Here’s how to position your portfolio for a COVID-19 vaccine approval, UBS says

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It's time to position your portfolio for a COVID-19 vaccine approval, UBS says. “While mobility and economic data will improve slowly even after a vaccine is approved, market returns will very likely be front loaded.”

U.S. stocks are moving higher at the start of the week despite a lack of progress over a new stimulus package.

Vaccine hopes accounted for just 4% of the S&P 500’s SPX, +0.95% 20% rise over the past five months, the bank’s global strategy team said in a note late last week, with liquidity and increased mobility accounting for the rest. They inferred that vaccine hope was only 55-60% priced in, based on how much of a drag current limited levels of mobility in society was still having on the market.

They recommended positioning tactically in the cyclical sectors and called for a one-to-three-month spell of rotation away from the U.S., particularly to emerging market equities. When it comes to sectors the bank said there was additional scope for rotating into cyclicals, including leisure, automobiles, beverages, housing and airlines.

The buzz President Donald Trump declared on Sunday he was ready to return to the campaign trail despite questions about his health. Trump will hold a rally in Florida later on Monday, his first rally since testing positive for COVID-19 earlier this month.

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