By Steve Goldstein
European stocks surged Monday after a trial showed a vaccine was more than 90% effective against COVID-19, extending what had already been strong gains on the news former Vice President Joe Biden declared victory.
Up 7% last week, the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.02% rose nearly 4%, which would be its best single-day performance since the 4.1% rally on May 18.
The German DAX /zigman2/quotes/210597999/delayed DX:DAX +1.46% , French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.42% and U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.12% all surged.
Pfizer /zigman2/quotes/202877789/composite PFE +0.71% and German partner BioNTech /zigman2/quotes/222361179/delayed XE:22UA -2.17% reported their late-stage trial news, which puts them on track to file for regulatory approval later this year.
The news sent traders scurrying for the stocks that have been beaten up: engine maker Rolls-Royce /zigman2/quotes/203646520/delayed UK:RR +2.49% jumped 43%, shopping mall owner Klepierre /zigman2/quotes/205805944/delayed FR:LI +1.15% jumped 38% and cruise operator Carnival /zigman2/quotes/210414141/delayed UK:CCL +2.17% rallied 33%.
On the downside were stocks that benefited from pandemic demand, like mealkit preparation firm HelloFresh /zigman2/quotes/203376622/delayed XE:HFG +1.46% , biotech supplies firm bioMerieux /zigman2/quotes/206867731/delayed FR:BIM -0.67% and food delivery service Ocado /zigman2/quotes/207225647/delayed UK:OCDO +1.46% .
It was also the market’s first opportunity to react to the news that Biden topped the necessary 270 Electoral College votes, according to the tallies from the Associated Press and other major media outlets. President Donald Trump hasn’t conceded, but has yet to mount a legal challenge that analysts think has any likelihood of succeeding. The Biden administration is likely to take place with a Republican-controlled Senate, unless Democrats can win two runoff elections in the state of Georgia.
“A week ago, the prospect of an inconclusive U.S. election was viewed with trepidation, but it turns out that gridlock in Washington is just what investors wanted,” said Ian Williams, strategist at Peel Hunt.
Analysts said Biden’s victory may also help make a European Union-U.K. trade deal more likely. “After all, Biden’s strong Irish links mean that any potential issues stemming from a no-deal Brexit would likely significantly dent hopes of any U.S.-U.K. free-trade agreement,” said Paul Hollingsworth, an economist at BNP Paribas.
The news on the election overshadowed the latest reports on the coronavirus pandemic. The COVID-19 project said the U.S. new-case tally was the highest ever for a Sunday, as the Bank of France said the current lockdown will reduce activity to 12% below normal.
Economists at Goldman Sachs lowered their estimate of global growth next year to 6%, a reduction of 0.5%. “The reason is the sharp rise in infections in recent weeks, which has led us to build in a sizable, if short-lived, economic hit, especially in Europe,” said Jan Hatzius and Daan Struyven in a note to clients.