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Markets rally on vaccine hopes, EU stimulus deal

21 July 2020, MVT 22:03
European Commission President Ursula Von Der Leyen (L) and European Council President Charles Michel (R) bump elbows at the end of the news conference following a four days European summit at the European Council in Brussels, Belgium, early July 21, 2020. - EU leaders approved a 750-billion-euro package to revive their coronavirus-ravaged economies after a tough 90-hour summit on July 21, along with a trillion-euro budget for the next seven years. PHOTO: STEPHANIE LECOCQ / POOL / AFP
21 July 2020, MVT 22:03

Asian and European stock markets rallied Tuesday on promising results from two clinical coronavirus vaccine trials, and after EU leaders finally clinched a landmark 750-billion-euro ($860-billion) stimulus deal.

"A combination of vaccine optimism and fiscal stimulus is boosting the mood," City Index analyst Fiona Cincotta said.

"Encouraging results ... in addition to EU leaders agreeing to a 750-billion-euro recovery fund, is overshadowing rising tension between the UK and China -- and soaring COVID-19 numbers in California."

The clinical studies provided a much-needed shot in the arm for investors, who have been put on edge by worrying spikes in new infections around the world, causing a months-long surge across equities to stumble.

The new cases have forced authorities to reimpose containment measures, fanning concerns about an economic recovery that has been supported by trillions of dollars in government and central bank stimulus measures.

Studies spark cheer

But two studies published in The Lancet medical journal sparked some cheer, with a trial among more than 1,000 adults in Britain finding a candidate vaccine induced "strong antibody and T cell immune responses" against the coronavirus.

That came as another trial of more than 500 people in China showed most had developed a widespread antibody immune response.

Meanwhile, British biotech firm Synairgen said a randomised trial of an aerosol-based treatment showrf it could drastically reduce the number of new patients dying of the disease or requiring intensive care.

The positive news from the trials could be a major step towards the Holy Grail that analysts say will likely send markets soaring.

More than 20 candidate vaccines are currently being tested on humans.

Stimulus deal

In addition, the European Union finally reached a stimulus deal after four days of haggling, made possible by the backing of Germany and France and including the biggest-ever joint borrowing by the 27 members, something that had been resisted by Berlin for generations.

"Deal!" tweeted EU Council Chief Charles Michel, whose job was to guide the talks over more than 90 hours.

The package sends tens of billions of euros to countries hardest hit by the virus, most notably heavily-indebted Spain and Italy that had lobbied hard for a major gesture from their EU partners.

In Europe at the half-way point, Frankfurt rallied by 1.7 percent and Paris jumped by 1.2 percent, while London put on 0.6 percent.

However, the euro pared earlier gains against the dollar, with analysts saying an agreement had been widely expected.

Focus now turns to lawmakers in Washington who are looking to pass a huge new stimulus package, with s previous multi-trillion-dollar one set to expire at the end of the month.

Key figures around 1100 GMT

London - FTSE 100: UP 0.6 percent at 6,296.51 points

Frankfurt - DAX 30: UP 1.7 percent at 13,273.82

Paris - CAC 40: UP 1.2 percent at 5,155.65

EURO STOXX 50: UP 1.5 percent at 3,439.21

Tokyo - Nikkei 225: UP 0.7 percent at 22,884.22 (close)

Hong Kong - Hang Seng: UP 2.3 percent at 25,635.66 (close)

Shanghai - Composite: UP 0.2 percent at 3,320.89 (close)

New York - Dow: UP less than 0.1 percent at 26,680.87 (close)

West Texas Intermediate: UP 2.2 percent at $44.23 per barrel

Brent North Sea crude: UP 2.0 percent at $41.64 per barrel

Euro/dollar: DOWN at $1.1443 from $1.1448 at 2100 GMT

Dollar/yen: UP at 107.29 yen from 107.27 yen

Pound/dollar: UP at $1.2691 from $1.2661

Euro/pound: DOWN at 90.17 pence from 90.41

London, United Kingdom | AFP

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