London-listed stocks surged yesterday on news that Moderna’s vaccine was shown to be 94.5pc effective in clinical trials. Markets mirrored positive movements last week when fellow drugmakers Pfizer and BioNTech released similar news, adding to hopes of a return to normal life throughout the world.
The FTSE 100 closed up 104.9p to 6,421.29p, its highest level since June 8. All eyes were on sectors most hit during lockdown.
Pub company Mitchells & Butlers outperformed in its sector, gaining 22p to 241p despite plans to axe 20 of its pubs, while real estate investment trust Hammerson added 2.6p to 25.65p, yet still remains significantly down since the start of the year. National Express added 21.8p to 249.20p.
Meanwhile, investors unwound holdings in companies that had benefited from the pandemic, including cleaning products firm Reckitt Benckiser, which lost 148p to £68.32. Its shares have added about 10pc so far this year.
In other positive news for London, Citigroup has said investors should favour cheaper UK equities over more expensive American counterparts, while 10-year Treasury yields look set to climb to 1.25pc before it expects the sell-off to stop.
The investment bank thinks markets will look through bad fundamentals to an economic recovery next year.
In a note, its strategists proposed an “aggressive” short-term bet into 2021 to hold overweight positions in UK stocks, as well as those from Australia, and underweight ones in the US and emerging markets.
Energy, bank and mining stocks tracked gains yesterday over hopes of a sooner-than-expected economic recovery.
Major oil companies took the lead from the rise in Brent oil, which was quoted at $44.40 a barrel at London’s close, sharply higher than Friday’s $42.88. BP rose 13.85p to 250.75p, Royal Dutch Shell gained 70p to £11.85 and Royal Petroleum added 75.20p to £12.41.
Banking stocks gained on news that Spanish lender BBVA’s American arm would be bought by PNC Financial Services. Barclays rose 4.62p to 138.78p, HSBC by 16.10p to 388.80p and Lloyds by 0.87p to 35.59p.
Separately, Vodafone surged 8.26p to 127.78p, after saying it was increasingly confident about its full-year performance, with cash flow forecast to be €5bn (£4.5bn). Its revenue dipped by 2.3pc to €21.4bn, but was slightly ahead of estimates.
Engineering company Smiths Group added 71.5p to £15.74, after highlighting a £30m cost-saving target for the full year 2021, followed by an additional £70m in cuts.
Technical goods firm Diploma bucked the rising trend and dropped 36p to £22.60 by close. It posted a 20pc drop in pre-tax profits to £66.7m for the year to the end of September.
It did, however, reinstate its dividend, paying shareholders 30p per share – a 3pc increase on last year.
Panther Metals also edged down, by a slight 0.1p to 12p, after it announced the acquisition of the Merolia Gold Project near Laverton, Western Australia from Australian-listed White Cliff Minerals.