US stocks edged higher on Monday following the announcement of another Covid-19 vaccine breakthrough that showed the shot being developed by AstraZeneca and Oxford university had exceeded the level of efficacy sought by regulators.
The S&P 500 index rose 0.6 per cent, outpacing the tech-heavy Nasdaq Composite, which advanced 0.2 per cent.
Wall Street’s gains followed a mixed session in Europe. The Stoxx 600 index climbed to its highest level since February before reversing course in the afternoon to close down 0.2 per cent. Still, the continent-wide benchmark has risen almost 14 per cent so far in November, putting it on course for its best month on record.
London’s FTSE 100 closed down 0.3 per cent, while Germany’s Xetra Dax ended the day 0.1 per cent lower.
The moves came after Oxford and AstraZeneca said late-stage trials showed their vaccine candidate had an average efficacy of 70 per cent, with one dosing regimen achieving 90 per cent. AstraZeneca said it would submit the data for regulatory approval immediately.
Vaccine trial results this month from Pfizer and Germany’s BioNTech, and another from Moderna, showed even higher efficacy for their products. Shares in AstraZeneca slipped almost 4 per cent, however.
Optimism that the rollout of a vaccine will support a global recovery from the coronavirus crisis has boosted economically sensitive sectors, such as energy and financials.
“If the market no longer reacts much to vaccine news as it has for a week, it is because it is for now priced in,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
However, Hani Redha, a portfolio manager at PineBridge Investments, said the AstraZeneca results were “more important for markets” than the Pfizer and Moderna news.
AstraZeneca’s jab could be stored long-term at normal fridge temperature — something that will help with widespread distribution — while the others required a storage temperature as low as minus 70C, he said.
The drug also looked set to be a fraction of the price of the other vaccines, added Mr Redha, and a large number of doses have been pre-ordered by governments around the world.
Ronald Temple, head of US equity at Lazard Asset Management, said the one “wet blanket” that markets were grappling with was “the ongoing inability or unwillingness of US Congress to pass incremental Covid relief”.
The failure of US lawmakers to approve a further stimulus deal could lead to the failure of more businesses and rising unemployment in the coming months, he said.
“The one other thing that might be holding investors back is we are basically at record highs,” he said. The S&P 500 hit a peak this month on vaccine optimism, despite the worsening pandemic, while on Monday the FTSE All-World index was hovering near its all-time high.
Energy stocks were winners on both sides of the Atlantic, tracking the price of oil. Brent crude, the international benchmark — which has had a tumultuous year as traders feared the pandemic would curtail demand — rose roughly 2 per cent to $45.88 a barrel.
In Europe, lawmakers are preparing to relax some coronavirus restrictions for the Christmas period, despite the latest wave of infections. But US policymakers are encouraging citizens not to travel for this week’s Thanksgiving holiday amid rising case numbers.
Data released on Monday presented contrasting pictures for the regions. Purchasing managers’ index data showed the services sector in the eurozone slumped in November, while US investors were cheered by better than expected readings in both the services and manufacturing sectors this month.
The yield on 10-year US Treasuries, which moves inversely to price, rose 0.03 percentage points to 0.86 per cent, as investors instead sought riskier assets.
In Asia, China’s CSI 300 closed up 1.3 per cent and Australia’s S&P/ASX 200 rose 0.3 per cent.
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