(Alliance News) - Stock prices in London were higher at midday on Monday as investors cheered coronavirus vaccine progress and the promise of looser lockdown restrictions.
UK Prime Minister Boris Johnson will set out plans for a strengthened three-tier system of regional coronavirus restrictions to replace the national lockdown in England and to pave the way for a limited relaxation at Christmas.
The PM is to detail his winter strategy on Monday afternoon, with a proposal to deploy a major testing scheme in an attempt to win over rebels on the Conservative backbenches.
It is understood that he will tell MPs that non-essential shops can open in all three tiers after the current restrictions expire on December 2, in a boost for retailers during the festive period.
The FTSE 100 index was up 7.72 points, or 0.1%, at 6,359.17 on Monday. The mid-cap FTSE 250 index was up 77.57 points, or 0.4%, at 19,584.53. The AIM All-Share index was up 0.2% at 1,033.50.
The Cboe UK 100 index was up 0.2% at 633.15. The Cboe 250 was up 0.6% at 16,972.89, and the Cboe Small Companies up 1.1% at 11,396.50.
In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 was up 0.8% early Monday afternoon in Frankfurt.
"UK stocks are on the rise ahead of a government announcement to reopen much of the UK economy once the nationwide lockdown ends on 2 December. Coming into a critical festive period for retailers, the decision to reopen non-essential stores could help stave off collapse for some of the hardest-hit firms. However, with mass adoption of the vaccine still some way off, there are many who will question whether Johnson's latest plan will simply spark a third wave without having allowed the second to fully subside. Nevertheless, from a market perspective, we are seeing money flow into value once more, with energy, travel, and financial stocks heading up the FTSE 100," said IG Group's Josh Mahony.
AstraZeneca said clinical trials in the UK and Brazil showed the AZD1222 vaccine was highly effective in preventing Covid-19.
The Anglo-Swedish drugmaker, which is partnering with Oxford University, said no hospitalisations or severe cases of the disease were reported in participants receiving the vaccine. There were a total of 131 Covid-19 cases in the interim analysis, but AstraZeneca did not comment on the effects of the vaccine by age group.
AstraZeneca said one dosing regimen showed vaccine efficacy of 90% when AZD1222 was given as a half dose, followed by a full dose at least one month apart. Another dosing regimen showed 62% efficacy when given as two full doses at least one month apart. The combined analysis from both dosing regimens resulted in an average efficacy of 70%.
In addition, the Cambridge-based drugmaker said it is making "rapid progress" in manufacturing, with a capacity of up to 3 billion doses of the vaccine in 2021 on a rolling basis, pending regulatory approval. The vaccine can be stored, transported and handled at normal refrigerated conditions, comprising 2 to 8 degrees Celsius or 36 to 46 degrees Fahrenheit, for at least six months and administered within existing healthcare settings.
UK Health Secretary Matt Hancock told Sky News that the UK has "100 million doses on order and should all that go well, the bulk of the rollout will be in the new year".
Two other leading vaccine candidates - one by Pfizer and German partner BioNTech and another by US firm Moderna - have been shown to be 95% effective in trials, and Pfizer has already applied for emergency use approval from US health authorities. US Food & Drug Administration vaccine advisors will meet on December 10 to discuss approval.
The beginning of vaccinations could be a crucial shift in the battle against a virus that has claimed more than 1.4 million lives worldwide, including 255,000 just in the US, since emerging from China late last year.
AstraZeneca shares were down 1.5% in London, but are up 7.7% so far in 2020.
"In relative terms one can understand why AstraZeneca's result only triggered a shrug of the shoulders from investors. However, a 70% result is still positive for helping society return to normal, and there are significant cost and storage benefits with the AstraZeneca jab," said AJ Bell's Russ Mould.
In the FTSE 100, travel-related stocks were rising amid the positive vaccine news.
British Airways parent International Consolidated Airlines was the best performer, up 5.5%, and jet engine maker Rolls-Royce was up 3.8%.
Oil majors were in the green, with BP, Royal Dutch Shell 'A' and 'B' shares, up 3.4%, 3.6% and 3.3% respectively, tracking spot oil prices higher.
Brent oil was quoted at USD45.85 a barrel Monday morning, sharply higher from USD44.00 late Friday. The North Sea benchmark was trading at around its highest levels since early September.
"Stocks started the week in green in the early trading. In this still 'risk on' scenario, the oil price is extending its gains. Investors are betting on the efficacy of the vaccine and with it, slowing numbers of coronavirus cases within a few months. These expectations - which of course will need to be confirmed later this winter - come in conjunction with expectations that OPEC+ will renew its current cuts in December," explained analysts at ActivTrades.
At the other end of the London large-cap stocks, United Utilities was down 1.2% after RBC Capital downgraded the water company to Sector Perform from Outperform.
In the FTSE 250, Cineworld Group was the standout performer, up 19% after the cinema chain said it has secured "significant additional liquidity", on top of further operational measures which it hopes will deliver "enhanced profitability over the long term".
Cineworld has agreed the terms of a new USD450 million three-year non-call facility, which matures on May 23, 2024. After accounting for the new debt facility, Cineworld will have aggregate gross debt financing of USD4.9 billion with a weighted average interest rate of approximately 4.5%.
The new debt facility also includes some financial and operating covenants and entitles the lenders to appoint a board observer. Cineworld has secured a waiver of all bank financial covenants until June 2022. It also has extended maturity of its USD111 million incremental revolving credit facility to May 2024 from December 2020.
The dollar was lower against major counterparts amid the risk-on market sentiment.
The pound was quoted at USD1.3341 at midday Monday, up from USD1.3284 at the London equities close Friday.
The euro was priced at USD1.1902, up from USD1.1861. Against the yen, the dollar was trading at JPY103.70, lower from JPY103.82 late Friday.
Gold was quoted at USD1,868.11 an ounce at midday, down from USD1,874.10 late Friday, as demand for the safe-haven precious metal waned.
On the economic front, business sector activity in the UK shrank as the services industry was hurt by tighter coronavirus restrictions, the latest figures from IHS Markit showed. England has been in lockdown since November 5, with all pubs, restaurants and non-essential retailersordered to close.
The flash UK services business activity index reading was 45.8 in November, down from 51.4 in October. November's score fell below the 50.0 mark which separates expansion from contraction and was the lowest level for six months.
The flash UK manufacturing purchasing managers' index print was 55.2 in November, up from 53.7 in October. The latest figure beat market forecasts, cited by FXStreet, for 50.5 and was a two-month high. Manufacturers were allowed to continue production during the current lockdown in England.
The flash UK composite PMI score was 47.4 in November and pointed to the sharpest downturn in overall business activity since May. The composite reading slipped into contraction territory after registering 52.1 in October.
"While we shouldn't read too much into the latest PMI levels when assessing the impact of fresh lockdowns, they do indicate that the latest restrictions are unlikely to be quite as devastating for UK GDP as in the spring. We expect a 6-7% decline in GDP during November," said analysts at ING.
On the continent, eurozone business activity fell sharply in November, IHS Markit said, as countries introduced more aggressive measures to counter rising coronavirus infections.
The flash IHS Markit eurozone composite purchasing managers' index slumped to 45.1 in November from 50.0 in October, hitting its lowest since May. The composite index comprises the flash eurozone services PMI activity index, which came in at 41.3 in November versus 46.9 in October, and the flash eurozone manufacturing PMI output index, which was at 55.5 in November from 58.4 in October.
The deteriorating performance was broad-based, though with the service sector hardest hit from virus containment measures. Service sector output fell for a third month running, with the rate of decline accelerating sharply to the fastest since May.
Meanwhile, manufacturing output growth merely slowed in November to the lowest since the start of the sector's recovery back in July, attributable to a marked slowing in order book growth.
US stock market futures were pointed higher on the hopes that a coronavirus vaccine will be rolled out as soon as next month.
The Dow Jones Industrial Average was called up 0.7%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.4%.
The US could begin its own vaccination program as soon as next month, raising hopes of a looming end to the pandemic in the world's worst-hit nation.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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