Tuesday 10 November 2020 3:15 pm

Wall St indexes dip as Pfizer vaccine optimism fades, but FTSE 100 powers ahead

The S&P 500 and Nasdaq indexes in New York dipped at the open, halting a rally set off by the Pfizer vaccine results yesterday.

Traders banked gains from yesterday and the S&P 500 slipped 0.2 per cent while the sell-off on the Nasdaq amounted to a 0.8 per cent fall.

The Dow Jones index resisted the dip, rising 0.33 per cent at the open.

Read more: UK unemployment hits four year high as redundancies reach record levels

On this side of the Atlantic, the FTSE 100 rose on Tuesday after scaling a near three-month high in the previous session as the prospect of a vaccine for Covid-19 continued to boost sentiment, despite new data showing rising unemployment in the UK.

In mid-afternoon trading, London’s blue-chip index rose 1.5 per cent to 6,283. The midcap FTSE 250 rose 1.1 per cent to 19,059, boosted by travel and leisure stocks. 

Global markets surged to record highs yesterday after Pfizer said its Covid-19 vaccine, developed with German partner Biontech, was more than 90 per cent effective in preventing infection, marking the first successful results from a large-scale clinical trial.

European markets hovered around eight-month highs this morning following the breakthrough, with concerns about the depth of the economic damage from the pandemic capping gains.

Transport and leisure stocks rebound

In London, blue-chip Rolls-Royce surged 25.5 per cent following a 44 per cent yesterday following Pfizer’s announcement. 

Shares of energy, insurance and auto companies were also among the biggest gainers in morning trading. 

Mid-cap Premier Foods – maker of Mr Kipling cakes – fell 5.2 per cent even after it raised its full-year trading profit outlook and said it expects higher demand for its brands due to the recent government restrictions on eating out.

“The results of the Pfizer study are certainly welcome news,” said Michael Hewson, chief analyst at CMC Markets.  

“A 90 per cent 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 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.”

Before the Open newsletter: Start your day with the City View podcast and key market data

New data from the Office for National Statistics showed that redundancies in the UK hit a record high in the quarter to September, while the unemployment rate hit a four-year high of 4.8 per cent. 

The Bank of England is predicting UK unemployment will hit a peak of  eight per cent during the second quarter of next year.

European shares made modest gains following yesterday’s surge, with the pan-continental Stoxx 600 index rising 0.4 per cent. 

France’s CAC 40 rose 1.6 per cent, while in Germany the Dax was up 0.7 per cent. 

Asian markets

Overnight, Asian markets largely rallied as traders welcomed successful data from Pfizer’s vaccine trial, but expected delays to any mass roll-out took the gloss off early gains.

Major Asian markets soared on the vaccine news before weakening later in the session. Japan’s Nikkei 225 ended up nearly 0.3 per cent after being 1.1 per cent higher in early trading, touching a 29-year high. In Hong Kong, the Hang Seng climbed 0.87 per cent. 

Read more: UK government to NHS: be ready for (optional) vaccine from next month

Chinese shares largely closed lower after new economic data signaled a roadblock to the country’s broader economic recovery. The Shanghai Composite dropped 0.4 per cent, while the Shenzhen Component dropped 1.05 per cent. 

China’s factory-gate prices fell at a sharper-than-expected pace in October, indicating tepid upstream demand for industrial goods despite a broader economic recovery. Consumer inflation was also soft, easing to an 11-year low.