Monday 9 November 2020 9:29 pm

Wall Street closes just shy of record on renewed hopes of Covid-19 vaccine

Wall Street surged ahead today as news of the first successful late stage Covid-19 vaccine trials bolstered hopes of the global economy emerging from a year of pandemic-driven crisis, with the S&P 500 and Dow Jones opening on record highs.

News that Pfizer’s experimental vaccine was found to be more than 90 per cent effective in preventing Covid-19 in an initial study sent markets soaring on Monday. Equities also benefited from a bounce after Joe Biden triumphed in the tightly-fought US presidential election on Saturday.

Wall Street hits record highs on open

The benchmark S&P 500 rose 3.54 per cent in the first few minutes of trading, while the Dow Jones added 5.21 per cent. Pre-market trading showed that both indices were set to open on record highs. 

The tech-heavy Nasdaq rose 0.93 per cent, as shares in tech and other companies seen as “stay-at-home” winners either fell or rose slower.

In London, the FTSE 100 surged ahead on renewed hopes of a vaccine, with the blue-chip index climbing 5.53 per cent to 6,236.93. The midcap FTSE 250 climbed 5.43 per cent to 18,890.32.

Pfizer and German partner Biontech are the first drugmakers to show successful data from a large-scale clinical trial of a coronavirus vaccine, a major victory in the fight against Covid-19, which has killed over one million people globally.

The companies said they have so far found no serious safety concerns and expect to seek US emergency use authorisation for the drug later this month.

Global stocks had already hit a record high on Monday before news of the vaccine broke, as Biden’s victory helped equities extend last week’s gains. 

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

MSCI’s All-Country World Index surpassed an intra-day high set on 3 September this morning after rising 0.5 per cent. 

European shares surge on vaccine optimism

European shares surged following the positive news on the hunt for a vaccine. The pan-European Stoxx 600 soared 4.25 per cent, putting it on course for its best day in six months.

In Germany, the Dax rose over six per cent, with Biontech’s shares jumping more than 27 per cent. France’s CAC 40 climbed as much as 7.89 per cent.

In London travel and leisure stocks, which have been the hardest hit by the pandemic, were among the best performing sectors, while those that have broadly benefitted from lockdown measures fell. 

British Airways owner IAG surged over 31 per cent following the vaccine update from Pfizer, while hotels groups Intercontinental and Whitbread climbed 13.80 per cent and 17.87 per cent respectively.

Taylor Wimpey surged 17.72 per cent after the blue-chip housebuilder said it was on track to deliver annual results above market expectations.

Fellow housebuilder Baratt also rose following Taylor Wimpey’s update, climbing 10.42 per cent.

“The Pfizer announcement is not yet a panacea, but adds to investor sentiment which had already been buoyed by the Biden victory, and has sent markets to strongly positive levels,” said Richard Hunter, head of markets at Interactive Investor. 

“Beneficiaries of the rally are widespread, particularly among the more beaten down sectors,” he continued. 

“It is still early days, and the practicalities point to any meaningful distribution not being available until the first few months of next year. Even so, the news is without question a positive development and has certainly captured the imagination of investors.”

Britain said on Monday it was open to a “sensible” compromise on fishing and that there was goodwill on both sides to progress towards a Brexit trade deal as a new round of talks began in London.

Read more: Joe Biden ‘will not prioritise’ UK-US trade deal

Asian stocks posted strong gains overnight, with Japanese blue chips climbing to a 29-year high. The Nikkei 225 rose 2.12 per cent, reaching its highest level since 1991. 

In Hong Kong, the Hang Seng rose just under one per cent, while the Shanghai Composite gained 1.86 per cent.

Wall Street ends high

The S&P 500 ended higher but closed just shy of a record on Monday as investors bet that a full economic reopening was finally in sight following the first positive data from a late-stage COVID-19 vaccine trial.

Sectors such as energy, travel and financials which were among the hardest hit by lockdowns aimed at curbing the virus were some of the biggest percentage gainers on Monday.

Unofficially, the Dow Jones Industrial Average rose 839.61 points, or 2.96 per cent, to 29,163.01, the S&P 500 gained 44.25 points, or 1.26 per cent, to 3,553.69 and the Nasdaq Composite dropped 162.91 points, or 1.37 per cent, to 11,732.32.

The S&P energy index led gainers among the S&P 500’s 11 major sectors and registered its biggest daily percentage gain in months as investors bet demand would climb again when people become more comfortable with the idea of traveling as the health crisis subsides.

The companies hit hardest by months of travel bans and lockdowns surged. The NYSE airlines index was up 19 per cent while plane maker Boeing Co jumped 15 per cent. Cruise line operator Carnival Corp was up more than 32 per cent.

In contrast, the technology sector and specific companies that had outperformed during the pandemic as they were seen as “stay-at-home” winners were making smaller gains or declining.

Netflix and declined while Zoom Video and exercise bike maker Peloton Interactive tumbled to limit the Nasdaq’s advance.

Stocks around the world had already been gaining ground before the vaccine data pushed equities even higher as expectations of better global trade ties and more monetary stimulus under U.S. President-elect Biden was already lifting demand for risky assets.

Pfizer shares closed sharply higher after soaring as much as 15.4 per cent during the session. But another drugmaker Biogen Inc slumped as a panel of experts to the U.S. health regulator voted against the drugmaker’s experimental Alzheimer’s treatment.