Europe open: Shares back to earth after Monday's vaccine surge

European markets took a breath after Monday's equities surge on the back of positive Covid-19 vaccine news from Pfizer and BioNTech as investors digested UK jobs data.

The pan-European Stoxx 600 index actually slipped into the red in early Tuesday trade, down 0.2%. The UK FTSE 100 was up, along with the French CAC 40, while Germany's DAX was down slightly.

US Dow Jones futures were virtually flat as investors also paused from a storming session on Wall Street that saw overnight gains of 834 points. 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, French shopping mall owner Klepierre, British Airways parent IAG, Premier Inn owner Whitbread, Tui, travel foot outlet operator SSP and Cineworld 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.