European shares slipped on Wednesday as investors took stock following a near 14% rally last month, while shares in BioNTech surged after UK became the first country to approve its COVID-19 vaccine developed with Pfizer.
London’s blue-chip index outperformed regional peers, up 0.1% after Britain said the vaccine will be rolled out from next week, and as the pound slid on Brexit trade deal uncertainty.
“As vaccines get approved and rolled out, the outlook for the economy should improve,” said Simona Gambarini, markets economist at Capital Economics.
The FTSE 100 has been inching towards pre-pandemic levels, having recovered 60% from March lows.
BioNtech’s Frankfurt-listed shares jumped 7.5%, compared with a 0.5% fall for Germany’s benchmark DAX index. Data showing a higher-than-expected rebound in retail sales in Europe’s largest economy in October did little to cheer investors.
The pan-European STOXX 600 index was down 0.3%, with auto stocks leading declines as carmaker Volkswagen slipped 2.1% amid uncertainty about top management.
“(The moves) come against the backdrop of a few weeks of very sharp rallies in European markets on the vaccine, so it’s not unusual that there will be days when the rally moderates slightly,” Gambarini said.
“I certainly don’t think this will be the beginning of a correction, as more positive news will probably be coming our way regarding the vaccines.”
Stimulus developments were also on the radar after the New York Times reported that U.S. President elect Joe Biden said his priority was getting a generous coronavirus aid package through Congress even before he takes office in January.
Biden added he will not act immediately to remove the Phase 1 trade agreement with China reached by President Donald Trump, according to the report. A tariff war between the world’s two biggest economies had roiled markets and slowed global economic growth.
Investors also kept an eye on moves by Britain and the European Union as Brexit trade talks were still stuck.
“A deal still hangs in the balance” the EU’s Brexit negotiator said on Wednesday. The bloc had said it would launch contingency measures on Wednesday or Thursday, if unable to reach an agreement by then.
Reporting by Susan Mathew in Bengaluru; Editing by Shounak Dasgupta