Financial markets around the world have rallied after Joe Biden’s victory in the US presidential election and news that Pfizer’s Covid-19 vaccine is 90% effective, with global shares reaching a record high. Shares, already sharply higher after the president-elect pledged to try to bring unity to the US after four tumultuous years under the Trump administration, surged after Pfizer announced that the coronavirus vaccine it is developing with Germany’s BioNtech is more effective Britain’s stock market, the FTSE 100 index, jumped 4.4%, or 260 points, to 6,170, as investors hail the news. The MSCI world equity index, which tracks shares in 49 countries, rose 0.5% to a record high in early European trading. The Japanese stock market hit its highest level in almost three decades and stock prices in Europe rose sharply on Monday Britain’s stock market rose to its highest level in almost four weeks, rising back above the 6,000 mark. The FTSE 100 index was up 94 points to 6,004 in early trading, a 1.6% gain. The Europe-wide Stoxx 600 index increased by 1.4%, to the highest level since 14 October, with gains in all the main European markets. Germany’s Dax and France’s Cac rallied 1.9% and 1.8% respectively. The Nikkei index in Tokyo rose 2.12% to 24,839, a new 29-year high. In China, the Shanghai Composite was up by almost 1.9%, Hong Kong shares rose 1.2% and the ASX200 in Sydney finished up 1.75%. “The markets came out of the weekend ready to celebrate after Joe Biden was called as the next president of the US,” said Connor Campbell, financial analyst at the trading platform Spreadex. “The real test for the markets is going to be the coming days and weeks. Donald Trump is showing no signs of conceding, and enough of the Republican party is willing to back up his baseless claims around voter fraud that persistent legal challenges are inevitable. The seriousness with which such challenges are pursued, and their perceived chances of success – slim, but you can’t discount a rightwing supreme court – could come to undermine the market’s recent gains.” Futures trading suggests the Dow Jones is will gain 1.26% when Wall Street opens, while the S&P500 is expected to rise 1.5% and the tech-heavy Nasdaq is seen rallying more than 2%. Investors appeared to be betting that Biden will most probably find himself without control over the Senate and therefore unable to push through any meaningful fiscal stimulus, in turn obliging the US Federal Reserve to continue pumping cheap money into the economy and keep borrowing costs at their historically low levels. “While lots of attention was given to Trump v Biden, markets have reacted strongly to the likely split Congress, which means more confidence that interest rates will be lower for longer,” said Dave Wang, a portfolio manager at Nuveen Capital in Singapore. Damien Klassen of Nucleus Wealth in Melbourne said the market’s reaction had still been a “little bit strange” given the prospect that the new president would be hamstrung by Senate opposition. And despite a rush of money into the markets because of latent demand, Klassen believed the outlook for the global economy was troubling because it relied so much on government stimulus. “The fundamentals still look terrible,” he said. “And it’s worse given the virus is ripping through America and Europe. Hospitalisations are really ticking up and when people start dying in corridors that’s when ordinary people stop doing stuff.” “So the fundamentals don’t look good and how long can the markets ignore that?” The US reported a record number of new coronavirus infections last week, with the total number of cases nearing 10 million. Matt Sherwood of Australian fund manager Perpetual was also sceptical, arguing that Biden’s victory did not necessarily warrant changing course on his investments. “In the end, we think the US economy is still fairly fragile and growth’s slowing down,” Sherwood said. Nevertheless, oil prices jumped on Monday, shrugging off worries about lacklustre demand. A barrel of Brent crude added $1 to $40.48. Although some analysts believed that a multitrillion-dollar fiscal stimulus plan focused on much-need infrastructure projects in the US was still possible despite a divided government, the spotlight would once again switch to the Fed. The US dollar dipped to two-month lows against the pound and the euro on Monday morning, reaching $1.319 against sterling and $1.189 against the euro. The dollar had already weakened in recent days while growth proxies such as the Australian dollar have rallied with the Biden presidency seen less likely to be confrontational on trade. The Aussie was up 0.2%, having jumped 3.3% last week.