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(Alliance News) - Stocks in London started December on the front foot to close sharply higher on Tuesday, buoyed by a potential US fiscal stimulus proposal and hopes for a swift coronavirus vaccine rollout.
Worldwide hopes that Covid shots could be ready for use by the end of this year received a boost when US firm Moderna said it was filing Monday for emergency authorisation of its Covid-19 vaccine in the US and Europe.
Another vaccine developed by US pharma giant Pfizer and its German partner BioNTech has also been submitted for approval on both sides of the Atlantic in recent days, with both inoculations claiming around 95% effectiveness.
Pfizer and BioNTech predicted their vaccine could be greenlit in the US shortly after December 10, while Europe's medicines regulator said earlier Tuesday that it would decide by December 29 whether to them grant emergency approval, ahead of Moderna's treatment.
The FTSE 100 index closed up 118.54 points, or 1.9%, at 6,384.73. The mid-cap FTSE 250 index closed up 508.49 points, or 2.6%, at 19,844.81. The AIM All-Share index closed up 13.25 points, or 1.3% at 1,063.79.
The Cboe UK 100 index closed up 1.5% at 636.50. The Cboe 250 ended up 2.7% at 17,157.27, and the Cboe Small Companies finished up 1.4% at 11,446.93.
In Paris the CAC 40 ended up 1.1%, while the DAX 30 in Frankfurt ended 0.7% higher.
"FTSE gains have been led by a mix of precious-metal miners and value stocks, with banks, airlines, and housebuilders all on the rise. The latest housing data has provided yet another timely reminder of just how influential [chancellor] Rishi Sunak's stamp duty holiday has been, with prices up a whopping 6.5% over the year to November as people hope to push through their deals ahead of the March deadline," said IG Group's Josh Mahony.
In the FTSE 100, housebuilders ended in the green on the back of positive house price data.
UK house prices surged in November to post their fastest growth since the start of 2015, according to Nationwide's latest house price index.
House prices jumped 6.5% year-on-year in November, accelerating from growth of 5.8% in October to achieve the highest rate since January 2015. Month-on-month, house prices rose 0.9%, a touch faster than the 0.8% growth seen in October.
The average UK house price stood at GBP229,721 in November versus GBP227,826 in October.
Taylor Wimpey, Persimmon, Barratt Developments and Berkeley closed up 7.9%, 6.9%, 5.8% and 5.7%, respectively.
Banks were also in demand, with Lloyds, NatWest and Barclays closing up 7.5%, 6.5% and 6.6%, respectively. In banking sector news, Swiss lender Credit Suisse Group said it has chosen outgoing Lloyds Chief Executive Antonio Horta-Osorio to be its new chair.
Horta-Osorio will succeed Urs Rohner as chair of the Swiss bank's board of directors. Rohner became full-time chair in 2009 and will step down in 2021 once he has reached his statutory 12-year term.
Credit Suisse will propose Horta-Osorio's election to shareholders at its April 30 annual general meeting. His departure from Lloyds after 10 years at the helm was announced in June.
Lloyds on Tuesday said it has agreed for Horta-Osorio to depart the UK bank on April 30, so that he can take up the chair of Credit Suisse on May 1. Previously, he was intending to leave Lloyds by the end of June 2021.
JD Sports Fashion closed up 4.2% after the sportswear retailer confirmed that discussions with the administrators of Debenhams for a potential takeover of the troubled UK department store chain have been terminated.
JD Sports was the last remaining bidder for Debenhams, which has been in administration since April.
The move came hours after rival Arcadia Group, which runs brands including Topshop, Burton and Dorothy Perkins, confirmed that 13,000 roles are at risk after it fell into administration.
Stocks in New York were also starting December sharply higher following reports of a renewed push in Congress to pass a US economic stimulus bill.
The DJIA was up 1.3%, the S&P 500 index up 1.2% and the Nasdaq Composite up 0.8%.
In the latest developments, a group of Democratic and Republican lawmakers on Tuesday unveiled a USD900 billion relief bill proposal in an effort to restart stalled talks on Capitol Hill as coronavirus cases spike across the country.
The proposal includes funds to aid small businesses, an extension of beefed-up unemployment benefits and fiscal support to state and local governments. There would also be more funds for health care needs and rental assistance.
The leadership of the two parties in Congress have not held talks since before the election last month.
Politico and CNBC reported that US Treasury Secretary Steven Mnuchin and Speaker of the House Nancy Pelosi will have their first direct contact later Tuesday.
Republicans are pushing for a more narrow, targeted bill, worth several hundred billion dollars, while Democrats initially proposed over USD3 trillion in relief but have come down to USD2.2 trillion.
Testifying before the Senate Banking Committee, Federal Reserve Chair Jerome Powell warned that there was more pain ahead in the short term, particularly for lower-wage earners, women and minorities, who have been hit hardest by the economic downturn since March.
The dollar fell against major counterparts as the upbeat mood dampened is the buck's safe-haven appeal.
The pound was quoted at USD1.3425 at the London equities close, up from USD1.3343 at the close Monday.
The euro stood at USD1.2045 at the European equities close, sharply higher from USD1.1948 late Monday. Against the yen, the dollar was trading at JPY104.40, up from JPY104.27 late Monday.
"The euro strength has been a surprise for the market given the eco shock on COVID, but the price action in the pair is very likely being driven more by broad dollar weakness rather than any organic demand. With US real rates now at nearly -2% as Fed continues its accommodative policy the dollar weakness has been across the board and as long as risk-on flows remain it will likely continue to drift lower," said analysts at BK Asset Management.
On the economic front, the UK manufacturing sector went from strength to strength in November, IHS Markit data showed, with businesses gearing up to the Brexit transition period's year-end deadline.
The IHS Markit/Chartered Institute of Procurement & Supply purchasing managers' index rose to a near three-year high of 55.6 points in November, up from 53.7 in October. Any reading above the no-change mark of 50 indicates expansion, and the PMI has now signalled growth for six successive months.
Manufacturing production increased again in November, said IHS Markit, though the downturn in the consumer good sector continued with decreases in both production and new business.
On the continent, the eurozone manufacturing sector in November expanded slightly faster than initially thought, data showed, though the recovery still slowed from the month before.
The final eurozone manufacturing PMI came in at 53.8 for November, above the flash reading of 53.6 but below October's 54.8.
Brent oil was trading at USD47.23 a barrel at the equities close, down from USD47.75 at the same time Monday.
Gold was quoted at USD1,811.03 an ounce at the London equities close, up sharply from USD1,772.60 late Monday, amid dollar weakness.
The economic events calendar on Wednesday has Germany retail sales at 0700 GMT, eurozone unemployment data at 1000 GMT and US ADP employment change figures at 1315 GMT.
The UK corporate calendar on Wednesday has annual results from distiller Stock Spirits Group and respiratory protection equipment manufacturer Avon Rubber.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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