Vaccine hopes drive stocks higher on 'Black Monday' anniversary

2/2 © Reuters. FILE PHOTO: A passersby wearing a protective face mask walks in front of a stock quotation board, amid the coronavirus disease (COVID-19) outbreak, in Tokyo 2/2

By Thyagaraju Adinarayan

LONDON (Reuters) - European stocks rallied on Monday as rising hopes of a coronavirus vaccine by the end of the year and a U.S. fiscal package before elections offset concern over record daily infections in the region.

Wall Street futures rose 0.9% on the 33rd anniversary of the 1987 "Black Monday" crash, when the Dow Jones Industrial Average (DJI) lost 22.6% in one day, equivalent to a drop of about 6,500 points in the index today.

European blue-chip stocks index (STOXX50) rose 0.8% even as new COVID-19 cases were growing at over 150,000 a day in Europe. Parts of the UK were put into lockdown and France imposed curfews.

Those worries and no breakthrough in the Brexit stalemate failed to curb risk appetite among investors, after U.S. House Speaker Nancy Pelosi said on Sunday she was optimistic about a coronavirus relief deal before Election Day.

Boosting overall sentiment, drugmaker Pfizer Inc (N:PFE) said on Friday it could have a coronavirus vaccine ready in the United States by the end of this year.

"A vaccine will be broadly available from the second quarter of next year, with markets moving to price in the economic benefits well ahead of that," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

"The on-off fiscal talks have injected near-term volatility into risk assets, but instead of staying on sidelines, we suggest investors consider ways to build up long-term positions in these market conditions."

Investors also took comfort from China's economic recovery in the third quarter as consumers shook off their coronavirus caution, although the weaker-than-expected headline growth capped stock market gains in Asia.

"The rebound in Q3 GDP was less strong than expected, but was still a decent 4.9% year on year. September data beat expectations, suggesting a pick-up in momentum towards the latter part of Q3," said Frances Cheung, head of macro strategy for Asia at Westpac in Singapore.

"The pick-up in momentum was broad-based, which bodes well for the Q4 outlook."

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) rose 0.5% for a second straight day of gains, paring back following third-quarter gross domestic product data from China.

Separate monthly indicators pointed to an expansion in economic activity. Industrial output accelerated 6.9% in September from a year earlier, when analysts were looking for a 5.8% gain from a 5.6% rise in August.

Later in the week, key risk events, include minutes of Australia's central bank meeting, the final U.S. presidential debate and global manufacturing indicators.

Action in currencies was muted with the U.S. dollar (=USD) flat at 93.696 against a basket of six major currencies. [USD/]

The euro (EUR=) traded higher at $1.1725 and the sterling held above a 10-day low on Monday. Investors cut their holdings as British and European negotiators tried to salvage post-Brexit trade talks.

"EU-UK trade talks are flirting with collapse," ANZ economists said.

"UK Prime Minister Johnson said the UK needs to prepare for a no-deal outcome, as both sides cannot agree on a Canada-style FTA. Talks resume in London on Monday, but without the political willingness to shift ground, there is little the negotiators can achieve."

In commodities, Brent crude futures (LCOc1) were flat at $42.92 a barrel and U.S. West Texas Intermediate crude futures (CLC1) traded at $40.91 a barrel.

Spot gold rose 0.6% to $1,909.6 an ounce.