Europe midday: Vaccine euphoria evaporates as investors step back
European shares were lower at midday as investors took profits and the euphoria over test results from a second Covid-19 vaccine fizzled out.
Having risen 1.2% yesterday, the pan-European Stoxx 600 was down 0.44%, with the German DAX , French CAC 40 and UK FTSE 100 all lower. The Dow Jones was marked down for a 165 point fall at the Wall Street open.
"It is very encouraging to hear that great strides are being made on the coronavirus front but even if the drug is approved, it could take months to get rolled out. Broadly speaking, the stocks that outperformed yesterday – airlines and pub groups – are in the red today," said CMC Markets analyst David Madden.
Investors were still wary of the number of rising cases in the US and across Europe. The American states of California and New Jersey both tightened restrictions, while President-elect Joe Biden warned that more lives would be lost unless incumbent leader Donald Trump stopped blocking the transition of power.
“A ripple of tighter lockdown restrictions in Europe forced investors to consider the pandemic present rather than the vaccine future on Tuesday,” said Spreadex analyst Connor Campbell.
“It seems like the Moderna news doesn’t have quite the same legs as the initial Pfizer/BioNTech announcement, though the latter vaccine update did also have the benefit of coming in the swell of Biden election win gains."
“Barring another vaccine update – a progress report from the AstraZenaca-Oxford trial is the most anticipated of those left – the day’s highlight could be the US retail sales. Not that they’re particularly promising; analysts are expecting a drop from 1.9% to 0.5% month-on-month."
In equity news, Banco Sabadell rose after a 25% surge on Monday, as the bank confirmed takeover talks with BBVA almost immediatelty swiftly after the larger Spanish bank reached a deal to sell its US operations to PNC Financial Services for $11.6bn. BBVA shares fell almost 7% after soaring 15% yesterday.
"Should the Banco de Sabadell move go ahead, it is likely that a cost cutting programme would be introduced, which would probably mean branch closures. The British bank TSB is owned by Banco de Sabadell and that could be spun off as the new entity might seek to focus on the domestic market," said CMC's Madden.
Alstom shares were 6% lower after launching a €2bn stock sale to fund the company's acquisition of Bombardier Transportation.
Shares in low-cost airline easyJet were lower after the company reported the first loss in its 25-year history. The company posted a pre-tax loss of £1.3bn as the Covid-19 pandemic battered demand and forced a grounding of the carrier’s entire fleet.
Shares in tobacco firm Imperial Brands rose as the company reported a rise in full year sales and forecast growth in 2021.
Intermediate Capital Group shares were higher as the fund manager posted a sharp rise in first half profits amid strong demand for its funds and a recovery in portfolio valuations across the period.