Money, medicine and markets : How Covid-19 has changed the technological trading landscape in 2020

2020 has been an intense year for everyone, and the Covid-19 pandemic has had significant impacts on all parts of life. The financial world is no exception, and the responses to the global pandemic have caused massive reverberations across a number of markets. In this blog post, we will analyse how stocks in pharmaceuticals and technology have been affected by Covid-19 in 2020 and how these changes could impact trading in 2021.

Pharmaceutical stocks

covid-19 trading stocks

Pharmaceutical companies have never had more of a focus on them than in 2020, and the extra attention given to the pharmaceutical sector as a result of the Covid-19 pandemic has resulted in some huge changes in the global financial landscape.

As investors have looked to pharmaceutical companies for hopes of a Covid-19 vaccine, pharmaceutical companies have received a lot of attention as the markets attempt to find and capitalise on the vaccine that eventually solves the pandemic problem. Shares in Moderna and BioNTech saw significant increases in early December, and despite some dips since then due to profit taking have generally seen success on the stock market compared to many other sectors in 2020.

However, wary investors have also affected pharmaceutical stocks somewhat, as the uncertainty of vaccine development and distribution has meant that the attention that the pharma markets have received has not necessarily translated to immediate stock market success. Noticeably, Pfizer’s stocks have slipped since the initial announcement of the US Food and Drug Administration approving of its vaccine, which could be attributed to investors looking forward now that the vaccine has been approved, or concerns over potential allergic reactions in the Pfizer vaccine.

Despite this uncertainty and the relative volatility of the stock market, particularly in the wake of global travel restrictions, pharmaceutical companies have been given a great deal of financial attention over the course of the pandemic, which could have lasting effects on global trading markets once a return to relative normalcy is established.

Technology stocks

covid-19 trading stocks

The global pandemic served to highlight the massive impact technology has on our everyday lives, and this influence has translated to some significant shifts in global markets.

According to the Financial Times’ US finance editor Robert Armstrong, long-term interest rates crashed over 2020, future cash flows from stocks were valued higher this year. This translated to investors buying companies with the biggest future cash flows, and tech stocks saw their values double from their lowest point in March.

However, while technology is one of the few sectors to come out of 2020 with profit growth, the Covid-19 pandemic has still had considerable effects on that profit growth and the financial influence of the sector will be uncertain going into 2021. Despite generally seeing growth over the year as a whole technology stocks have also taken something of a back seat in recent weeks following hopes of a vaccine, which has encouraged investment in other parts of the market such as energy and pharmaceuticals.

As Armstrong notes, the future of technology stocks on the global market will be dependent on the efficiency of the vaccination process, and how much “pent-up economic demand” will be released upon the return to relative normalcy.

According to IBES data from Refinitiv reported by Reuters, the tech sector’s earnings are projected to grow by 14.2% next year, which is slower than the 23.2% growth seen for S&P companies seeing growth overall. Despite this, investors have been maintaining a hold on technology stocks through this slower growth period, and despite short-term changes in stocks and investments the technology sector is expected to continue asserting itself on the global financial market.