Australian fund managers and analysts have warned that impending developments with leading COVID vaccine candidates could cause more volatility in global markets already reeling from Donald Trump’s coronavirus diagnosis and uncertainty about the US election result.

There are 11 COVID-19 projects in the phase 3 trial stage and investors are expecting updated data from companies including Pfizer, AstraZeneca and Johnson & Johnson in the next three months.

Cross asset investment specialist at Fidelity International Anthony Doyle said any vaccine approval or significant data updates would have “market moving significance on the day and contribute to heightened volatility”.

However, he warned any gains could be shortlived as investors turned their focus on the logistics of deploying a vaccine. “It would be an enormous, significant event if it were to occur, but if a vaccine was approved, there would still be questions about the rollout,” Mr Doyle said. “But I think the sugar rush to the market would be very short and sweet before more questions start to get asked.”

Amid the uncertainty caused by COVID-19 shutdowns, investors have been particularly sensitive to news – positive or negative – about a potential vaccine.

At the start of July the benchmark S&P/ASX 200 rallied above the 6000 mark, gaining 1.7 per cent on a positive update from Pfizer about its project. On September 9, the local sharemarket dropped more than 2 per cent after the market digested the news that the University of Oxford and AstraZeneca had paused their phase 3 trial after an adverse reaction from a participant.

The local bourse is still sitting 13.4 per cent below where it was on January 2, before the pandemic took hold. Investors may be in for more volatility this week as the Australian market responds to US President Donald Trump’s coronavirus diagnosis. News of this filtered through in the last hour of trading on Friday and saw the ASX 200 plunge in late trade to finish down 1.4 per cent for the session. US markets also fell on Friday with the tech-heavy Nasdaq index feeling most of the pain with a drop of 2.2 per cent.

Australia has so far made just one deal with a project in late-stage trials, entering an agreement for CSL to make 30 million doses of the AstraZeneca/University of Oxford vaccine if successful.

Lead portfolio manager for WAM Global Limited Catriona Burns said news of a successful phase 3 trial would drive markets higher, though there are other factors at play as economies recover from COVID-19.

“The prospect of a vaccine has assisted markets in recovering towards pre-COVID-19 levels, however the greater force has been the monetary and fiscal stimulus enacted in the aftermath of lockdowns,” she said.

Investors should be prepared for major data releases to continue to have an impact on markets, Ms Burns said. “Good news and bad news on from those data releases will drive markets. Look for relative out- or under-performance of cyclically exposed stocks on positive or negative news.”

In August, the UBS Global equities team highlighted small cap companies have been the most sensitive to positive vaccine news across the S&P500. Cyclical industries, including consumer stocks and energy, have been the biggest beneficiaries of good news about vaccines, posting returns of more than 2 per cent on days where there’s positive news.

Manager of Platinum Asset Management’s international healthcare portfolio Bianca Ogden said she was looking beyond the first announcement of a successful vaccine, saying the path towards vaccination for the virus will take time.

“Your guess is as good as mine as to what the market will do [after the first approval],” she said.

“Once the plan for a vaccine is there, let’s reassess. You also have to remember this will take a while. Mid next year, I think you probably get a flood of these other vaccines coming through.”