Europe Stocks Jump to Highest Since March on Vaccine Bets, Biden

European stocks surged to the highest level since March as fresh hopes for a coronavirus vaccine added as much as 400 billion euros ($476 billion) to the Stoxx 600’s market value.

The benchmark index ended 4% higher, rallying in morning trading on optimism over Joe Biden’s election victory and surging following news that a vaccine being developed by Pfizer Inc. and BioNTech SE prevented more than 90% of infections in a study of tens of thousands of volunteers.

Preliminary results could pave the way for two vaccines becoming available in the U.S. by around year-end, reducing this year’s most critical investment risk after the pandemic and lockdowns whipsawed markets and led to an economic slump across the world.

“It’s very good news, exuberance looks fair,” said John Roe, head of multi-asset funds at Legal & General Investment Management. “It’s not just the announcement, where news was expected, but the effectiveness and so this hasn’t just taken out a tail risk, it’s taken out quite a lot more. It could even mean the necessary U.S. lockdown can be taken in the markets’ stride when it comes.”

READ: Lockdown Winners Sink After Pfizer Vaccine Progress

Europe Stocks Jump to Highest Since March on Vaccine Bets, Biden

Major equity benchmarks jumped with France’s CAC 40 Index and Spain’s IBEX 35 Index rising 7.6% and 8.6% respectively, leading the gains. Germany’s DAX Index closed up 4.9%, while the Greece’s ASE benchmark surged 11%, also helped by Moody’s Investors Service raising the country’s sovereign credit rating.

Cyclical sectors such as travel, banks and energy led the rally, with Air France-KLM up 27% and Carnival Plc up 38%. Shares in companies that have benefited from virus-induced lockdowns fell, with meal-kit maker HelloFresh SE and online grocery delivery firm Ocado Group Plc both losing more than 10%.

Europe Stocks Jump to Highest Since March on Vaccine Bets, Biden

Over the weekend, Biden promised swift action against the pandemic in his victory speech. He’ll also reach out to Republicans and Democrats in Congress to discuss a new relief package. Still, President Donald Trump is weighing legal challenges and has so far refused to concede.

“The new president should bring less confrontational trade policies and adopt a more consensual approach at home and abroad,” said Emmanuel Cau, head of European equity strategy at Barclays Plc. “A split Congress reduces the prospects of large scale fiscal stimulus, but also limits the chances of market unfriendly policies, like tax increase or tighter regulations, being implemented.”

©2020 Bloomberg L.P.

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