Markets rally on vaccine hopes, EU stimulus deal

LONDON: 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.