Update (17:00): The FTSE 100 has closed 85 points, or 1.4%, higher at 6,382, while UK ‘mid-cap’ companies on the FTSE 250 gained 1.6%.
That takes the UK blue-chip index’s gains over the last three sessions to 8%, following Monday’s spectacular 4.7% surge.
British Airways owner International Consolidated Airlines (IAG) led the among UK blue-chips, building on its weekly gains spurred by Monday’s news of a coronavirus vaccine breakthrough.
Close behind were B&Q owner Kingfisher (KGF), up 6.3% at 293.4p, and Ocado (OCDO), 6.4% higher at £23.02, with both recouping some losses from the previous two sessions sparked by the vaccine news, which could curtail the boost to home improvements and online supermarket deliveries spurred by Covid-19 restrictions.
(16:20) Growth stocks lead way in US
John Coumarianos reports from New York: After two days of declines for growth stocks, and a rally for value sectors, markets have reversed their course.
The tech-heavy Nasdaq is up 1.3% to 11,705, while the Dow is flat at 29,418 at 11:10am. The S&P was up 0.6% at 3,567.
News that a Covid-19 vaccine from Pfizer (PFE.N) and BioNTech (BNTX.O) had proved 90% effective in a study had sent value stocks, including energy and financials, higher on Monday and Tuesday, on hopes that the economy might open up and reverse trends in unemployment and GDP growth.
That vaccine news also sent ‘stay-at-home’ technology stocks lower.
For the two-day period starting this week, the Russell 1000 Value index returned 5.3% cumulatively, while the Russell 1000 Growth index fell 3.2%.
On Monday alone, the value index returned 4.1%, while the growth index lost 1.8%. Research Affiliates founder Rob Arnott noted that this was the largest one-day discrepancy between the two indices in a decade.
Today, the Russell 1000 Value index is down 0.5%, while its growth counterpart is up 1.3%.
All the large technology stocks – Facebook (FB.O), Apple (APPL.O), Amazon (AMZN.O), Netflix (NFLX.O), Alphabet (GOOGL.O) and Microsoft (MSFT.O) – are up between 1% and 2.8%. Car maker Tesla (TSLA.O), which trades like a technology stock, was also up 0.9%.
Bonds are continuing their selloff, as the yield on the 10-year US Treasury was up 0.016 percentage points to 0.979%. The yield on the note has nearly doubled since mid-summer, though it is still half of what it was at the start of the year.
Oil is continuing its upward trend too, with West Texas Intermediate crude up $1.09, or 2.6%, to $42.46.
Gold was down $15.50, or 0.83%, to $1,861.50. It’s up more than 20% for the year, but has cooled off over the past three months after touching $2,000 per ounce.
(9:54) FTSE extends vaccine rally
The FTSE 100 has inched higher after two days of strong gains sparked by Monday’s news of a coronavirus vaccine breakthrough, though gains were were limited by concerns about mounting Covid-19 infections.
The UK blue-chip index rose 31 points, or 0.5%, to 6,328, now up 7% this week. A spike in coronavirus deaths to 532 yesterday, the highest number since May, tempered gains.
Neil Wilson, analyst at Markets.com, said the ‘risk-on rotation continues to have legs for the time being but we could see this suffer a bit of payback before long’, especially as former US president Donald Trump gears up for a legal challenge over the election that could spark a ‘constitutional crisis’.
Ocado (OCDO) led the blue chips higher, gaining 3.8%, or 83p, to trade at £22.47, clawing back some of the losses over the past few days sparked by the vaccine development, which could curtail the surge in demand for the online grocer driven by coronavirus restrictions.
Outsourcing group Segro (SGRO) advanced 2.9% to 896p, and British Airways owner International Consolidated Airlines (IAG) added 1.8% to trade at 140p, adding to the gains it made this week on the back of Pfizer’s vaccine announcement.
Wilson said ‘it’s a bit more complex today than all being about the reopening trade’.
‘Rotation [into value stocks] is not going to be a straight line,’ he said. ‘After the initial kneejerk, investors will need to work out now which “value” stocks remain value traps and which have some growth in them.’
He said the outlook for Covid-19 hit sectors, such as travel and leisure, was brightening but warned investors to ‘expect pullbacks along the way’.
Fiona Cincotta, analyst at City Index, said expectations were for the global economy to recover ‘considerably more quickly’, with Goldman Sachs predicting US growth would bounce back to pre-pandemic levels by the second quarter of 2021.
‘Expectations for UK growth is, in some cases, equally optimistic, and the UK could also return to pre-pandemic growth levels potentially as soon as mid-2021,’ she said.
The FTSE 250 inched up 0.4% with UDG Healthcare (UDG) leading the way, gaining 5.3%, or 36p, to 725p after RBC raised its rating to ‘outperform’ a day after the stock fell on a Jefferies downgrade.
Energean (ENOG) rose 4.2% to 647p after the oil exploration group provided a positive reserves and resources update yesterday.