Hospitality stocks, such as airlines and hotel operators, as well as retailers surged on the news that a potential vaccine for coronavirus may be up to 90 per cent effective.
The positive announcement shortly before midday for the vaccine, which is being developed by Pfizer and BioNTech, was immediately greeted with huge spikes in shares from sectors that have been depressed since the pandemic took hold in the spring.
Travel stocks in particular soared on the news. On the Iseq index in Dublin, Ryanair immediately leaped by about 14 per cent at midday to breach the €15 barrier and held its gains for the rest of the session. Dalata, the Republic's biggest hotel group and owner of the Clayton and Maldron brands, finished the session ahead by more than 30 per cent to €3.15 per share.
“This is good news for the world and will give a big lift. There is a lot of pent-up demand, particularly in our sector,” said Pat McCann, the Dalata chief executive. “The performance of the share price today is perhaps indicative of the unrealistic level it had fallen to.”
Irish Continental Group, the owner of Irish Ferries, gained 15 per cent to €3.85, while International Airlines Group, the owner of Aer Lingus and British Airways, soared by about 25 per cent in London. The British-listed JD Wetherspoon pub group, which owns about eight venues here, rose by more 20 per cent on the vaccine news, while Mitchells & Butlers pub group, whose backers include Irish investors JP McManus and John Magnier, rose by 26 per cent.
Discount fashion chain
Stock market listed retailers also rose on the vaccine news. Applegreen, which runs a network of garage forecourts in Ireland, Britain and the US, was up in Dublin by 13 per cent to €3.50 per share, while Associated British Foods, the owner of the Irish-headquartered discount fashion chain Penneys/Primark, was up by 18.5 per cent by the end of the session.
Other UK high street retailers also spiked, including Marks & Spencer, up 15 per cent, and Mike Ashley's Sports Direct group, which also owns the Heatons department store chain in Ireland. Sports Direct climbed by more than 9 per cent.
Some other retailers that have fared well in the pandemic, such as predominantly online operators, suffered following the news on the potential vaccine’s effectiveness, as investors mulled the possibility that the consumer dynamics of the past eight months could slow or reverse. Ocada, the online supermarket, fell by 15 per cent while Kingfisher, the owner of DIY chain B&Q, fell by 8.5 per cent – DIY stores fared particularly well as consumers have turned to improving their homes during lockdowns.
Banks, which are heavy lenders to the retail and hospitality sectors, also performed well after the Pfizer vaccine news. By the end of the session, AIB was up by almost 16 per cent to €1.13 per share, while Bank of Ireland was up by 15.5 per cent to €2.42 per share.
Pfizer and BioNTech announced earlier that the vaccine’s potential effectiveness had been strongly suggested by data from late-stage trials, exceeding expectations and leading to speculation that it could be authorised for emergency use in the US in coming months.
The announcement sparked a major surge in global markets, including in the US where trading opened a couple of hours after the news. By lunchtime in New York, the Dow Jones Industrial Average was up by 4.3 per cent.
“Decisive progress towards a vaccine and the clear outcome of the US elections remove the two biggest tail-risks for markets,” said Emmanuel Cau, head of European equity strategy at Barclays. If confirmed, it would be a game changer for investor sentiment.
But even if the rate of effectiveness holds and the vaccine receives expedited approval, it is still expected that it will be deep into next year before it is distributed and the pandemic is brought under control.