Europe midday: Shares extend gains on Brexit deal, vaccine rollout
European shares continued to power ahead on the first session of the year, driven by the Brexit trade agreement and roll out of coronavirus vaccines across the region.
The pan-European STOXX 600 index extended morning gains to be 1.67% higher at lunch time. The UK’s FTSE 100 rose 2.79% in the first trading day of Britain’s existence outside the European Union. This was despite the nation heading for tougher Covid-19 lockdown measures after a surge in cases – with the government predictably wavering on when to introduce them.
“These gains can be tied to the rollout of the Oxford/AstraZeneca vaccine in the UK – the continuation of 2021’s great hope for ending the coronavirus pandemic. It is another step on the journey back to normality, and investors have seized upon it with all their might,” said Spreadex analyst Connor Campbell.
UK shares also received a boost after figures from the Bank of England showed mortgage approvals hit their highest level since before the financial crisis in November as buyers rushed to arrange finance during the government's stamp duty holiday.
Net mortgage borrowing rose to £5.7bn from £4.7bn a month earlier - the highest since March 2016 - and lenders approved 105,000 loans, up from 98,300 in October.
The German DAX was up 1.23% and French CAC rose 1.66%. Dow Jones futures were up 162 points.
“It is a trickier first week of 2021 than the US index would like. Tuesday sees the Senate runoff elections in Georgia, a pair of races arguably as important as the nationwide vote. For tomorrow’s winners will dictate whether the Democrats or Republicans take control of the upper chamber, and therefore have huge implications for the Biden administration’s ability to get things done. And for the markets, that means further covid-19 stimulus,” Campbell said.
In equity news, shares in Ladbrokes owner Entain topped the gainers, soaring 28% despite rejecting an $11bn bid proposal from US casino operator MGM Resorts, saying it significantly undervalued the business.
Precious metals miners were on the rise as gold prices shone, with Fresnillo, Polymetal, Centamin, Anglo American, Glencore, BHP and Rio Tinto all up.
On the downside, banks and housebuilders lost ground, while Rolls-Royce fell after the Financial Times reported that the engine maker will be putting its UltraFan engine programme "on ice" when testing finishes in 2022.
While the FTSE was up on Brexit deal optimism, there was still some concern about the fact that a deal was not agreed on financial services, which make up 80% of the UK economy. Shares in banks such as Lloyds, Barclays and NatWest were all lower.
(Michele Maatouk contributed to this report)