It looks like your browser is not up to date.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

Sector movers: Aerospace, Big Oil spike as short-sellers caught out by vaccine news

Mon 09 November 2020 15:21 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - Aerospace and Defence, and Big Oil were wanted at the start of the week following news that one of the front-runners in the fight to find a vaccine against Covid-19 had proven far more effective than even company insiders had hoped for.

Early on Monday afternoon, Pfizer and BioNTech announced that their vaccine candidate had blocked over 90% of novel coronavirus infections, versus the more than 50% required by regulators in the US in order for a vaccine to be considered for emergency use approval.

It would still be a couple of weeks before the two firms would have the preliminary safety data needed to apply for EUA, but market reaction was nevertheless quite bullish.

Significantly, in the run-up to the news, reports around some of the most eagerly-awaited vaccines appeared to indicate that their efficacy might be a fair bit lower.

Against that backdrop, markets appeared to be quickly reassessing the outlook for economic growth into 2021 with some of the most bombed-out areas of the market the key beneficiaries.

Earlier in the same session, before the news from Pfizer and BioNTech broke, analysts at Citi had issued a research note pointing out various of the more dire economic scenarios that might crystallize if a vaccine were not found.

"A vaccine or other cure that could permanently control the pandemic is possible, but this could take years, widening the range of possible economic paths further. Huge losses can snowball - Our illustrative scenarios suggest GDP might still be more than 10% below 2019 levels in two years' time," Citi said.

"Cumulative losses over this period could be 14-33% of 2019 GDP for the Eurozone and 20-43% for the UK. Impaired public and private balance sheets could snowball beyond the pandemic."

Aerospace was the top gainer on the FTSE 350, with stock in Rolls Royce flying by more than 50% to 106.4p, with short-sellers likely in a rush to cover their positions.

Shares of Meggitt and Senior were sharply higher too, alongside even bigger gains for the likes of IAG, Easyjet and Airbus.

Commenting on the potential implications of a vaccine for jet-maker Airbus, one of Rolls Royce's top clients, analysts at Jefferies said: "A vaccine promises to underpin current aircraft production rates.

Further, if airline capacity in Domestic China can largely recover within six months absent a vaccine, we believe expectations would grow of an accelerated recovery in airline traffic."

In parallel, and reflecting those hopes for a quiker reopening of economies, front-dated Brent futures were 9.3% higher to $43.12 a barrel on the ICE, fueling gains amond both oil explorers and the companies that supply them with kit and services.

Top performing sectors so far today

Aerospace and Defence 3,321.83 +14.64%

Oil & Gas Producers 4,015.58 +14.18%

Travel & Leisure 7,550.55 +13.48%

Oil Equipment, Services & Distribution 4,586.43 +13.42%

Life Insurance 6,482.24 +12.95%

Bottom performing sectors so far today

Leisure Goods 26,737.55 -6.46%

Food & Drug Retailers 4,048.48 -3.61%

Technology Hardware & Equipment 2,232.08 -2.25%

Pharmaceuticals & Biotechnology 17,201.12 -0.98%

General Retailers 2,457.17 -0.58%

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.