European shares surge on Moderna vaccine optimism

European shares ended at a more-than-eight-month high on Monday as positive data from Moderna's Covid-19 vaccine boosted investor confidence in a faster pace of economic revival, while signs of recovery in Asia also helped.

Moderna became the second drugmaker in a week to report high efficacy for an experimental coronavirus vaccine after Pfizer made a similar announcement on November 9th.

"The more companies that can develop a vaccine candidate that can be shown to be effective, the more optimistic investors will be about being able to see a way out of this pandemic and for economic activity, sort of come back to some semblance of normality," said Michael Hewson, chief market analyst at CMC Markets.

The pan-European Stoxx 600 ended 1.3 per cent higher with oil stocks leading gains on the back of a 4 per cent jump in oil prices, while banks rose 3.1 per cent, led by Spanish lender BBVA.

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Vaccine focus drives Asian stocks to record highs

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European shares close 2% higher after choppy start

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BBVA ended 16 per cent higher and was one of the top three performing stocks on the STOXX 600 index after PNC Financial Services Group said it would buy its US business for $11.6 billion in cash.

DUBLIN

The Iseq rose by a lacklustre 0.8 per cent, under-performing the buoyancy in other markets. Bank of Ireland and AIB were the chief beneficiaries of the more positive economic outlook, rising by 6.5 per cent and 4 per cent respectively. News that the another workable vaccine was in train also boosted hotel group Dalalata,which rose by 7 per cent to €3.45. Ryanair was lifted but only by 1.1 per cent.

Insulation group Kingspan, however, fell after reporting a 5 per cent decline in sales for the first nine months of the year and saying it expects its full year trading profit to be marginally ahead of last year. The company's shares closed 4 per cent down at €76.50. Paddypower Betfair owner Flutter also weighed on the main index, closing 3 per cent down at €146.20.

Iseq heavyweight CRH rose by 2.3 per cent amid a better outlook for the global construction industry.

LONDON

British stocks jumped on Monday as positive vaccine data from drugmaker Moderna bolstered hopes of a swift economic recovery to pre-pandemic levels, offsetting concerns over a post-Brexit trade deal with the European Union.

The blue-chip FTSE 100 index closed 1.7 per cent higher, after Moderna reported its experimental vaccine is 94.5 per cent effective in preventing Covid-19 based on interim data from a late-stage trial. Pfizer and German drugmker BioNTech made a similar announcement on November 9th.

British drugmaker AstraZeneca, which is yet to release results from its late-stage vaccine trials, fell 1 per cent. The domestically focused mid-cap FTSE 250 index ended 1.8 per cent higher, with cinema operator Cineworld Group jumping 13.5 per cent to the top of the index. The wider travel and leisure sub-index gained 3.2 per cent. Vodafone Group surged 6.9 per cent, after saying it was increasingly confident about its full-year performance, while tech firm Smiths Group rose 4.8 per cent, after highlighting a £30 million cost-saving target for FY21. Companies that have benefited from people staying home during the pandemic, such as Rentokil Initial, Just Eat Takeaway. com and Ocado Group, tumbled between 3.3 per cent and 4.1 per cent.

EUROPE

The benchmark STOXX 600 has gained nearly 40 per cent from its March lows and is on track for its best month in nearly three decades. But the economic disruption arising from a spike in coronavirus cases across Europe has led the index to underperform its US peers this year.

European Central Bank vice president Luis de Guindos asked euro zone banks on Monday to keep using their capital buffers to absorb losses without holding back credit to the real economy, which, he said, needs time to rebound from a pandemic-induced recession.

"The market has already priced in such vaccine news as there is still a long way for the vaccine to be completely developed and for economies to genuinely recover," said Keith Temperton, a sales trader at Forte Securities.

Data showing that China’s factory output rose faster than expected in October and that retail sales surged had helped sentiment earlier in the day.

In company news, Italy's Nexi jumped 0.5 per cent after it struck its second tie-up in six weeks, agreeing a €7.8 billion merger with Nordic rival Nets to create Europe's largest payments group.

US

The Dow hit a record high on Monday after Moderna became the second US company in a week to report positive results from its Covid-19 vaccine trial, raising hopes of a quicker economic recovery from a pandemic-led recession. Moderna soared 7.7 per cent as it said its experimental vaccine was 94.5 per cent effective in preventing Covid-19 based on interim data from a late-stage trial.

The Nasdaq's rise was limited as investors sold some of this year's "stay-at-home" winners such as Amazon , Netflix and Zoom Video Communications.

The S&P 500 and the Dow headed for record closing highs, building on gains from last week after a similar vaccine-related update from Pfizer brightened the economic outlook and sparked a rotation into cyclical and value shares.

Travel-related stocks including United Airlines Holdings , American Airlines Group, Carnival Corp and Norwegian Cruise Line Holdings, which have lost more than half their market capitalisation this year due to the pandemic, jumped between 5 per cent and 11.4 per cent. – Additional reporting: Reuters