As investors expect rapid economic growth, stock markets across Europe are rallying
On the first trading day of 2021, London’s stock market surged on expectations that the newly approved Oxford coronavirus vaccine will lead to a faster-than-expected economic recovery from the pandemic.
On Monday morning, the FTSE 100 jumped almost 3 percent, rising more than 150 points to 6,638 after the vaccine, developed by Oxford University and AstraZeneca, was first administered after it was approved by the U.K. Agency for Drugs last week.
Shares in Entain, the owner of Ladbrokes and Coral betting brands, rose 27 percent in early trading, the largest gain on the blue-chip index, after the company declined a £ 8 billion takeover offer, claiming it undervalued the company significantly.
As investors bet that a robust economic recovery would follow tighter government restrictions to curb the rapid growth of Covid-19 infections, stock markets across Europe rallied. The Cac 40 index in France rose 1.7 percent and the Dax 30 in Germany gained 1.2 percent .
The lack of widespread disruption to cross-border trading since the conclusion of the Brexit transition has also improved markets, analysts said. For this time of year, however, truck movements are below average after businesses scrambled to transport goods before the transfer period expired and a last-minute deal with the U.K. The EU and the EU agreed before the deadline of Dec. 31.
However, it is anticipated that tighter government controls and a sharp increase in coronavirus infections will weigh on the economy early in the year.
Hinesh Patel, portfolio manager at Quilter Investors, said stock market gains reflect the desperate hope of investors that the vaccine can be rapidly promoted. “Otherwise, they may be jumping the gun on the revival of the economy.”
However, he added, “With Brexit risk seemingly off the table and Oxford University/AstraZeneca starting to roll out the vaccine, many investors are taking the opportunity to catch up on some of the potential opportunities they may have missed before Christmas.”