Monday 16 November 2020 3:00 pm

Wall Street and European markets cheer highly effective Moderna vaccine

Wall Street followed the FTSE 100 up today following news from US drug firm Moderna that its coronavirus vaccine proved to be almost 95 per cent effective in early testing.

The Dow Jones Industrial Average is up 1.1 per cent this afternoon while the S&P 500 gained 0.85 per cent.

London’s main stock index jumped 1.8 per cent to 6,429 points, its highest level since June.

Read more: Moderna vaccine prevents 94.5 per cent of coronavirus, but the UK hasn’t ordered any doses

The FTSE 250 soared 1.8 per cent higher as well.

Leisure stocks such as Whitbread and British Airways-owner IAG were among the biggest gainers.

The Europe-wide Stoxx 600 rose 1.4 per cent while Germany’s Dax climbed one per cent. US stocks were set to open sharply higher, according to futures prices.

Moderna said its experimental vaccine was 94.5 per cent effective in preventing Covid-19 according to early data from a late-stage trial.

It comes a week after drug firms Pfizer and Biontech announced that their vaccine had been more than 90 per cent effective according to trials.

Both groups will now apply to regulators for emergency use authorisation. The vaccines could mean a return to normal life in 2021, a prospect that has massively cheered markets.

Investors were already riding high on the back of Pfizer’s announcement last week. The FTSE 100, for example, was up around 13 per cent for the month even before the Moderna announcement.

FTSE 100 boosted by vaccine ‘reflation trade’

The announcement by Moderna has accelerated some of the trends seen in markets over the last week. 

Most notably, unloved sectors such as aviation and finance – which stand to gain most from a return to normality – have surged. Meanwhile, the tech companies that fared so well during Covid have slipped.

Read more: Cineworld shares soar on Moderna coronavirus vaccine breakthrough

“Visibility towards a return to normality is increasing,” said Seema Shah, chief strategist at Principal Global Investors. “This should provide more fuel to the ‘reflation rally’, with small caps, value and cyclicals clear beneficiaries.”

On the FTSE 100, British Airways-owner IAG skyrocketed by 10.5 per cent. It has gained an enormous 65 per cent since the start of November.

Jet engine-maker Rolls Royce was close behind, jumping nine per cent. Intercontinental Hotels rose seven per cent.

Financial groups and oil companies also surged. Standard Chartered, HSBC and Lloyds all rose more than four per cent. BP and Shell were also among the biggest risers as oil prices climbed.

However, investors sold companies that have surged during the pandemic. Zoom’s shares were down five per cent in pre-market trading, for example, while online UK supermarket Ocado shed four per cent.

Read more: Airline stocks take flight again on Moderna vaccine success

Fawad Razaqzada, market analyst at Think Markets, said: “Investors are showing increased appetite to position themselves for value stocks and other assets that rely on economic recovery.”

He also pointed out that gold was tumbling, having been bid up amid massive monetary stimulus and economic uncertainty. Safe haven assets such as the dollar and government bonds also slipped.