Share prices buoyed by lockdown easing and hopes of Covid vaccine

Share prices have risen strongly on global stock markets amid an easing of lockdown restrictions, the announcement of a Franco-German rescue package for Europe and rising hopes of a vaccine for Covid-19.

In one of its strongest trading days since the crisis began in March, the FTSE 100, which measures the stock market performance of the City’s leading companies, gained 248 points and ended the day at 6,048.

Travel companies and airlines were among the biggest gainers, with the cruise operator Carnival up nearly 15%, British Airways owner IAG up 11% and easyJet up 10%. Mining shares also rallied on hopes of an upturn in global demand.

On Wall Street, the Dow Jones industrial average opened strongly after Moderna, a biotechnology company based in Boston, Massachusetts, reported encouraging results from early trials of a new vaccine.

Oil prices also rose on optimism that the gradual opening up of European countries and individual US states marked a turning point in a crisis that has seen share prices tumble over the past three months. Despite its strong rise of more than 4% on Monday, the FTSE 100 is still down almost 20% on its pre-Covid level.

Even bigger gains were posted on bourses in other European countries following news that Angela Merkel and Emmanuel Macron had agreed to the creation of a €500bn (£441bn) European recovery fund under which the European commission would be able to borrow money from the financial markets. Germany’s Dax index closed 5.7% higher while France’s CAC ended 5.2% up.

Edward Moya of Oanda said: “The start of the trading week was supposed to have some optimism with the global economic recovery, but no one anticipated this Monday’s start.

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“Risk appetite is running wild after Moderna’s experimental vaccine showed promising early signs to create an immune-system response might be able to fight off Covid-19. Global equities are roaring higher on vaccine hopes combined with continued major economies reopening and as the Fed continues to promise more stimulus is coming when it is needed.”

The rise in stock markets came despite a warning from the head of the International Monetary Fund, Kristalina Georgieva, that a full recovery was unlikely for the global economy in 2021.

In April, the IMF said it expected a 3% drop in activity this year followed by a 5.8% rebound in 2021, but the grim economic news since then has made Georgieva less optimistic.

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The IMF’s managing director told Reuters that data had been worse than expected, adding: “Obviously that means it will take us much longer to have a full recovery from this crisis.”

With financial markets taking fright last week at growing trade tensions between the US and China, Georgieva also warned against countries resorting to protectionism.

“We do need to keep trade flows open, especially for medical supplies, food and longer-term to find a pathway to overcome what is happening now with this crisis,” she said. “We want to continue to build this more prosperous future for all by overcoming the scarring that may come from this crisis.”


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