Update (12:35): The FTSE 100 has rallied after US biotechnology company Moderna (MRNA.O) said its vaccine was 94.5% effective in preventing Covid-19, just one week after Pfizer (PFE.N) unveiled far better than expected results from its jab.
The UK blue-chip index added to gains on the news, trading 106 points, or 1.7%, higher at 6,422, while UK ‘mid-cap’ companies on the FTSE 250 rose 1.8%.
Germany’s DAX 30 climbed 1.2% and France’s CAC 40 was up 2.2%, while futures pointed to the US S&P 500 opening 1.1% higher and the Dow Jones rising 1.7%.
Moderna’s strong results follows Pfizer’s announcement last week that its vaccine, developed with German partner BioNTech (BNTX.O), was more than 90% effective.
‘This is a pivotal moment in the development of our Covid-19 vaccine candidate,’ said Moderna chief executive Stephane Bancel.
‘This positive interim analysis from our Phase 3 study has given us the the first clinical validation that our vaccine can prevent Covid-19 disease, including severe disease.’
Shares in travel and leisure companies, hit hard by coronavirus restrictions, rallied strongly on the news. British Airways owner International Consolidated Airlines (IAG) topped the FTSE 100, up 11.9% at 161.8p, while aircraft engine maker Rolls-Royce (RR) rose 9.6% to 102.7p.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said investors were seeing ‘the light at the end of the coronavirus tunnel shining even brighter’.
‘This is early data and the Moderna vaccine isn’t likely to be approved for at least another few weeks but the announcement adds to the confidence washing through financial markets.’
The BlackRock Investment Institute said the positive vaccine news gave greater confidence of an economic re-acceleration next year. ‘The game changer is that we now know we are building a bridge to somewhere, providing more clarity for governments and companies about getting to the post-Covid stage.
‘That will make it easier to absorb any near-term disappointments and have greater confidence in the restart plan. It should also help limit any economic scarring and justify deploying further policy support,’ the institute added.
(10:00) China data boosts FTSE
Strong data from China and another shot of Covid-19 vaccine optimism helped the FTSE 100 start the week with gains.
The UK blue-chip index rose 48 points, or 0.8%, to 6,345, buoyed by an update from Ugur Sahin, chief executive of BioNTech (BNTX.O), which has developed a vaccine with Pfizer (PFE.N).
Sahin said the transmission of Covid-19 would be reduced by ‘maybe 50%’ after the vaccine is distributed, leading to ‘a dramatic reduction of the pandemic spread’.
Spreadex analyst Connor Campbell pointed to further positive news that 6,000 British volunteers were participating in the phase three trials of the vaccine created by Johnson & Johnson (JNJ.N) subsidiary Janssen.
‘Though the vaccine headlines were the market’s main shot in the arm, a better-than-forecast third quarter GDP reading out of Japan – at 5% against the 4.4% expected and -7.9% seen in the second quarter – helped sweeten early trading, as did a largely positive data dump out of China,’ he said.
Retail sales in China rose at the fastest rate for a year in October as consumer demand improved, and contributed to the ‘economy’s solid economic recovery from the Covid-19 pandemic’, said Fiona Cincotta, analyst at City Index.
Covid-19 bellwether stocks climbed to the top of the FTSE 100. International Consolidated Airlines (IAG), the owner of British Airways, was up 5.5%, or 8p, at 152p, and aerospace engineer Rolls-Royce (RR) advanced 4.2%, or 4p, to 97p.
Asian-focused bank Standard Chartered (STAN) jumped 4.3% to 435p on the positive data from China and Japan.
Vodafone (VOD) was up 3.5%, or 4p, at 123p as the communications giant reported a headline profit of €1.6bn the first half, against a €1.9bn loss last year.
William Ryder, analyst at Hargreaves Lansdown, said the group was in an ‘interesting position’ as it is in the middle of an overhaul.
‘Vodafone is still in a tough industry… so only time will tell whether the new structure will be enough to drive future growth,’ he said.
Gains in sterling, which was up 0.2% to $1.321 against the dollar helped push the FTSE 250 up 0.7%, or 145 points, to 19,415.
Coronavirus sensitive stocks were also riding high in the mid-caps, with Cineworld (CINE) jumping 6.6%, or 2p, to 46p, cruise operator Carnival (CCL) up 6.2% at £11.48, and Easyjet (EZJ) climbing 4% to 766p.
(2:29) Asian stocks celebrate trade deal
SINGAPORE: Asian stocks climbed on Monday after China and 14 other countries signed the world’s biggest trade agreement.
The Regional Comprehensive Economic Partnership was signed virtually as the yearly Asean summit wrapped up on Sunday.
The agreement will take tariffs between member countries lower in the coming years, fuelling hopes that it would help Covid-19 recovery.
Japan’s Nikkei 225 index jumped 2.1% and the Kospi in South Korea rose 2%. The Shanghai Composite added 1%.
The Taiwan Capitalization Weighted Stock Index picked up 2.1%. Hong Kong’s Hang Seng Index rose 0.5%. The S&P ASX 200 in Australia was 1.2% higher.
The Global CIO Office called the agreement ‘a significant feather in the cap of Asia’. It covers a third of the world’s population and $26.2tn of gross domestic product.
‘While not nearly as market moving as vaccine news, they may well move the Asian economy another step or two forward as the global growth engine of choice for the next number of years,’ said representatives Gary Dugan, Johan Jooste and Bill O’Neill.
This could lead to a more successful Covid-19 response and a region that is more integrated with China’s push for technological advancement and financial market liberalisation, they added.
The agreement notably excludes India, which pulled out last year. But the door is open for the country to join at a later date, said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
India’s Nifty 50 index rose 0.7% by mid-day. The Straits Times Index in Singapore climbed 1.4% and FTSE Bursa Malaysia KLCI gained 0.4%. The SET Index in Thailand added 1%.
Wall Street had cemented gains on Friday, with the technology-heavy Nasdaq rallying 1%.
The S&P 500 rose 1.4% and the Dow added 1.4%. This brought their weekly gains to 2.2% and 4.1% respectively.
Citi Private Bank observed a rotation from ‘Covid-defensive’ to ‘Covid-cyclical’ assets.
There was a 6.2% gain for cyclicals, versus a 0.4% gain for defensives last week, David Bailin and Steven Wieting said.
‘During the week the “see-saw” between hope and fear was manifest.
‘When investors are fearful of the rapid rise in Covid, the Nasdaq continues to act defensively, but the fall in bond prices and action in gold also suggest that a transition is underway,’ they said in a note.
The US indices were set for a bullish open on Monday. Futures for the S&P 500 and Dow were up 0.9%. That of the Nasdaq rose 0.7%.