Leading European stocks edged higher on Monday, as hopes grew over a “promising” coronavirus vaccine trial and progress towards a breakthrough in EU stimulus talks.
A paper in The Lancet medical journal said a potential vaccine in a leading University of Oxford trialhad been found safe. “These early results hold promise,” said Professor Sarah Gilbert, of the University of Oxford, “If our vaccine is effective, it is a promising option as these types of vaccine can be manufactured at large scale.”
AstraZeneca has already signed deals with the university and with countries including the UK and the US to supply doses of the vaccine if trials are successful. It has said total manufacturing capacity stands at two billion doses.
Investors’ hopes also rose on Monday as several EU leaders said progress had been made in talks at a Brussels summit over a potential €750bn (£683bn, $859bn) bloc recovery fund.
Dutch prime minister Mark Rutte told journalists on Monday: “We are not there yet, things can still fall apart. But it looks a bit more hopeful than at the times where I thought last night that it was over.
Hopes of a compromise deal grew over the weekend as the talks, only scheduled for Friday and Saturday, continued into a fourth day on Monday. The euro remains near four-month highs against the dollar (EURUSD=X), hovering above $1.14.
Most major stock indexes had fallen at the start of trading in Europe on Monday amid heightened worries over infection rates worldwide, but some had made gains or pared back losses by the afternoon. Germany’s DAX (^GDAXI) and the pan-European STOXX 600 index (^STOXX) were up 0.5% at around 3pm in London. France’s CAC 40 (^FCHI) gained 0.2%. But Britain’s FTSE 100 (^FTSE) dropped 0.6%.
Discussions at the EU summit resumed in late afternoon in Brussels. European leaders remain at odds over the size and form of a bloc-wide recovery plan, aimed at stimulating economies reeling from the coronavirus and lockdowns. It would be the first ever EU stimulus plan funded through joint borrowing.
Several northern countries are pushing for more of the package to be funded through loans rather than grants, and with more conditions attached. One diplomat told Reuters French president Emmanuel Macron had banged his fist on the table in frustration at the Netherlands, Sweden, Denmark, Austria and Finland for holding out.
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But diplomats hope compromise will be reached on the amount disbursed through grants, with a sum somewhere between each sides’ preferred totals.
Deutsche Bank analysts wrote in a note that the latest reports were “pointing towards a possible compromise for €390bn in grants in the recovery fund,” wrote “The fact that we are still going well into a fourth day suggests a desire to get something done.”
Fresh tensions between the UK government and China also added to uncertainty for UK and Hong Kong investors. The Times and the Daily Telegraph reported over the weekend prime minister Boris Johnson’s administration is set to suspend Britain’s extradition agreement with Hong Kong over China’s authoritarian national security law.
The Hang Seng (^HSI) index in Hong Kong shed 0.3% overnight. Stocks in Shanghai (^SSEC) gained 3.1%, after Chinese authorities lifted an equity investment cap for insurers. Japan’s Nikkei (^N225) gained 0.1%.
It came as coronavirus cases continued to rise in hard-hit Barcelona, and hit a new high in the Czech Republic. In the US, Reuters reports infections have also edged higher in 42 states over the past two weeks. Globally, Friday saw a record leap in daily reported cases for a second day in a row, with almost 260,000 new cases.