Wall Street hits record high on vaccine hopes and Biden transition
US stocks pushed to record highs this afternoon as investors welcomed positive and signs that US President Donald Trump is accepting his election loss.
The Dow Jones climbed 1.6 per cent to set a new record high, trading above 30,000 points for the first time.
The gains mean it is on track to cement its best monthly performance since 1987.
The S&P 500 was up 1.5 per cent, while the tech-heavy Nasdaq reversed initial losses to gain just under one per cent.
It came after the FTSE 100 gained ground, closing 1.5 per cent higher at 6,432 points. The FTSE 250 of slightly smaller firms climbed just over one per cent.
One key driver of the rally was more upbeat vaccine news. Yesterday, Astrazeneca and Oxford University showed that their jab was up to 90 per cent effective. It came after Moderna and Pfizer/Biontech’s vaccines were shown to be even more effective than that.
On top of this, Trump said he would accept the General Services Administration’s move to acknowledge Joe Biden as the apparent winner of the presidential election. This reduces uncertainty and allows Biden to start planning for when he takes up office in January.
In Europe, Germany’s Dax was up one per cent while France’s CAC 40 was 1.2 per cent higher. The continent-wide Stoxx 600 was up 0.7 per cent.
Oil hit its highest level since March amid optimism about increased demand next year.
Tesla drives up US stocks
Wall Street’s big winner this afternoon was Tesla, which burst through the $500bn market valuation mark.
The electric car manufacturer rose more than three per cent as markets opened, before gains softened to just over one per cent.
The rise in valuation caps off a mammoth rally for Tesla, which has seen its share price increase more than sixfold this year.
The growth cements its position as the world’s most valuable car manufacturer, despite producing far fewer vehicles than rivals such as Toyota, Volkswagen and General Motors.
The rally also adds to the personal wealth of eccentric boss Elon Musk, who has overtaken Bill Gates to become the world’s second-richest man.
Other US risers including aerospace giant Boeing and oil group Chevron, with financial firms following close behind.
Tech was the only Dow sector in the red, with Apple and Microsoft both slipping.
Neil Wilson at Markets.com said: “We’re seeing some big risk-on moves this afternoon in the market which we can attribute to some very favourable pre-Thanksgiving flows off the back of Trump giving the green light to the transition, news that Janet Yellen is heading to Treasury and vaccine positivity increasing as the Astra news gets fully digested.
“Uncertainties about next year are being cleared out of the way and the vast liquidity put is still positive even if this all looks like it’s a little exuberant.”
FTSE 100 reflation trade continues
The positive vaccine announcements have led to a “reflation trade” in which investors have bought up unloved sectors of the market, which stand to benefit from a return to normal life.
Those dynamics continued today, with jet engine-maker Rolls Royce leading the FTSE 100 with a 10 per cent jump.
British Airways-owner IAG was not far behind. Both stocks were boosted by England’s plans to cut the quarantine period for travellers.
BP was the second-biggest riser, with shares up 7.6 per cent, while Shell’s shares rose around 4.8 per cent. The Brent crude oil price rose 1.3 per cent to $46.40, its highest level since March.
“The dominant driving force behind the market has been progress in vaccine development,” said Fiona Cincotta at Gain Capital.
The dollar dropped 0.2 per cent against a basket of other currencies. Its fall was a sign that investors were moving away from safer assets towards riskier ones. It also helped the pound rise 0.1 per cent to $1.334.