LONDON MARKET MIDDAY: AstraZeneca And Glaxo Give Markets Vaccine Lift

(Alliance News) - Stock prices in London continued to move higher at midday on Wednesday with sentiment supported by positive news on the progress of coronavirus vaccines.

The FTSE 100 index of large-caps was up 8.46 points, or 0.1%, at 6,525.11. The mid-cap FTSE 250 index was up 72.05 points, or 0.3%, at 20,762.26. The AIM All-Share index was up 0.5% at 1,195.77.

The Cboe UK 100 index was up 0.8% at 649.34. The Cboe 250 was up 0.3% at 18,303.31 and the Cboe Small Companies up 0.6% at 12,301.54.

In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt was up 1.4%.

UK drugmaker GlaxoSmithKline and German biopharmaceutical company CureVac announced a new EUR150 million collaboration to jointly develop next-generation mRNA vaccines for Covid-19, with the potential for a "multi-valent approach" to address multiple emerging variants in one vaccine.

Under the terms of the collaboration agreement, Glaxo will have exclusive rights to develop, manufacture, and commercialise the vaccine in all countries with the exception of Germany, Austria and Switzerland. It also will be the marketing authorisation holder for all countries other than Switzerland. Glaxo will make an upfront payment to CureVac of EUR75 million and a further milestone payment of EUR75 million, conditional on the achievement of specific milestones.

Further, Glaxo will also support the manufacture of up to 100 million doses of CureVac's first generation Covid-19 vaccine candidate CVnCoV in 2021. The stock was up 0.3%.

Glaxo also reported its 2020 results at midday. Sales totalled GBP34 billion, up 1% at reported currency rates and 3% at constant rates, while adjusted earnings per share were 115.9 pence, down 6% and 4%, respectively. Glaxo said this was in line with its prior guidance.

In more positive news on the vaccine front, the jab developed by AstraZeneca and the University of Oxford offers protection of 76% up to 12 weeks after a single dose and may reduce transmission by 67%, according to a new study.

After the second dose, vaccine efficacy from two standard doses is 82.4% with the three-month interval being used in the UK, researchers from the University of Oxford say. The data from the study, which has not yet been peer reviewed, supports the four to 12-week prime-boost dosing interval that many global regulators have recommended.

Analyses of positive coronavirus swabs in the UK population suggest the vaccine may have a substantial effect on transmission of the virus, with a 67% reduction in positive swabs among those vaccinated with the Oxford/AstraZeneca jab.

IG Group's Josh Mahony said: "This week sees a return to more normalised drivers of sentiment, with US stimulus, vaccinations, and the prospect of an economic recovery back at the forefront. News that the AstraZeneca vaccine appears to slow the transmission of the virus has been heralded as a significant breakthrough, with many fearing that it may simply lessen the chance of a deadly infection rather than completely stopping patients catching the virus at all.

"With the UK being so reliant upon the AstraZeneca vaccine, any good news for that particular jab has substantial consequences for the reopening prospects in this country."

In the FTSE 100, Vodafone was the best performer, up 4.7%, after the telecommunications firm said it returned to organic service revenue growth in its third-quarter, helped by a much stronger showing in Germany.

Total revenue in the quarter ended December 31 fell 4.7% to EUR11.20 billion from EUR11.75 billion a year earlier. The organic figure - which strips out the effects M&A activity and currency movements - was 0.4%.

Vodafone generates the bulk of its cash from service revenue, which includes monthly access charges, airtime usage and roaming. In the third quarter ended December, service revenue rose 0.4% on an organic basis. The organic service revenue figure is one that is closely eyed by analysts.

In Germany alone, service revenue rose 1.0% year-on-year on both an organic and reported basis to EUR2.91 billion.

Aviva was up 4.4% after Morgan Stanley upgraded the blue-chip insurer to Overweight from Equal Weight.

Taylor Wimpey and Persimmon were up 2.0% and 1.8% respectively after Barclays upgraded both UK housebuilders to Overweight from Equal Weight.

Elsewhere, shares in Dr Martens were trading at 449.55p, up 21% from the initial public offering price of 370p. The iconic boot maker said its entire share capital has begun trading on London's Main Market on Wednesday, with a market value of around GBP4.5 billion. This puts Dr Martens easily in contention for a spot in the FTSE 250 index of mid-caps.

The pound was quoted at USD1.3642 on Wednesday at midday, flat from USD1.3644 at the London equities close Tuesday, but retreating from an intraday high of USD1.3684 after disappointing UK economic data.

UK services sector activity fell sharply in January due to stringent lockdown measures, but optimism improved on hopes for a swift rollout of Covid-19 vaccines, IHS Markit said.

The IHS Markit/CIPS UK services purchasing managers' index print registered 39.5 points in January, down sharply from 49.4 in December and indicated the fastest reduction in business activity for eight months.

The latest reading remained well below the 50.0 mark, which separates expansion from contraction, but beat the market forecast, cited by FXStreet, of 38.8.

In addition, the seasonally adjusted UK composite output index registered 41.2 in January, down from 50.4 in December and back below the crucial 50.0 no-change threshold.

The euro stood at USD1.2021 at midday, down from USD1.2029 late Tuesday, after PMI data from the continent.

Business sector activity in the eurozone worsened in January as lockdown restrictions hit the services industry, the latest figures from Markit showed.

The Markit eurozone services purchasing managers' index reading was 45.4 points in January from 46.4 in December. The latest figure remained well below the 50.0 neutral mark which separates expansion from contraction, but beat the market forecast, cited by FXStreet, of 45.0. Markit said January's reading marked the fifth successive month in which the index has posted a reading below the 50.0 no-change mark.

The eurozone composite PMI score fell to 47.8 points in January from 49.1 in December.

Against the yen, the dollar was trading at JPY105.05, unchanged from late Tuesday.

Brent oil was quoted at USD58.00 a barrel Wednesday midday, up from USD57.58 at the London market close Tuesday. Gold was trading at USD1,835.65 an ounce, a touch lower from USD1,837.20 late Tuesday.

US stock market futures were pointed to a higher open as earnings season continues with fourth-quarter earnings due from online auction site eBay and payments processor PayPal.

The Dow Jones Industrial Average was called up 0.1%, the S&P 500 up 0.4% and Nasdaq Composite up 0.7%.

Shares in Amazon.com will be in focus after the e-commerce company late Tuesday said founder Jeff Bezos will stand aside later this year as chief executive of the firm he built from a startup into one of the world's most valuable entities.

Bezos founded Amazon in his garage in 1994 and went on to grow it into a colossus that dominates online retail, with operations in streaming music and television, groceries, cloud computing, robotics, artificial intelligence and more. His other businesses include the Washington Post newspaper and the private space firm Blue Origin.

The world's richest person based on his Amazon stake, Bezos said he will transition to the role of executive chair in the third quarter, handing over the CEO role to Andy Jassy, who heads Amazon Web Services. The stock is up 0.2% in pre-market trade.

Alphabet shares were up 6.9% in pre-market trade after the Google parent late Tuesday said its quarterly earnings surged at the end of last year as its digital advertising business thrived.

Meanwhile, shares in GameStop were up just 1.4% in pre-market activity, after the video-game retailer dropped by 60% on Tuesday. GameStop over the past week has been the subject of a battle of wills between a group of retail investors and institution short sellers.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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