Europe midday: Shares tick higher on Covid vaccine feelgood factor
European shares firmed at midday as investors took a reality check after Monday’s euphoria surrounding a potential Covid-19 vaccine.
The pan-European Stoxx 600 index was up 0.72% as all major European bourses moved higher, with the UK FTSE 100 1.8% higher and the French CAC 40 increasing 1.27% while Germany's DAX was flat.
US Dow Jones futures gained ground to be 168 points higher, while those on the S&P and the Nasdaq were lower after a storming session on Wall Street. There was no reaction to news that US Attorney-General William Barr had controversially allowed prosectors to investigate any allegations of fraud in the presidential election, once again blurring the lines of the extent of his authority.
On equities, analysts said the vaccince-drive optimism of Monday had been tempered by reality, especially as the UK reported a rise in unemployment.
"For all of the optimism that we saw in yesterday’s rebounds in travel, leisure, pubs, restaurants and other hospitality, we need to see evidence that consumer behaviour will start to change as well, and even then, overall capacity in all of these sectors is likely to be much lower than was the case pre-pandemic," said CMC Markets analyst Michael Hewson.
"The results of the Pfizer study are certainly welcome news, a 90% success rate is certainly well above expectations, and as such is a very much needed beacon of light in what has been a dark year for the global economy, however one swallow does not make a summer, and there still remains a some way to go before life as we knew it a year ago, can return to any semblance of normal, in the short or medium term."
Markets.com analyst Neil Wilson said markets "have a habit of overshooting on the way down, and on the way back up. Nevertheless, an effective vaccine changes the game for investors, at the very least in terms of relative valuations and the premium we are willing to pay for growth".
UK unemployment rose in September as the coronavirus pandemic continued to batter the jobs market. The rate increased to 4.8% from 4.5% in August, in line with analyst’s expectations. The data also showed that the number of workers on payrolls fell by 782,000 between March and October, with a 33,000 decline last month.
Meanwhile, redundancies hit a record high of 314,000, up 181,000 on the quarter.
Travel, leisure and consumer-related stocks were still on the rise with aircraft engine maker Rolls-Royce up 20% on hopes of more passengers jets flying soon. Engineer Meggitt, which makes parts for planes, was also higher, despite reporting that 2020 profits would be almost halved.
French shopping mall owner Klepierre, British Airways parent IAG, Premier Inn owner Whitbread, Tui, travel foot outlet operator SSP and Cineworld were all higher.
Sales, marketing and support services group DCC was also on the front foot as it lifted its interim dividend by 5% and posted a rise in profit.
Conversely, stocks that have benefited from Covid-related restrictions and lockdowns fell, with Hello Fresh, Delivery Hero, Just Eat Takeaway and Ocado and all lower.
Adidas shares were lower as the sportswear maker said it expected sales to fall in the last three months of the year as coronavirus lockdowns return in Europe and despite forecasting a return to growth in China and strong demand for running gear and products designed by singer Beyonce.