Britain’s bombed out stocks staged a dramatic recovery yesterday after Pfizer declared it has developed an effective vaccine against Covid-19.
As shares soared on markets around the world, Rolls-Royce and British Airways owner IAG led the FTSE 100 back above the 6,000 mark as £70.5billion was added to the value of the UK’s blue-chip firms.
On Wall Street, the Dow Jones Industrial Average jumped almost 3 per cent, or 834.57 points, to 29,157.97.
As shares soared on markets around the world, Rolls-Royce and British Airways owner IAG led the FTSE 100 back above the 6,000 mark
The price of oil also rose by as much as 7 per cent amid hopes that a working vaccine will boost demand by unshackling economies across the world and bringing back global travel.
Gold – seen as a safe investment in times of crisis – fell 4 per cent.
Paul Craig, portfolio manager at Quilter Investors, said: ‘The fact that the world was hit with an unknown virus and within a year has produced what looks to be an effective vaccine is remarkable. This announcement is hugely positive news and is the first major step back towards normality for those worst-affected by Covid-19.
‘However, this vaccine is not a silver bullet. Many of the issues facing developed economies now are structural and a vaccine is not going to prevent the large-scale unemployment we are likely to see as a result of the lockdowns of earlier this year.’
Rolls and IAG – two giants which have been fighting for survival after the pandemic triggered a collapse in global air travel – were the biggest blue-chip risers.
Rolls, which makes engines for commercial planes, jumped 43.8 per cent while IAG rose 25.5 per cent.
The gains were echoed across Covid-battered sectors ranging from hospitality and catering to retail and leisure.
Exhibition and publishing giant Informa jumped 22.2 per cent, as the prospect of a working vaccine raised hopes that it may be able to stage real events rather than virtual ones in the not-too-distant future.
Take off: British Airways owner IAG, which had been fighting for survival after the pandemic triggered a collapse in global air travel, rose 25.5 per cent
Catering group Compass (up 21.7 per cent) and pubs and hotels group Whitbread (up 15.6 per cent) were also sharply higher.
In the second tier FTSE 250, Upper Crust sandwich chain owner SSP led the way with a gain of 51.8 per cent.
The company was forced to axe 5,000 jobs this year as a collapse in the number of people commuting and flying hit business at its Upper Crust outlets at train stations and airports.
Cineworld, which has been forced to temporarily shut down its cinemas across the UK, putting 5,500 jobs at risk, was up 40.3 per cent.
Neil Wilson, chief market analyst at Markets.com, said: ‘The dichotomy in the market is stark: the biggest gainers in a frantic session are among those stocks worst hit by the pandemic – travel and leisure chiefly – whilst Covid winners are doing poorly.
‘We should be careful in overreacting but it’s clear the market is forward-looking and pricing in recovery in a number of beaten down areas next year.’
Overall the FTSE 100 jumped 4.7 per cent, or 276.27 points, to 6186.29, the highest level since mid-August. With the FTSE 250 up 5.2 per cent, a total of £91billion was added to the value of firms on the UK stock market.
There were also strong gains in Europe, with the main benchmark in Frankfurt up 4.9 per cent, Paris up 7.6 per cent and Madrid 8.6 per cent higher.
…but Ocado, Zoom and Netflix plummet
Shares in Ocado and Zoom fell sharply as so-called ‘stay-at-home’ stocks collapsed.
Home delivery and technology firms were hit by Pfizer’s announcement that the vaccine could be available before Christmas.
Ocado fell 11.5 per cent, wiping £2.2billion off its valuation and £88million from the wealth of founder Tim Steiner.
It was followed down by Just Eat Takeaway, which saw its shares fall by 8.9 per cent. Shops selling DIY equipment, homewares and kit for make-shift offices were also hit after booming through the autumn.
B&Q owner Kingfisher dropped 8.6 per cent, homeware specialist Dunelm dropped 5 per cent, while shares in electricals seller AO World fell 11.5 per cent.
Shares in FTSE 100 discounter B&M, which sells garden equipment, DIY kit and pet food, fell 9.8 per cent.
Novacyt, which makes Covid testing kits, fell 33.1 per cent while Dettol maker Reckitt Benckiser dropped 5.8 per cent. In the US, video conferencing firm Zoom was down 17.4 per cent while Netflix was also hit, falling 8.6 per cent.