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European stocks traded higher on Monday, with investors encouraged by COVID-19 vaccine progress and hopes for a stimulus deal out of Washington. No collapse in Brexit talks also lifted sentiment.
The Stoxx Europe 600 index SXXP, +0.79% rose 0.6%, after the index logged a 1% loss last week, snapping a five-week winning streak. The German DAX DAX, +1.17% rose 0.9% and the French CAC 40 PX1, +0.83% gained 0.6%.
Gains were less pronounced for the FTSE 100 index UKX, +0.22%, which was flat while the pound surged against the dollar, last up 1% to $1.3364. U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen, agreed on Sunday to go “the extra mile” to reach a post-Brexit trade deal.
The two said that discussions would continue as the legal deadline of Dec. 31 looms. And while Johnson pointed out that both sides remain “very far apart,” he said the U.K. wouldn’t be “walking away from the talks.” On Monday, European Union Brexit negotiator Michel Barnier reportedly said a trade deal with the U.K. was still possible, but the coming days would be vital to keep it alive
“So, with the worst case, no Brexit deal global risk reset this morning, investors can breathe a morning sigh of relief as temporary as it might be,” said Stephen Innes, global chief market strategist at Axi, in a note to clients.
U.S. stocks DJIA, +0.39% climbed at the open. A bipartisan group of U.S. lawmakers will present a two-part $908 billion stimulus proposal on Monday, Bloomberg reported, citing a source. One part will consist of a deal worth $160 billion that includes the stickiest issues of state and local aid and liability shields for businesses, while the larger other part is a $748 billion package that covers measures that are less controversial.
Treasury Secretary Steven Mnuchin and Speaker of the House Nancy Pelosi spoke by phone on Sunday to discuss stimulus and agreed to speak again on Monday, her deputy chief of staff, Drew Hammill said via Twitter. TWTR, +1.85%
Investors were finding strength in COVID-19 vaccine news. Vials of the candidate from U.S. drug company Pfizer PFE, -2.39% 0Q1N, -4.52% and its German partner BioNTech BNTX, -5.80% are now making their way to distribution sites in the U.S., as the nation’s pandemic deaths near 300,000. The first vaccinations could come in the next few weeks.
Pfizer and BioNTech said on Monday that overall results of a Phase 1/2 study in Germany of its COVID-19 vaccine candidate mirrored those from the U.S. study.
Shares of AstraZeneca AZN, -5.70% AZN, -6.41% slid over 6%. The pharmaceutical group said over the weekend it will buy Boston-based Alexion Pharmaceuticals ALXN, +31.57% for $39 billion in cash and stock. The deal would boost the U.K. drug company’s presence in immunology and rare diseases. It also comes as AstraZeneca is in the late stages of developing a COVID-19 vaccine with the University of Oxford.
Shares fell on some fears that the company paid too much for Alexion, said Neil Wilson, chief market analyst at Markets.com, in a note to clients. “While the 45% premium may seem high, it’s probably not that significant when you consider the sector and the cash flow generation and revenue growth that it will bring,” he said.
Shares of GlaxoSmithKline GSK, -0.31% GSK, -0.81% dropped 1%. The U.K. pharmaceutical group said on Friday that it would delay the launch of a COVID-19 vaccine that it is developing with French drug company Sanofi SNY, -0.93% SAN, -0.50% until the end of 2021, after the first trials showed an insufficient response in older patients.
Read: CureVac starts Phase 3 clinical trial of its Covid-19 vaccine candidate
As Christmas nears, Europe also continues to struggle with the pandemic. Germany plans to enter a hard lockdown as COVID-19 cases continue to climb, with small exceptions only to be made for Christmas. The epicenter of Europe’s outbreak in the spring — Italy — has now overtaken the U.K. as the country with the region’s highest death toll from the disease.
Shares of Vivendi VIV, +0.90% rose 1%, after the French media conglomerate said on Monday it has entered into exclusive negotiations with Bertelsmann for the acquisition of the German media conglomerate’s Prisma Media unit.
