The Times - UK (2020-11-14)

the times | Saturday November 14 2020 2GM 53

Business

Vaccine hopes boost prices despite sharp rise in Covid cases

FTSE’s best week since April

James Dean US Business Editor
Alex Ralph

Euphoria about a breakthrough in the
race to develop a Covid-19 vaccine has
driven leading British shares to their
best week in seven months, even as
coronavirus cases hit a record.
The FTSE 100 index climbed by
6.9 per cent this week and clocked up its
largest two-week percentage gain since
October 2001. The domestically
focused FTSE 250 rose by 7.6 per cent,
the best weekly performance for each
since the week starting April 6.
Investors poured a record £33.8 bil-
lion into global equity funds this week,
research by Bank of America showed.
They also spent £13.5 billion in cash,
indicating that the mood has shifted
from defensive to offensive investment.
Yields on “safe-haven” ten-year UK
government bonds jumped by 22.4 per
cent this week, reflecting heavy selling,
and on Wednesday hit their highest
level since late March. Yields rise when
prices fall.
Promising data from Pfizer and Bion-
tech’s late-stage Covid-19 vaccine trial
sent markets up sharply on Monday,
extending a rally that began after last
week’s US elections. The rally intensi-
fied as short-sellers were forced to close
out losing bets on recovering bank,
travel and leisure shares.
In an interview with The Times, Ian
Read, former chief executive of Pfizer,
said that the vaccine heralded the
“beginning of the end of the crisis”.
Pfizer and Bionech said that their
vaccine worked in more than 90 per
cent of cases, easily surpassing analysts’
forecasts of 60 per cent to 70 per cent
effectiveness and a 50 per cent thresh-
old set by the US drugs regulator.
Mr Read, 67, was in charge of the
American drugs company when it
struck its first flu vaccine research
collaboration deal with Biontech, of
Germany, two years ago. He said that
confidence in the vaccine was war-
ranted and that the high efficacy “will
have a fundamental impact on society”.
This week’s rally hit a bump on
Thursday as infections jumped more
than expected in Europe and the
United States, raising fears of extended
lockdowns, tighter social restrictions
and, ultimately, further economic dam-
age. Confirmed daily Covid-19 cases in
Britain rose to a record 33,470 on
Thursday and America reported more
than 160,000 daily infections little
more than a week after it broke the
100,000 mark for the first time.
The FTSE 100 rose for eight consecu-
tive sessions to Wednesday, adding
14.4 per cent. Yesterday it fell by 22.55
points, or 0.4 per cent, to 6,316.39. Brit-
ain’s index of leading shares is down by
15.3 per cent since markets began to
tumble in mid-February but is 26.7 per
cent above its trough of late March.

Brent crude, the global oil price bench-

mark, was up by 8.4 per cent for the

week as investors bet that a vaccine

would restore demand.

On Wall Street, fading hopes of

imminent fiscal stimulus from Wash-

ington and uncertainty about an order-

ly transfer of power at the White House

dulled the mood, but not enough to stop

the S&P 500 closing at a new record

high. In New York last night the index

ended the week up 2.2 per cent. It rose

1.4 per cent on the day to 3,585.15 and

has climbed by 11 per cent this year.

The Dow Jones industrial average

was up 4.1 per cent for the week and by

1.4 per cent yesterday at 29,479.81. It is

up 3.3 per cent since January.

The technology-focused Nasdaq suf-

fered as investors pulled out of big tech-

nology companies, whose shares have

risen since the start of the pandemic.

The index was down 0.6 per cent for the

week but up 1 per cent for the day at

11,829.29. The pan-European Stoxx

600 index was up by 5.2 per cent for the

week, its best two-week gain in 19 years.

The post-vaccine economy, pages 54-55

My role in drug breakthrough,

The Manifesto, page 61

Not too late to join investment party,

Money, page 63

Back on its feet?

Best weeks for FTSE 100 since

financial crisis, %

Apr 6

2020

Nov 28

2011

Jun 27

2016

Nov 9

2020

Jun 1

2020

Top 5 risers and fallers this week

IAG

Rolls-Royce

Land Securities

Informa

Compass

Fresnillo

Avast

Just Eat Takeway

Ocado

Polymetal

40%

-13%

-10

-9

-9

-8

35

27

23

21

FTSE 100 so far this year

JFMAMJJASON

2020

8,000

7,000

6,000

5,000

7. 9 7. 5 7. 2 6. 9 6 .7

commodities currencies

$

Brent crude (6pm)

$42.95 (-1.16)

world markets (Change on the day)

$

Gold

$1,891.60 (+17.10)

2,200

2,000

1,800

1,600

6,500

6,000

5,500

5,000

FTSE 100

6,316.39 (-22.55)

1.350

1.300

1.250

1.200

$

1.150

1.125

1.100

1.075

¤

£/$

$1.3172 (+0.0032)

£/€

€1.1142 (+0.0021)

Dow Jones

29,479.81 (+399.64)

commodities

50

45

40

35

Oct 16 26 Nov 3 11 Oct 16 26 Nov 3 11 Oct 16 26 Nov 3 11 Oct 16 26 Nov 3 11 Oct 16 26 Nov 3 11 Oct 16 26 Nov 3 11

30,000

28,000

26,000

24,000

H

edge funds with

short positions

in Britain’s

biggest

companies are

nursing paper losses of

nearly £700 million from

this week’s stock market

rally (Miles Costello writes).

Funds had placed

individual bets worth

hundreds of millions that

the shares in a string of

leading companies,

including HSBC, Rolls-

Royce and J Sainsbury, will

fall. Smaller companies

such as Cineworld and

Premier Oil also have been

targeted.

However, some of the

most heavily shorted stocks

rose sharply in the rally this

week. According to

provisional figures from

Ortex Analytics, a London

and Wall Street data

specialist, short-sellers lost

£676.7 million between

Monday and last night’s

close. Although funds

generated a return of

£166.9 million yesterday as

markets moved in their

favour, short-sellers are still

£1.3 billion out of pocket

since the beginning of the

month, it found.

The data compiler

balanced loss-making

positions against profitable

short bets on other

companies in the index, but

would not have been able to

take account of balancing

long holdings the funds

might have elsewhere. The

data also covers only this

week and month, meaning

that short-sellers could still

be in positive territory with

their bets overall, given that

the FTSE 100 is 15 per cent

below its peak in January.

Short-selling involves an

investor borrowing shares

and offloading them in the

market in the hope that the

price falls and it can buy

them back more cheaply

later, banking the

difference as profit. When

the price moves against it,

the fund often has to buy at

a loss in order to cover its

position or return the share

to its owner.

Rolls-Royce, the troubled

engine maker, is among the

most-shorted companies in

the FTSE 100, according to

Short tracker, which

collates official filings to the

regulator, the Financial

Conduct Authority. It

estimates that 5.9 per cent

of the shares are out on

loan for Rolls, which has

been hit by the effective

grounding of the aviation

sector and has had to turn

to the equity and bond

markets to shore up its

balance sheet. However,

shares in the company rose

35 per cent this week.

Funds betting against

Rolls include Boussard &

Gavaudan, a Mayfair firm

founded by two former

Goldman Sachs bankers,

and Guevoura, based in

Gibraltar.

Short-sellers lick wounds

as stock market picks up