By Jack Denton
European stocks nudged slightly higher on Tuesday, with U.S. stock market futures pointing similarly up, as the market looks set to temper Monday’s extended optimism over a coronavirus vaccine breakthrough.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.89% rose near 0.5%, while in Germany the DAX /zigman2/quotes/210597999/delayed DX:DAX +1.34% fell 0.2%. France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.45% lifted near 1.3% and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.76% was around 1.2% higher in London.
Dow Futures /zigman2/quotes/210598065/realtime DJIA +0.72% were up 246 points, after the index /zigman2/quotes/210598065/realtime DJIA +0.72% surged more than 800 points on Monday and closing near a record high at 29,157.
European stock markets were trading around eight-month highs following Monday’s spectacular rally after news of a coronavirus candidate vaccine breakthrough.
Drugmaker Pfizer /zigman2/quotes/202877789/composite PFE +1.17% and its partner BioNTech /zigman2/quotes/214587675/delayed DE:22UA +7.10% announced on Monday that the candidate vaccine they are developing, which is in Phase 3 clinical trials, has an efficacy rate of 90% when assessed seven days after the second dose was administered.
The news created stark winners and losers in the market. Sectors like travel, transport, banks, and hospitality — hit hard by the economic impact of the coronavirus pandemic— rebounded strongly, while stocks representing the “stay-at-home” economy, like food delivery, were battered.
Analysts cautioned uncertainty in the markets on Tuesday, as the economic pressure of the pandemic remains, and some of Europe’s largest economies, like Germany, the U.K., and France, remain under some form of lockdown.
The Pfizer and BioNTech study hasn’t been peer-reviewed and must still pass regulatory hurdles, so any widespread distribution of the vaccine, if successful, won’t happen immediately.
Michael Hewson, chief market analyst at CMC Markets U.K., said that Monday’s highs for the Dow and S&P 500 “certainly point to a much greater sense of optimism than at any other time this year, however it still doesn’t hurt to exercise a degree of caution, at a time of still highly elevated levels of uncertainty.”
“This means that for all of the optimism that we saw in yesterday’s rebounds in travel, leisure, pubs, restaurants and other hospitality, we need to see evidence that consumer behavior will start to change as well,” Hewson said. “Even then, overall capacity in all of these sectors is likely to be much lower than was the case pre-pandemic.”
Rolls-Royce /zigman2/quotes/203646520/delayed UK:RR +3.23% led the FTSE 100’s winners, rallying for a second day as much as 28%, as hope that a vaccine would return widespread air travel boosted confidence. The engineering company’s balance sheet has long been reliant on lucrative engine-maintenance contracts for cash flow.
“Stay-at-home” stocks Just Eat Takeaway.com /zigman2/quotes/216303066/delayed UK:JET +0.14% and Delivery Hero /zigman2/quotes/208380525/delayed XE:DHER +3.64% led the losers on the FTSE 100 and DAX, respectively, as some sentiment remains that an end to the pandemic will see a fall in consumer demand for food delivery. Just Eat fell near 5% and Delivery Hero dropped 7%.
Shares in Paris-based commercial real-estate company Unibail-Rodamco-Westfield /zigman2/quotes/207218984/delayed NL:URW +0.98% , a Stoxx 50 constituent, rose more than 30% after a rights issue proposal failed to gather the required majority vote.