The FTSE 100 doubled its gains on Wednesday as investor optimism about a coronavirus vaccine grew stronger, also fuelling US and European stocks.
London’s blue-chip index climbed as high as 6,241 as it opened trading this morning, following positive trial results of a Moderna vaccine.
By 1.30pm the FTSE 100 was up 2.07 per cent at 6,303 points after reports that the Astrazeneca-backed Oxford vaccine group could release a positive update as soon as tomorrow.
The stock market index retreated slightly over the afternoon but closed 1.83 per cent. The double dose of good news pushed European stocks higher, alongside the FTSE 100.
Germany’s Dax index leaped 1.99 per cent. France’s CAC 40 was a huge 2.6 per cent higher and the continent-wide Stoxx 600 soared 1.9 per cent.
Spreadex analyst Connor Campbell said today’s rise showed FTSE 100 traders are “opting for long-term hope over near-term reality”.
“With Moderna reporting overnight that it had seen a ‘robust’ immune response from all 45 of the patients in its early huge trial, investors already had a reason to ignore the ongoing re-lockdowns and accelerating numbers of Covid-19 cases around the globe,” he said.
“Robert Peston then gave the markets an extra boost as he tweeted that the AstraZeneca-backed Oxford vaccine group would be releasing a positive update on its trials.”
Vaccine developments push up stocks
Investors found solace in a report from US researchers on American drugmaker Moderna’s experimental coronavirus vaccine. It said the treatment was safe and provoked immune responses in all 45 healthy volunteers in an ongoing early-stage study.
“It’s hardly surprising that investors get a little excited when the results of these trials emerge, even those in the early stages,” said Craig Erlam, senior market analyst at Oanda. “The boost tends to be relatively short-lived though and in a week like this, there’s plenty of distractions.”
Shares in Glaxosmithkline, one of the UK’s largest drugmakers, gained 2.67 per cent off the back of Moderna’s successes. And Astrazeneca surged 4.39 per cent following ITV’s Robert Peston saying he understands positive news of its University of Oxford vaccine research will land in the coming days.
Trump hailed the Moderna announcement on Twitter, saying: “Great news on vaccines!”
Nonetheless, China’s CSI 300 index dropped 1.3 per cent overnight. Hong Kong’s Hang Seng fell 0.3 per cent. Japan’s Nikkei rose 1.6 per cent, however, partly boosted by the Moderna vaccine announcement.
FTSE 100 boosted despite retail fallout
A number of British retailers reported results for the first half of 2020 this morning, posing a mixed bag for investors.
Online fashion retailer Asos jumped 4.09 per cent on posting a sales bump through the coronavirus lockdown, while Burberry slumped 6.81 per cent as it said demand had been severely impacted by the pandemic.
Meanwhile Dixons Carphone plunged almost nine per cent this morning after posting an annual loss.
“Retail earnings continue to look exceptionally bleak,” said Neil Wilson, chief market analyst at Markets.com.
FTSE 100’s top risers and fallers
|International Consolidated Airlines Group (7.53%)||Burberry (-6.39%)|
|Ocado (6.21%)||BT (-1.82%)|
|Compass Group (5.86%)||Morrison’s (-1.21%)|
|3i Group (5.37%)||Land Securities (-1.15%)|
|Intercontinental Hotels Group (5.19%)||Sainsbury’s (-0.83%)|
US stocks push higher on vaccine optimism
Wall Street surged higher this afternoon, fuelled by hopes that a successful vaccine trial can translate into a safe emergence from lockdowns reimposed around the US.
The Dow jumped 1.4 per cent before retreating to trade up 0.49 per cent by 4.45pm. The S&P 500 climbed 1.2 per cent before falling back slightly to be up 0.43 per cent. The tech-focused Nasdaq dipped 0.26 per cent lower.
Moderna, the company fuelling Wall Street’s gains today, leapt almost 13 per cent higher after US markets opened this afternoon.
US stocks were helped by a sign that banks could perform well despite downbeat expectations. Goldman Sachs saw profit surge to beat predictions in its latest quarter, it revealed before the bell.
CEO David Solomon said Goldman’s core bond trading and underwriting division have helped see it through the economic storm of coronavirus.
“The problem for investment bank stocks is that the volatility of earlier in the year has not been replicated of late, and may not return for some time,” said Chris Beauchamp, IG’s senior market analyst.
“As a result, with other divisions struggling, [Goldman’s] stock may struggle to make much further headway in the short-term.”
Optimism outweighs despair on stock markets
Investors are being pulled in two different directions by economic data and coronavirus itself.
The US is still regularly breaking records for daily new cases, causing states such as California to roll back reopening plans. Hong Kong has also said it will shut schools amid new outbreaks.
Yet the lifting of coronavirus restrictions around the world has boosted economies. And investors are largely choosing to focus on the positives, pushing the FTSE 100 to 25 per cent above its March lows and the US’s S&P 500 up 42 per cent.
The pound gained 0.55 per cent against the dollar, hitting $1.2621 as investors sold the greenback as stocks rose. The euro climbed 0.1 per cent to $1.142.
Oil prices rise as demand grows
WTI and Brent were higher today even after Opec announced plans to ease production cuts.
Since May, the wider alliance of Opec members and key players such as Russia have been cutting oil output by 9.7m barrels per day, nearly a tenth of global production, in response to flatlining demand caused by the coronavirus pandemic.
The latest EIA report helped the market which showed that US oil and gasoline inventories fell by 7.49m barrels and 3.14m barrels respectively, suggesting higher demand.
“Like equities oil prices have struggled to clear recent highs, but if the demand narrative continues to grow stronger then it looks like the rally in prices since April may have further to go,” said Beauchamp.
“Such a development would be good news for the FTSE 100, which has seen its heavyweight oil and gas sector act as a drag on performance in recent months.”