London close: Stocks finish higher on Oxford vaccine hopes

London stocks closed well above the waterline on Wednesday, with sentiment boosted by hopes of a coronavirus vaccine.

The FTSE 100 ended the session up 1.83% at 6,292.65, and the FTSE 250 was ahead 1.43% at 17,420.55.

Sterling was stronger against both of its major trading pairs, last rising 0.38% against the dollar to $1.2601, and advancing 0.2% on the euro to €1.1033.

Stocks had started the session in the green, taking their cue from gains on Wall Street after Moderna reported that its Covid-19 vaccine had produced a ‘robust’ immune response in all of the 45 patients in its early stage human trial.

Equity markets took another leg higher in the middle of the day after an unsourced ITV report stated that positive news - possibly on Thursday - was expected from the Oxford coronavirus vaccine backed by AstraZeneca.

The report stated the vaccine was generating the kind of antibody and killer cell response that the researchers were hoping to see.

“Stocks are driving higher on the back of optimism in relation to the possibility of a Covid-19 vaccine being developed,” said CMC Markets analyst David Madden, referring to the AstraZeneca vaccine reports.

“In addition to that, Moderna’s potential vaccine has shown encouraging results too.

Madden said it was still early days in regards to the development of a potential vaccine, but added that many traders were keen to buy into the market.

“In London, it is a broad based rally as banks, mining, oil and airline stocks are higher, while the supermarket sector and the hospitality industry are mixed.”

Investors were also digesting the latest figures from the Office for National Statistics, which showed that inflation rose for the first time this year in June, although the pickup was caused mainly by volatile computer game prices and economists said the trend was still downwards.

The annual rate of consumer price inflation rose to 0.6% from 0.5% in May, exceeding economists' average forecast of 0.4%.

According to the ONS, the main contributor to June's increase was computer games and consoles whose prices rose 1.8% compared with a fall of 4.7% a year earlier.

It said the increase could have been caused by a jump in demand during the Covid-19 lockdown, a shortage of consoles or which computer games were in the bestseller charts.

Clothing prices also rose from a year earlier as retailers discounted clothes earlier in the year but food prices fell.

"The inflation rate has increased for the first time this year, but remains low by historical standards," Jonathan Athow, the ONS's deputy national statistician for economic statistics, said.

"Due to the impact of the coronavirus, clothing prices have not followed the usual seasonal pattern this year, with the normal falls due to the start of the summer sales failing to materialise.

“Prices for computer games and consoles have risen, but food prices, particularly vegetables, have fallen.”

In equity markets, British Airways parent IAG ascended 10.72%, while 3i Group was ahead 5.15%.

Homeware retailer Dunelm Group was also in the black, managing gains of 2.53% despite warning that annual pre-tax profit was set to fall after stores were shut during the coronavirus lockdown, and reporting a decline in fourth-quarter sales.

On the downside, luxury fashion brand Burberry was 5.62% lower after saying it expected first half revenue to fall by up to 50% and would restructure further as the coronavirus pandemic continued to have a material impact on sales.

The company said first quarter comparable sales plunged 45% to £257m with stores closed during global lockdowns, although the rate eased to -20% in June with growth in mainland China and Korea ahead of pre-Covid levels.

Burberry said it was expecting a decline of 15-20% in second quarter retail revenues, with wholesale revenues down 40-50%.

The company said it was in consultation over 150 UK head office jobs and was hoping to redeploy some affected staff to reduce the number of potential redundancies.

Dixons Carphone was 9.36% weaker after it posted a slump in full-year profits, pinning the blame on weakness in the mobile division and store closures due to the coronavirus pandemic.

In the 53 weeks to 2 May, adjusted pre-tax profit fell to £166m from £339m in 2019.

That was around £44m below the guidance that Dixons reiterated in January, which it said it was on track to achieve before the Covid-19 outbreak.

However, it was still ahead of consensus expectations of £151m.

Market Movers

FTSE 100 (UKX) 6,292.65 1.83%
FTSE 250 (MCX) 17,420.55 1.43%
techMARK (TASX) 3,803.44 3.37%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 229.30p 10.72%
Compass Group (CPG) 1,187.50p 7.54%
Whitbread (WTB) 2,412.00p 7.39%
Ocado Group (OCDO) 2,120.00p 6.61%
Smith & Nephew (SN.) 1,660.00p 6.27%
Next (NXT) 5,004.00p 5.61%
Rolls-Royce Holdings (RR.) 272.50p 5.42%
Hikma Pharmaceuticals (HIK) 2,213.00p 5.38%
JD Sports Fashion (JD.) 651.80p 5.26%
Melrose Industries (MRO) 122.50p 5.24%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,470.00p -5.62%
BT Group (BT.A) 113.45p -1.86%
Morrison (Wm) Supermarkets (MRW) 183.40p -1.71%
M&G (MNG) 175.25p -1.53%
Sainsbury (J) (SBRY) 195.20p -1.46%
Land Securities Group (LAND) 549.40p -1.12%
British American Tobacco (BATS) 2,870.50p -1.10%
British Land Company (BLND) 373.70p -1.01%
Imperial Brands (IMB) 1,428.50p -0.97%
National Grid (NG.) 871.20p -0.89%

FTSE 250 - Risers

Hochschild Mining (HOC) 214.20p 12.62%
Carnival (CCL) 1,055.50p 11.39%
Cineworld Group (CINE) 57.32p 8.85%
Rank Group (RNK) 154.80p 8.25%
Energean (ENOG) 514.00p 7.96%
Meggitt (MGGT) 319.40p 7.58%
John Laing Group (JLG) 301.80p 7.56%
TUI AG Reg Shs (DI) (TUI) 380.50p 6.79%
easyJet (EZJ) 691.60p 6.40%
Vesuvius (VSVS) 397.20p 6.20%

FTSE 250 - Fallers

Dixons Carphone (DC.) 78.40p -9.36%
St. Modwen Properties (SMP) 358.00p -3.68%
Bank of Georgia Group (BGEO) 964.00p -3.60%
TBC Bank Group (TBCG) 859.00p -3.41%
Just Group (JUST) 49.84p -3.32%
Airtel Africa (AAF) 62.10p -3.30%
Hilton Food Group (HFG) 1,196.00p -3.14%
HGCapital Trust (HGT) 247.50p -3.10%
FDM Group (Holdings) (FDM) 925.00p -2.54%
Drax Group (DRX) 252.40p -2.40%