European stocks move higher as market optimism about the vaccine breakthrough may wane

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Pfizer and BioNTech announced that their vaccine candidate has a 90% effectiveness rate.

Kena Betancur / Agence France-Presse / Getty Images

European stocks rose slightly on Tuesday, with U.S. stock market futures similarly pointing up as the market should dampen Monday’s expanded optimism about a breakthrough in a coronavirus vaccine.

The pan-European Stoxx 600 SXXP,
-0.28%
rose by almost 0.5%, while in Germany the DAX DAX,
-0.29%
0.2% fell. France’s CAC 40 PX1,
-0.61%
rose 1.3% and the FTSE 100 UKX,
+ 0.25%
was around 1.2% higher in London.

Dow futures YM00,
-0.05%
rose by 246 points, according to the DJIA index,
-0.03%
rose more than 800 points on Monday to close near a record high at 29,157.

European equity markets traded around eight-month highs following Monday’s spectacular rally following news of a breakthrough in a coronavirus candidate vaccine.

Drug manufacturer Pfizer PFE,
-0.68%
and his partner BioNTech 22UA,
-0.93%
announced Monday that the vaccine candidate they are developing, which is in phase 3 clinical trials, has a 90% efficacy rate when assessed seven days after the second dose is given.

The news created clear winners and losers in the market. Sectors such as travel, transportation, banking and hospitality – which were badly hit by the economic impact of the coronavirus pandemic – rebounded sharply, while stocks representing the “stay at home” economy such as grocery delivery suffered.

Analysts warned of uncertainty in the markets on Tuesday as economic pressures from the pandemic persist and some of Europe’s largest economies such as Germany, the UK and France remain under lockdown in some form.

The study by Pfizer and BioNTech was not peer-reviewed and has yet to overcome regulatory hurdles so that if successful, the vaccine will not be widely adopted immediately.

Michael Hewson, senior market analyst at CMC Markets UK, said Monday’s Dow and S&P 500 highs “certainly indicate much more optimism than any other time this year, but it still doesn’t hurt to close do”. Caution, at a time of still great uncertainty. “

“That means that for all the optimism we saw yesterday in the travel, leisure, pubs, restaurants and other hospitality sectors, we need to see evidence that consumer behavior is about to change,” said Hewson. “Even then, the total capacity in all of these sectors is likely to be much lower than it was before the pandemic.”

Rolls-Royce RR,
+ 1.76%
led the FTSE 100 winners, hitting 28% on a second day as hopes that a vaccine would bring back widespread air travel boosted confidence. The engineering company’s balance sheet has long relied on lucrative engine maintenance contracts for cash flow.

“Stay-at-home” shares Just Eat Takeaway.com JET,
-0.16%
and delivery hero DHER,
+ 0.79%
led the losers in the FTSE 100 and DAX, as there remains a certain opinion that an end to the pandemic will lead to a decline in consumer demand for food deliveries. Just Eat fell nearly 5% and Delivery Hero 7%.

Shares in the Parisian commercial real estate company Unibail-Rodamco-Westfield URW,
+1.63%,
a Stoxx 50 constituent, rose more than 30% after a rights issue proposal failed to obtain the required majority.


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