If you're anxiously awaiting the arrival of a COVID-19 vaccine raise your hand.
Okay, you can put your hand down now. (I'm assuming it was up!)
There have been whispers and rumours of an effective vaccine since the earliest weeks of the pandemic. Russia, among other nations, is currently trialling one. We wish them luck.
But the best hopes of an effective vaccine now look to lie with the University of Oxford.
Earlier today Prime Minister Scott Morrison announced the government has signed an agreement to secure 25 million doses of a potential COVID-19 vaccine — enough for every Australian — with the UK's AstraZeneca plc (LON: AZN). If successful it will be free, and mandatory, for all Australians.
The vaccine was developed by Oxford University and has now entered its third phase. This will see it tested on thousands of volunteers.
According to Morrison, "The Oxford vaccine is one of the most advanced and promising in the world, and under this deal we have secured early access for every Australian."
Rather than purchasing 25 million doses of the vaccine, if it proves successful, Australia will receive the formula and immediately begin to manufacture it domestically.
Image source: Getty Images
How will a successful vaccine impact ASX share prices?
As with any massive shifts to global economic output and the very way people are living their lives, a successful vaccine is likely to see some ASX share prices post strong gains while others fall.
One potential winner from the Oxford vaccine is biotech company CSL Limited (ASX: CSL). CSL is in discussion to produce the vaccine in Australia, though the company notes it is still working through various issues.
CSL's share price has been on a rollercoaster of a ride this year. So far in August, that ride's been mostly up hill, with CSL's share price gaining 16% so far in August, giving it a market cap of $142 billion.
On a broader scale, other likely big winners are shares involved in the travel and leisure industries.
Flight Centre Travel Group Ltd (ASX: FLT), for example, has been hammered by the pandemic's impact on travel. The Flight Centre share price is down 70% year-to-date. Though in a sign that investors are beginning to look beyond the pandemic, Flight Centre shares have gained 12% so far in August.
The potential downside for ASX share prices
Some of the shares that could well come under pressure are, not surprisingly, the same shares that have benefitted. That could be particularly concerning for shares that have gained on the back of trillions of dollars in global government and central bank stimulus. Stimulus that will almost certainly begin to wind down following an effective vaccine.
As quoted by Bloomberg, George Mussalli, head of research and chief investment officer for equities at PanAgora, says, "The risk is a taper tantrum. That's what everyone is going to be worried about."
Yousef Abbasi, global market strategist at StoneX adds:
The Fed will have to gently and carefully pull back from the policy measures enacted during the pandemic, and it will likely create a period of elevated volatility and indigestion for these markets. That is, of course, unless Chairman Jay Powell is a better magician than his contemporaries.
It's a similar story here in Australia, where both the Morrison government and RBA Governor Philip Lowe will need to step carefully when winding back stimulus measures.
Careful as they may be, though, some share prices will likely suffer.
JB Hi-Fi Limited (ASX: JBH), for example, has benefitted from some consumers finding more money in their pockets with less places to spend it. And they've been snapping up the retailer's electronics offerings.
That's seen the JB Hi-Fi share price gain 33% year-to-date. And JB Hi-Fi's share price is up an eye-popping 116% since its 25 March low.
That share price surge was justified when the company's full year results were released on Monday. JB Hi-Fi reported its profits were up 33.2% due to strong growth in sales.
But many brokers, including Credit Suisse and UBS, are forecasting JB Hi-Fi's operating revenue will fall in FY21 as stimulus measures are wound down.
