Vaccine optimism lifts European shares to near-nine month high

European shares ended higher on Tuesday, as the potential easing of lockdowns in France combined with optimism around the deployment of a coronavirus vaccine as early as the beginning of next year to lift hopes of a swift economic recovery.

The pan-European Stoxx 600 index rose 0.8 per cent to its strongest close since late February, supported by strong gains in oil and gas stocks, which were set for their best month on record as crude prices hit their highest levels since late March.

"Oil acts as an economic bellwether and the commodity has been on a tear for the past month, rising by more than 20 per cent in value as markets start to become more optimistic about economic activity amid positive vaccine news," said Russ Mould, investment director at AJ Bell.

The benchmark Stoxx 600 has surged 14.5 per cent so far this month and is on track for its highest monthly gain on record.

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DUBLIN

The feel-good factor traversing European markets translated into a 1 per cent rise in the Iseq, which closed at 7,147. Building materials group CRH was one of the main drivers, increasing by 4 per cent to €34 .89.

In a trading update, it predicted pre-tax profits would rise this year on the back of a recovery in sales as economies continued to open up during the summer following the initial Covid-19 lockdown, price rises and tight control on costs.

Swiss-Irish baked goods specialist Aryzta was up a further 7 per cent to 66 cent as machinations around a possible takeover by US hedge fund Elliott rumbled on.

Elliot has offered to buy Aryzta for 0.80 Swiss francs (€0.74) a share in a deal that would value the company at €735 million, but Aryzta’s largest shareholder, Cobas, is opposing it.

Despite the jump in travel and hotel stocks across Europe, Ryanair dropped 0.8 per cent to €15.39 on the back of rising oil prices. In contrast hotel chain Dalata rose 1.4 per cent to trade at €3.68.

The market's two main financials, AIB and Bank of Ireland, had another good day, rising 5 per cent and 3 per cent respectively, as the outlook for the euro zone economy brightened.

LONDON

BP topped the FTSE 100 in London, rising 8.4 per cent over the day, not far ahead of other natural resource giants including Antofagasta, Glencore, BHP and Shell.

The oil giant was boosted by the price of its product, as Brent crude soared by 3.7 per cent to $47.75 per barrel. CMC Markets analyst David Madden said: "The rally in commodities like platinum, copper and oil has given a boost to Glencore, Antofagasta, BHP Group, BP and Royal Dutch Shell.

"The airline sector has also enjoyed a big rally too. England will soften its quarantine rules – whereby passengers to the country will have to self-isolate for five days and then if they pass a Covid-19 test, they will no longer have to quarantine."

Rolls-Royce, which makes airplane engines, rose more than 8 per cent, Premier Inn owner Whitbread nearly 7 per cent, and travel group TUI jumped 16 per cent.

Meat producer Cranswick was helped by high demand for sausages to boost its operating profit from £47 million to £62 million in the first half of the year. Shares rose slightly by 0.3 per cent.

Caterer Compass saw annual profits drop 76 per cent, it said on Tuesday morning, and warned it might have to overhaul the business. But investors were not put off and sent shares up 2.5 per cent.

EUROPE

German shares jumped 1.3 per cent, with exchange operator Deutsche Börse revealing that the blue-chip index would expand to 40 from the current 30 companies with tougher membership criteria.

Data also showed that Europe’s biggest economy grew by a record 8.5 per cent in the third quarter.

France’s benchmark CAC 40 rose 1.2 per cent after the country on Monday reported its lowest daily tally of Covid-19 infections since September 28th. The news lifted travel and leisure stocks, among the worst hit by the pandemic due to restrictions on travel, by 2.7 per cent.

NEW YORK

The Dow breached 30,000 points for the first time on Tuesday as investors bet on a swift economic recovery next year following progress on coronavirus vaccines and the formal go-ahead for president-elect Joe Biden's transition to the White House.

Economically sensitive industrial stocks surged to a record high, while the financials and energy indexes jumped 3.3 per cent and 4.8 per cent, respectively.

Electric-car maker Tesla rose 4 per cent, crossing $500 billion in market capitalisation as investors lapped up its shares in the run-up to its addition to the S&P 500 index.

The S&P value index has gained about 15 per cent so far in November compared with an 11 per cent rise in the S&P 500. – Additional reporting by Reuters