Covid vaccine: Stock markets surge after Pfizer announces breakthrough

FSTE 100 enjoyed its best day since before lockdown in March after better-than-expected trial results

The  FTSE 100 surged on Monday after news of a potential Covid-19 vaccine breakthrough and Joe Biden’s US election victory gave traders cause for optimism.

At one point in early trading the index jumped 5.5 per cent, adding £84bn to the valuations of Britain’s largest companies after Pfizer announced that it had seen positive signs from a vaccine trial. By the close the FTSE was up 4.67 per cent, a gain of 276 points and a rise in stock valuation of £70bn.

Pfizer’s study indicated that its vaccine was more than 90 per cent effective in preventing Covid-19. Preliminary analysis, conducted by an independent data monitoring board, looked at 94 infections recorded so far in the vaccine’s phase 3 study, which has enrolled nearly 44,000 people in the US and five other countries.

The data has yet to be publicly released or peer-reviewed, and Pfizer said the initial protection rate might change by the time the study ends.

Companies that have been hit hardest by the pandemic, including British Airways owner IAG (up 25 per cent) and engine maker Rolls-Royce (up 43 per cent,) jumped on hope that the vaccine could bring a relatively swift return to normality.

Shares in easyJet, Britain’s biggest budget airline, rose from £5.54 to £7.22 – a jump of over a third. Ryanair’s shares rose by over 13 per cent.

On the FTSE 250, Cineworld rose by over 40 per cent, Trainline added 22 per cent, Tui rose almost 20 per cent and cruise operator Carnival was up almost 38 per cent.

Firms that have benefited financially from changing shopping habits during the pandemic saw their share prices tumble. Online supermarket Ocado dropped 14.5 per cent, Just Eat Takeaway.com lost almost 10 per cent, and Reckitt Benckiser, which makes Dettol, fell almost 6 per cent.

And Zoom fell around 15 per cent in Wall Street trading. 

Futures contracts which bet on the direction of America’s Dow Jones Industrial Average rose 4.2 per cent higher while those for the S&P 500, a much broader index of leading companies’ shares, were up 3.1 per cent.

In Europe, France’s CAC 40 surged 7.7 per cent to 5,336, while Germany’s DAX jumped 4.94 per cent to 13,095. Britain’s FTSE 100 gained 4.67 per cent to 6,186.

Donald Trump sought to capitalise on the news, tweeting: “US stock market up big, vaccine coming soon. Report 90% effective. Such great news!”

Markets across the globe also benefited from a “Biden bounce” early on Monday, with Japanese shares jumping to a 30-year high after Joe Biden was named as the president-elect of the US.

In Tokyo, the Nikkei index rose 2.6 per cent when the market opened at 9am on Monday (12am GMT) and later closed up 2.1 per cent at a level not seen since 1991.

Its gains were helped by a recent boom in car manufacturing from brands including Toyota.

Elsewhere in Asia, the markets also looked healthy after the US election result. Topix index in Japan jumped 1.41 per cent, China’s CSI 300 index jumped 1.96 per cent and Hong Kong’s Hang Seng rose 1.18 per cent.

Mr Biden has vowed to tackle the coronavirus pandemic head-on while in office and is seeking to push ahead with a new $2.4 trillion stimulus package.

Chinese investors also see Mr Biden as a positive hope for the future as he is seen as more open to trade and the expansion of overseas technology firms in the US.

While stock markets have welcomed the prospect of a Biden presidency, the US political system continues to “throw curveballs” when least expected, said Stuart Clark, portfolio manager at Quilter Investors.

“There will be a run-off election in Georgia for the remaining Senate seats in January and this is likely to decide whether or not Biden can enact his agenda and push through the policies he promised to introduce. Without it, we very much see the status quo dominating once again.

“For now, however, markets seem to be embracing the news and have not been too unsettled by the lack of clarity last week brought. For long-term investors it goes to show that this election is a timely reminder to block out the noise and not be swayed by certain political events.”