Europe open: Shares surge on vaccine hopes, Biden transition
Surging travel stocks helped push European markets higher at the opening on Tuesday, spurred on by fresh Covid-19 vaccine hopes and news that US President-elect Joe Biden can officially start his transition to power.
The pan-European Stoxx 600 index was up 0.66%, with all bourses higher. US futures showed the Dow Jones index up 258 points.
Investors had started to digest the results of AstraZeneca and Oxford University’s joint contribution to the fight against the coronavirus. The market seemed unimpressed on Monday with the 70% efficacy rate compared with higher results from rivals Moderna and Pfizer.
“The headline figure of 70% effective is the average, and one of the regimens is 62% effective and the other is 90%. In terms of cost, the Astra-Oxford medication is reported to be a fraction of the price of Moderna’s and Pfizer-BioNTech’s possible vaccines,” said interactive investor analyst Richard Hunter.
“In addition to that, it can be stored at approximately -3 degrees, which makes it far easier to transport and more conducive to mass production.”
Reports that Biden has asked former Federal Reserve chairman Janet Yellen to be the next US Treasury Secretary also boosted sentiment, raising hopes of a more consensual approach between the central bank and US administration over the next four years.
In equity markets, British Airways and Iberia parent IAG and engine maker Rolls-Royce were on the front foot again, boosted by recent vaccine updates and news that from next month, travellers who arrive in England will be able to cut their quarantine to five days from 14 if they test negative for coronavirus on the fifth day. Passengers will have to pay for the tests privately.
Other travel and leisure stocks also gained, with TUI surging more than 11%, followed by Carnival, up 9.9%.
They were joined by InterContinental Hotels, Premier Inn owner Whitbread, Cineworld, easyJet and Upper Crust owner SSP.
Online electricals retailer AO World fell sharply despite saying it swung to a profit in the first half as strong demand amid the pandemic boosted revenues. In the six months to 30 September, the company swung to a pre-tax profit of £18.3m from a loss of £5.9m in the same period a year ago, with revenue up 53.2% to £717m.
Richard Hunter, head of markets at interactive investor said: "It remains to be seen whether the meteoric rise can be continued, but for the moment an increase in the share price of 382% over the last year, as compared to a dip of 4.4% for the wider FTSE250, has rewarded shareholders handsomely. Even though this can partially explain an inevitable bout of strong profit-taking on these numbers, the market consensus of the shares as a buy remains in place despite the blistering outperformance overall."
Pets at Home - classed as an essential retailer during lockdown - was also firmly in the red even as it reported higher interim profits and maintained its dividend after a strong second quarter as it forecast full-year results to be in line with expectations.
The shares were hit by a note from Shore Capital, which put the stock under review from a ‘buy’ recommendation. The outlook statement suggests “the share price has already arrived at its destination”, said Shore analysts Greg Lawless and Clive Black.
(Michele Maatouk contributed to this report)