(Alliance News) - Stock prices in Europe surged on Monday amid optimism fuelled by the promise of vaccine rollouts, while the FTSE 100 got additional impetus from M&A news and a bullion price boost for gold miners.
The FTSE 100 index was up 182.99 points, or 2.8%, at 6,643.51 at midday on Monday. The blue-chip stock measure was up sharply despite a rising pound, which reduces the sterling value of the overseas earnings of index constituents.
"The FTSE 100 started 2021 with a bang. Surging more than 2% higher and closing on the 6,700 mark amid M&A news and confirmation that roll-out of the AstraZeneca coronavirus vaccine will commence today," AJ Bell Investment Director Russ Mould said.
The mid-cap FTSE 250 index was up 243.34 points, or 1.2%, at 20,731.64. The AIM All-Share index rose 0.7% to 1,165.21.
The Cboe UK 100 index surged 2.7% to 661.34. The Cboe 250 was up 0.7% at 18,106.68, and the Cboe Small Companies up 0.3% to 11,773.30.
The FTSE 100's bumper gains came despite the pound reaching a multi-year high against the dollar, briefly crossing USD1.37. Cable hit an intra-day high of USD1.3702.
At midday, the pound was quoted at USD1.3677 on Monday in London, improved from USD1.3656 at the London equities close on Thursday.
London's blue-chip index is laden with globe-spanning, dollar earners.
Elsewhere in forex, the euro rose to USD1.2295, up from USD1.2272 on Thursday. Against the yen, the dollar was trading at JPY102.82, down from JPY103.06.
Dollar weakness was helping to lift commodity prices, noted IG Senior Market Analyst Joshua Mahony.
"Dollar weakness has been seen throughout the FX market as traders prepare for a year of economic recovery. However, while the likes of gold and silver are often seen as havens, they often perform best in the years following a crisis as highlighted by the 2009-11 bull-run," Mahony added.
"For investors this rise in precious metal prices provides a fresh round of buying for the likes of Polymetal and Fresnillo, with the miners providing the benefits of both reflecting underlying prices while also paying dividends."
Fresnillo shares were 9.8% higher midday Monday, while Polymetal climbed 6.6%. Over in New York, Barrick Gold was 4.7% higher in pre-market trade.
Gold surged to USD1,936.45 an ounce, from USD1,894.00 at the London equities close on Thursday.
Share price gains in London also came despite the looming threat of a third national lockdown in England as the UK struggles with a new variant of Covid-19.
UK Health Secretary Matt Hancock has refused to rule out another lockdown amid concerns the new variant is spreading out of control.
He told Sky News: "We don't rule anything out, and we've shown repeatedly that we will look at the public health advice and we will take the public health advice in terms of what is needed to control the spread of the disease."
Gambling firm Entain was comfortably the best large-cap performer, however, rising 29% in the wake of confirming a takeover approach from US partner MGM.
The Ladbrokes Coral-owner said: "Under the terms of its most recent proposal, MGMRI would offer 0.6 MGMRI shares for each Entain share. Based on closing prices on 31 December 2020, being the last trading day prior to this announcement, MGMRI's proposal represents a value of 1,383 pence per Entain share and a premium of 22% to Entain's share price."
Entain shares were trading at 1,456.50p on Monday, following the announcement, valuing the company at GBP8.51 billion. At the close of play on Thursday, Entain was valued at GBP6.63 billion.
The company said Entain shareholders would own just shy of 42% of the enlarged firm under the terms of the offer.
Entain, however, said it told MGM the bid "significantly undervalues the company and its prospects".
The news comes after London-listed peers of Entain have received interest from the US or have moved to boost their exposure in the lucrative gambling market there.
"In 2018, America repealed 1992's Professional and Amateur Sports Protection Act to effectively legalise betting on sports beyond the borders of Nevada by giving individual states the ability to tax and regulate this activity themselves," AJ Bell Investment Director Russ Mould noted.
MGM shares were slightly lower in pre-market trade in New York.
Elsewhere in London, Tesco rose 2.5% after Barclays resumed coverage of the grocer at Overweight. On Tuesday, research firm Kantar will report its latest grocery market share figures for the 12 weeks ended December 27, which includes the lucrative Christmas trading period.
British Airways owner International Consolidated Airlines Group rose 1.6%, after Citigroup raised the stock to Buy from Neutral. Fellow carrier easyJet was cut by Citi to Sell from Neutral, its shares still rose 0.1% in the FTSE 250 amid the overall vaccine enthusiasm.
In other travel news, Anglo-German tour operator is preparing for a return to normality this summer, Executive Chair Fritz Joussen said in an interview with German newspaper Rheinische Post on Saturday.
Joussen said the rollout of Covid-19 vaccines will make travel restrictions unnecessary by the summer. He also noted that the company's market research has found that there is still big demand for travel, despite Covid-19 concerns.
Tui shares were 8.0% higher, the best among London mid-caps.
On the AIM market, Tiziana Life Sciences rose 11% after the biotechnology firm said it has concluded a clinical study investigating nasally administered Foralumab in Covid-19 patients in Brazil.
Ahead of the topline data, set to released in January, Tiziana said the treatment was "well-tolerated".
"Because COVID-19 enters through the nasal and respiratory passage, the proprietary nasal formulation and nasal delivery of Foralumab is an innovative approach to provide immediate relief to COVID-19 patients," the company said.
In European equities, the CAC 40 in was up 1.7%, while Frankfurt's DAX 30 climbed 1.3%.
The French index got a boost from PSA Group, which surged 2.4% on Monday. The automaker's shareholders voted Monday to approve a merger with the US-Italian group Fiat Chrysler, a move that catapults the new company, 'Stellantis', into the fourth position of the world's carmakers by volume.
Approval for the three merger resolutions tabled at PSA's annual shareholder meeting – held online – was nearly unanimous, PSA chief Carlos Tavares said.
In Milan, Fiat Chrysler was up 2.0%. Its shareholders vote this afternoon.
On Wall Street, the Dow Jones Industrial Average and the S&P 500 are both called 0.6% higher. The Nasdaq Composite is called up 0.4%.
"Tuesday sees the Senate runoff elections in Georgia, a pair of races arguably as important as the nationwide vote. For tomorrow's winners will dictate whether the Democrats or Republicans take control of the upper chamber, and therefore have huge implications for the Biden administration's ability to get things done. And for the markets, that means further Covid-19 stimulus," Spreadex analyst Connor Campbell said.
"Assumedly the Dow Jones is after victories for Democrats Jon Ossoff and Raphael Warnock. That would result in a 50:50 split in the Senate (2 independents caucus with the Democrats), allowing Vice – and upper chamber – President Kamala Harris to cast the deciding vote, freeing Biden to more aggressively follow his agenda."
Still to come on Monday's economic calendar is US manufacturing PMI data at 1445 GMT.
In data already out, UK's manufacturing sector registered its best performance in more than three years in December helped Brexit stockpiling IHS Markit said, though the industry was later hit by port delays and a slip in optimism.
The seasonally adjusted IHS Markit/CIPS purchasing managers' index rose to 57.5 in December, from 55.6 in November. Any number above 50.0 denotes expansion, and a number below says the industry is in contraction territory.
The manufacturing survey was taken before border closures.
Much of Europe swiftly banned British travellers and UK freight entering their nations after the discovery of a more transmissible variant of Covid-19 in Britain. Dramatic images in December showed hundreds of lorries backed up in the port of Dover.
Brent prices were higher on Monday ahead of a meeting of OPEC and other major producers later in the day to decide February output levels.
A barrel of the North Sea benchmark fetched USD52.60, up from USD51.10 at the London equities close on Thursday.
By Eric Cunha; ericcunha@alliancenews.com
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