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Stocks soar on Pfizer’s vaccine breakthrough

Counting on a new drug

An announcement from Pfizer and its German partner BioNTech that its Covid-19 vaccine provided 90% protection against the virus sent global markets into a buying frenzy, pushing indexes to some of their biggest ever one-day gains.

Wall Street picked up the baton from Europe with the S&P 500 ending higher but just shy of a record 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.

The FTSE 100 index was expected to fall today as investors take some profits from yesterday’s surge.

IG Index saw the index opening around 80 points lower at 6116.2, a 1.3% reversal of yesterday’s gains. Travel, leisure, pubs, restaurants and other hospitality stocks are among those likely to pull back.

Wall Street is also likely to see a reversal after the Dow Jones Industrial Average rose 2.95%, the S&P 500 gained 1.17%, while the Nasdaq Composite fell 1.53% as tech firms found themselves among the losers.

Japan’s Nikkei 225 rose 1.1% after reaching a 29-year high in early trade and Australia’s S&P/ASX 200 rose 1.6%.

The FTSE 100 hit a day high of 6258.31 before closing 276.27 points (4.67%) higher at 6,186.29, adding £70 billion to the value of shares. The price of oil also rose by as much as 7% amid hopes that a working vaccine will boost demand for travel and wider economic activity. Brent Crude was trading 5.7% higher this morning at $41.96.

The main beneficiaries were those stocks expected to benefit from any easing of restrictions, though analysts cautioned that the impact of the vaccine will not be immediate and will take time to be applied worldwide.

Investors switched into bombed out stocks from firms supplying hygienic products, videoconferencing and delivery services. Shares in Ocado (down 11.5%) and Zoom (down 17.4%) fell sharply as so-called ‘stay-at-home’ stocks collapsed.

Beleaguered Rolls-Royce soared 43.8% while all five oil majors were up by around 12%, and Total and BP were 15% higher after being squeezed hard by the slowdown in economic activity.

Airlines and travel firms were also higher – British Airways owner IAG surged 25% while Ryanair jumped 16% – but firms at the testing stage of the virus were among those who were hit as demand for their kit may weaken.

In Japan Qantas Airways gained 8.6% to hit its highest level since March. Japan Airlines was 17.6% higher and ANA Holdings rose 16.4%.

In Hong Kong, Cathay Pacific Airways shares jumped 14.9%, the best since July.

Pfizer and its partner BioNTech described the breakthrough as a “great day for science and humanity”.

Their vaccine has been tested on 43,500 people in six countries and no safety concerns have been raised.

The companies plan to apply for emergency approval to use the vaccine by the end of the month.

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“I’m near ecstatic,” Bill Gruber, one of Pfizer’s top vaccine scientists, said in an interview. “This is a great day for public health and for the potential to get us all out of the circumstances we’re now in.”

Pfizer and BioNTech have a $1.95 billion contract with the U.S. government to deliver 100 million vaccine doses beginning this year. They have also reached supply agreements with the European Union, the United Kingdom, Canada and Japan.

Pfizer said it expects to produce up to 1.3 billion doses of the vaccine in 2021.

Pfizer shares were indicated 6% higher in New York, while BioNTech’s US stock leapt 18%.

Shares of other COVID-19 vaccine developers that are in the final stage of testing also reacted with AstraZeneca rising 0.5% in London while Johnson & Johnson gained 2.6%.

Laith Khalaf, financial analyst at AJ Bell offered a cautious note, saying: “While the tremendous vaccine result is likely to underpin markets from here, investors shouldn’t be too gung-ho with their portfolios.

“Many stock prices have jumped in response to the news already, and so already reflect an improved outlook. Often the initial knee-jerk response of markets to big events, positive or negative, is an over-reaction which is tempered over time.

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“The vaccine result clearly raises hopes that a return to normality is within touching distance, and while that is extremely positive for markets and businesses, we should be mindful that the economic impact of the pandemic is still being felt around the globe.”

Nigel Green, the chief executive and founder of deVere Group, said: “The vaccine development reports are, obviously, an important step in the right direction. 

“However, I suspect the markets – which are already in a bullish mood due to the incoming Biden administration – are overthinking the positive vaccine news. They are being premature in their buoyancy.”

Despite the warnings to be cautious, the news helped boost stock markets which were already rallying on the back of Joe Biden’s victory in the US presidential elections. 

“Even though Donald Trump has not yet conceded, markets have taken Joe Biden’s election victory to be a done deal which gives another leg up to global equities,” said Russ Mould, investment director at AJ Bell.

“Investors are buying tech stocks again in the belief that there would be gridlock in Congress and so Biden would find it hard to push through punitive tax measures that could have hit the tech sector.

“Tech is also one of the few places where there is expected to be sustained earnings growth at a time when economies are under pressure from the pandemic.

“Mining shares are also in demand in the belief that Biden would have a more predictable trade policy and that some tariffs on Europe and China could be rolled back, thus benefiting the commodities market.”



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