Market report: Vaccine hope injects buoyant mood
Hopes of progress on a Covid-19 vaccine boosted global markets on Wednesday, sending European equities sharply higher.
A buoyant mood at the open grew after ITV reported “positive news” is coming on the vaccine under development at Oxford University, where research is being conducted in conjunction with AstraZeneca.
The broadcaster’s political editor, Robert Peston, said the under-development vaccine “is generating the kind of antibody and T-cell (killer cell) response that the researchers would hope to see”.
The FTSE 100 pharma giant’s shares popped higher following the report, ending the day up 447p at £89.96.
The chunky rise for London’s most valuable listed company put a strong upwards pull on the blue-chip index, with only a handful of groups losing ground.
European travel stocks reached a three-week high, led by gains for British Airways-owner International Consolidated Airlines, which pushed up 22.2p to 229.3p on optimism about vaccine trials. On the FTSE 250, fellow airline easyJet also jumped, rising from 41.6p to 691.6p.
At the other end of the FTSE 100 was Burberry. The luxury goods retailer was the standout poor performer among blue chips, dropping 87.5p to £14.70 after it reported a 45pc sales drop in the three months to the end of June and announced job cuts.
Royal Bank of Canada’s Piral Dadhania said the pandemic has put Burberry in an unenviable position, adding: “Brand heat is improving, but we are unsure that it is strong enough to take market share from the sector winners.”
Among mid-caps, furniture and homewear retailer Dunelm rose 29p to £11.75 despite warning its full-year pre-tax profit will take a hit due to the lockdown, despite a recent recovery in sales.
The FTSE 250 group said total sales rose 20pc in June, having fallen as much as 78pc in April. A surge in online sales, which were up 106pc over the quarter, wasn’t enough to offset the drop caused by store closures. Citi’s Matthew Garland said Dunelm faces uncertainty and cost headwinds.
Shares in Dixons Carphone fell sharply after analysts warned the electricals retailer faces a tough road ahead. A drop of 8.1p to 78.4p left it as the FTSE 250’s worst performer.
The group scrapped its dividend after falling to a £140m annual loss for the 12 months to the start of May as lockdown weighed on mobile phone sales and forced its stores to close.
Royal Bank of Canada’s Richard Chamberlain said Dixons has a relatively strong market position, but said the outlook for big-ticket purchases “look challenging”.
Elsewhere, shares in online fashion retailer Asos pushed higher after the group said it anticipates profits this year will land at the top end of market expectations.
The group said sales rose 10pc over recent months, picking up as lockdowns rolled back across Europe – but its UK and US sales fell. Liberum’s Wayne Brown said the group’s relatively muted performance compared to rivals such as Boohoo and Zalando “highlights the challenges of wholesale model where lead times are long and capital is tied up in inventory makes it difficult to quickly change the product mix”. The fast fashion group’s shares rose 116p to £34.89.
