LONDON MARKET CLOSE: Astra And Moderna Vaccine News Push Stocks Up

Wed, 15th Jul 2020 17:16

(Alliance News) - Stocks in London ended Wednesday firmly in the green as sentiment was boosted from positive news from test trials of potential Covid-19 vaccines.

The FTSE 100 index added 112.90 points, or 1.8%, to 6,292.65. The mid-cap FTSE 250 index closed up 245.86 points, or 1.4%, at 17,420.55. The AIM All-Share index ended up 8.92 points, or 1.0% at 875.47.

The Cboe UK 100 index closed up 2.1% at 628.11. The Cboe 250 added 1.6% to 14,767.44, and the Cboe Small Companies closed up 0.2% at 9,172.68.

In mainland Europe, the CAC 40 in Paris advanced 2.0%, while the DAX 30 in Frankfurt added 1.8%.

Oanda Edward Moya commented: "Global stocks continue to rally on encouraging incremental vaccine news. Hope is sky high that a vaccine will be in place by the end of the year and that is driving the reopening trade again."

"Stocks are riding both Moderna's human trial data news and press reports that AstraZeneca will have positive news with their vaccine by tomorrow," Moya continued.

Hopes rose when US biotech firm Moderna said late Tuesday that it will start the final stage of human trials for its vaccine candidate later this month after promising results from earlier testing. The vaccine produced antibodies in all 45 patients who received two injections 28 days apart in March, said the study published in the New England Journal of Medicine.

Adding to this, positive news on initial trials of the University of Oxford's potential Covid-19 vaccine that has been licensed to AstraZeneca could be announced as soon as Thursday, according to ITV.

The project has started Phase III of the human trials to assess how the vaccine works in a large number of people over the age of 18, but has yet to report Phase I trial results.

"I am hearing there will be positive news soon (perhaps tomorrow) on initial trials of the Oxford Covid-19 vaccine that is backed by AstraZeneca," ITV's Robert Peston said in a blog post on Wednesday.

Astra advanced 5.2% in London on Wednesday. Travel stocks reacted positively to the news too, with Carnival and International Consolidated Airlines both gaining 11% and easyJet adding 6.4%.

The DJIA was up 0.9% at the London equities close, the S&P 500 index up 0.8%, and the Nasdaq Composite was up 0.4%.

"Global equities are acting like a vaccine put is in place. Vaccine progress is helping traders look beyond all the negative coronavirus and US-Chinese tensions headlines. A vaccine put is essentially in place until we get the critical phase 3 updates which haven't even started yet," Oanda's Moya said.

Back in London, Ocado added 6.6%, regaining the 2.2% loss from Tuesday. The online grocer, on Tuesday, said it delivered a strong performance considering the challenging times created by the Covid-19 pandemic.

For the half-year ended May 31, Ocado's pretax loss narrowed to GBP40.6 million from GBP147.4 million a year before, as revenue increased to GBP1.09 billion from GBP882.3 million. Ocado said the coronavirus crisis has significantly accelerated the ongoing shift by consumers to online grocery.

Looking ahead, Ocado said there is a positive outlook for online grocery, but it has suspended its Retail revenue growth forecast given uncertainties over the scale and duration of social distancing restrictions in the UK.

3i Group added 5.2% after Exane BNP started coverage on the private equity investor with an Outperform rating.

At the other end of the blue chip index, Burberry lost 5.6% - the worst performer - after the fashion house said sales in the first quarter took a severe hit, as demand for luxury goods was dealt a blow due to the coronavirus pandemic.

For the period ending June 27, retail revenue was down 48% to GBP257 million from GBP498 million in the first quarter of 2019. Comparable sales declined 45% in the first quarter, but eased to a 20% decline in the month of June as lockdown restrictions became less stringent.

The luxury retailer expects the second quarter to end of September to continue to suffer from the pandemic. In retail, it said, tourist flows are likely to remain negligible, and store operations are continuing to face significant pressures, with some remaining closed and operating with reduced trading hours.

Burberry expects retail sales performance to decline by 15% to 20% in the second quarter. In wholesale, it is collaborating with partners to protect the brand and as a result, anticipates first-half sales to fall around 40% to 50%.

It added that it expects its first-half gross margin to decline by between 200 and 300 basis points annually, but operating expenses to be cut by "mid-teens percentage".

BT Group gave back 1.9% but UBS reiterated its Neutral rating for the firm saying the UK government's decision to ban Huawei from the country's 5G networks removes an overhang weighing on the telecom stock.

BT said Tuesday the UK government's move to remove Chinese tech giant Huawei from the country's 5G network will cost about GBP500 million.

The UK on Tuesday bowed to growing US pressure and ordered the phased removal of Chinese telecoms giant Huawei from its 5G network despite warnings of retaliation from Beijing. The policy reversal hands a long-sought victory to US President Donald Trump's administration in its geopolitical tug-of-war with China.

The politically-fraught change in Britain's digital future was made by UK Prime Minister Boris Johnson during a meeting with his cabinet and National Security Council. It requires companies to stop buying new 5G equipment from Huawei starting next year and strip out existing gear by the end of 2027.

UBS analyst Polo Tang said that while a Huawei swap-out will lead to incremental capital expenditure, the impact is largely captured in existing estimates for most of the UK operators and there has already been significant news flow on the issue in recent weeks. Further, the analyst thinks clarity on the issue removes an "overhang for the UK names, particularly for BT".

In the midcaps, Hochschild Mining added 13%. The gold miner said that second-quarter and first-half production was impacted by the Covid-19 pandemic, but the company expects to restart operations at the Inmaculada mine in Peru by next week.

Hochschild, which also operates mines in Argentina, said attributable gold production in the six months to June 30 fell to 79,073 ounces from 138,080 ounces a year ago. Silver production fell to 4.1 million ounces from 8.7 million ounces.

For the second quarter, attributable gold production declined to 19,647 ounces from 70,660 ounces. Silver output fell to 1.1 million ounces from 2.9 million.

Hochschild Mining said its operations are currently halted due to a number of cases of Covid-19 with a reduced workforce performing care and maintenance activities. The Inmaculada mining team is expected to remobilise during the week starting July 20 and is scheduled to reach full production by the end of July.

Sitting at the bottom of the FTSE 250, electrical retailer Dixons Carphone lost 9.4%. Dixons decided against issuing guidance for financial 2021 due to the "high levels of uncertainty" created by the Covid-19 pandemic, but warned that its mobile phones business will be hurt by the virus outbreak.

Dixons Carphone reported a narrowed pretax loss for the financial year that ended May 2 of GBP140 million compared with a GBP259 million loss a year ago.

Adjusted pretax profit fell 51% to GBP166 million from GBP339 million due to a poor performance from its mobile phones business and Covid-19 related store closures.

The adjusted profit figure was GBP44 million below the company's guidance reiterated in January.

The pound was quoted at USD1.2604 at the London equities close Wednesday, up from USD1.2547 at the same time Tuesday.

The euro was changing hands at USD1.1419, up from USD1.1403 at the European equities close Tuesday. The single currency hit an intraday high of USD1.1444 against the greenback in early trade - its highest level in four months.

Against the yen, the dollar was trading at JPY106.88, down from JPY107.21 in London.

Brent oil was trading at USD43.42 a barrel Wednesday evening, up from USD43.10 at the London close Tuesday.

Oanda's Moya commented: "Crude prices jumped around following both the OPEC+ recommendation to slowly bring back some oil supplies and after the EIA crude oil inventory reported showed a much larger draw and some signs demand is improving."

Gold was quoted at USD1,809.00 an ounce, flat against USD1,808.60 late Tuesday.

Thursday's economics calendar is headlines by the European Central Bank rate decision at 1245 BST. Before that, there is second quarter China GDP print overnight and a UK ILO unemployment rate at 0700 BST. There is also a eurozone trade balance print at 1000 BST. Weekly US initial jobless claims are scheduled for a 1330 BST release.

In the UK corporate events calendar, mining giant Anglo American will issue half-year production figures, consumer credit reporter Experian will issue its first quarter results and recruiter Hays is scheduled to issue a trading statement.

By Paul McGowan; paulmcgowan@alliancenews.com