European Central Bank President Christine Lagarde had some cautious words about the pandemic today.

Lagarde told the ECB Forum on Central Banking that the eurozone may not experience a ‘linear’ recovery, despite the optimism about Pfizer’s vaccine. There would probably be bumps on the way, depending how fast treatments are rolled out.

Lagarde explained (via CNBC) that:

“While the latest news on a vaccine looks encouraging, we could still face recurring cycles of accelerating viral spread and tightening restrictions until widespread immunity is achieved.

“So the recovery may not be linear, but rather unsteady, stop-start and contingent on the pace of vaccine rollout,”

Britain has passed another dark milestone in the pandemic tonight, with the UK’s headline Covid death toll passing 50,000.

My colleague Andrew Sparrow has the details:

• The UK has recorded 595 further coronavirus deaths, taking the official headline death toll above 50,000 for the first time. This is the highest daily total since early May, and substantially above yesterday’s total - 532 - which was the previous highest total for this wave of the pandemic. The headline death total is now 50,365, making the UK the first country in Europe to pass this milestone. But this figure only counts people who have died within 28 days of testing positive for coronavirus. Taking into account all deaths where coronavirus was mentioned on the death certificate, the UK total has passed 65,000.

• There have been 2,623 deaths in the past week, up 27% on the previous week.

• The UK has recorded 22,950 further positive cases.

Tate & Lyle Sugars, a prominent corporate backer of Brexit, has warned of sugar and syrup shortages in Northern Ireland in the new year, due to lack of clarity over the UK and EU trade relationship.

The company is the largest cane sugar brand in the UK and supplies the main supermarkets in Northern Ireland. It has advised retailers to draw up contingency plans to source sugar and syrup from elsewhere, because it will struggle to get its products to them next year, according to ITV News.

Tate & Lyle Sugars, which was sold by Tate & Lyle plc to American Sugar Refining in 2010, said the uncertainty over Brexit and the Northern Ireland protocol was likely to cause significant outages in Northern Ireland. The company owns the Thames Refinery in London, the biggest sugar refinery in Europe.

Drinks giant Diageo has suffered a bitter blow today --recalling all its new non-alcoholic Guinness stout because of “microbiological contamination”.

It warned that cans of the new Guinness 0.0 drink, which took four years to develop and launched two weeks ago, may be “unsafe to consume”. If you’re got some, return it to your retailer for a refund.

The contamination is understood to have occurred during the production process at its St James’s Gate brewery in Dublin, so production and canning are on hold while tests are carried out.

With the lockdown hitting pub sales this year, this is unfortunate timing for Diageo.

Sarah Riding, partner at law firm Gowling WLG, says:

“Supply chain forethought and contingencies are key to making any product launch seamless and successful, and sometimes, it is only instances such as this that trigger a through and rigorous audit of the individual checks in place to ensure prevention at all times.

“The cost of recalling, as well as any lost brand equity can be extremely disabling at the best of times, but the pressures of the pandemic may make this even harder to bear – better guaranteeing this won’t happen in future will save far more in the long run, of course.”

Britain’s FTSE 100 is firmly on track for its eighth day of gains in a row, now up 85 points 0r 1.35% at 6383 in late trading.

Connor Campbell of SpreadEx says London’s market is leading the way today:

Less electric than the last few sessions, the markets nevertheless continued to ride the wave of Pfizer vaccine positivity.

The FTSE was head and shoulders above its peers this Wednesday. Climbing more than 1.3%, the UK index crossed 6,380 for the first time in 5-months. That means it is getting close to the 6,500 peak it hit before unravelling across the summer

Remaining near the top of the FTSE 100 charts was British Airways-owner IAG, which surged another 6%, meaning it has moved from £1.05 to 1.48 in the space of 3 sessions.

Goldman Sachs has also predicted the US stock market will climb higher over the next couple of years.

It now estimates the S&P 500 index will end this year at 3,700 points - around 4% higher than currently, up from 3,600 points previously.

And Goldman then sees stocks rising sharply higher next year, and in 2022,

We forecast S&P 500 will climb by 16% to 4300 at year-end 2021 and gain 7% to reach 4600 by the end of 2022.

The market is actually less dependent on the performance of a few mega-cap stocks than many investors perceive.

This forecast is based on the assumption that at least one vaccine is approved by the FDA and administered to a large portion of the US population.

It also assumes that the Republican Party maintains control of the US Senate following run-off elections in Georgia, making it harder for president-elect Biden to push major tax reforms through.

Goldman Sachs’ equity strategist David Kostin explained:

A vaccine is a more important development for the economy and markets than the prospective policies of a Biden presidency. The much-awaited results from Pfizer that its COVID-19 vaccine has an efficacy rate greater than 90% is a positive event that will allow society to gradually normalize during 2021.

Elections have consequences, both for policies and markets. Joe Biden has been elected the 46th President of the United States. However, the upcoming 117th Congress (2021-2023) will likely remain divided but will depend on the results of two run-off Senate elections in Georgia on January 5th. Politics is policy and uncertainty will remain elevated until then. A divided government means little scope for major legislative changes, although trade and regulatory policy stances will likely differ relative to the Trump administration. Unified control would mean more fiscal spending but also higher individual and corporate tax rates.

Over in America, the number of weekly mortgage applications has fallen back.

Mortgage applications decreased 0.5% week-on-week in the seven days to Friday 6th, according to data from the Mortgage Bankers Association.

In the previous week, mortgage applications jumped by 3.8%, so this is quite a reversal [although these weekly figures can be erratic, and potential housebuyers may have been distracted by the election].

It could remind US politicians of the need for a new stimulus package, with economists concerned that its economy is slowing.

Back in Europe, the pound has briefly nudged a six-month high against the euro.

Sterling traded as high as €1.1284, the highest since May, before dropping back towards its earlier two-month high.

Reuters reports that vaccine optimism is giving the pound a lift:

The pound benefited as investors judged that a vaccine would be a particular boon to the UK, which has seen its economy ravaged by the coronavirus.

“Since Britain has been disproportionately hit by the virus, it will be disproportionately helped by a vaccine,” wrote Marshall Gittler, head of investment research at BDSwiss Group.

The euro has also lost ground against the US dollar today, down nearly half a cent.

Kit Juckes, foreign exchange expert at Société Générale, points out:

In FX, this week’s wining currencies come from countries which might have been thinking about negative rates but haven’t yet done the deed, and the losers are the ones which already have negative rates.

The yen, Swiss franc and euro are all lower against the dollar since the vaccine news emerged.

But, of course, the Brexit negotiations will also influence both currencies.

Daniel Boffey, our Brussels bureau chief, reports that a video conference summit of EU leaders on 19 November is now viewed by Brussels as the final deadline for a draft Brexit deal, with negotiations continuing...

The thorniest problems to resolve remain the level of access to UK waters provided to EU fishing fleets, how to maintain fair competition rules for business – including rules on domestic subsidies – and the mechanism in the final treaty for resolving future disputes.

Concerns about China has also helped prompt the British government to draw up new proposed powers to block takeovers and corporate deals that threaten national security.

The National Security and Investment Bill, published this morning, will give ministers greater powers to scrutinise takeover activity in key sectors such as energy and defence.

Business Secretary Alok Sharma has said the proposed legislation will stop ‘hostile actors’ from threatening the public’s safety.

“The UK remains one of the most attractive investment destinations in the world and we want to keep it that way.

“But hostile actors should be in no doubt - there is no back door into the UK.”.

Our defence and security editor, Dan Sabbagh, explains:

Ministers and officials have been careful to draw up the legislation in a country-neutral manner, but although there are concerns about Russian companies, it is takeovers involving Chinese firms that will come under the greatest scrutiny.

The proposals emerge at a time of heightened political concern about Chinese ownership in key parts of the economy, while the coronavirus pandemic has also further revealed dependencies on foreign suppliers for critical goods.

A growing number of Conservative backbenchers also want to make it harder for Chinese companies to buy strategic British firms – after they successfully forced the government to drop Huawei from 5G mobile networks after 2027.

One of the party’s MPs, Bob Seely, said he welcomed the intent of the bill but wanted ministers to be clear about how far takeovers by foreign companies could be blocked amid concerns over human rights.

More here:

European stock markets have also extended their gains this morning, with France’s CAC and Germany’s DAX both up around 0.4%.

This has pushed the Stoxx 600 index to a fresh eight-month high, clawing back more of its losses since the pandemic began.

Geoff Yu, senior market strategist at BNY Mellon, says:

This week’s momentous news of a potentially successful vaccine for COVID-19 has triggered one of the biggest rotations in asset markets in recent memory.

Unsurprisingly, the eurozone equities market has been a major beneficiary as its value heavy components finally found favor.

Yu adds that the eurozone should benefit from more fiscal support next year, while US politicians have so far failed to agree a new Covid-19 stimulus package.

While Senate Majority Leader Mitch McConnell saw the vaccine news as an opening to reduce the amount of stimulus which could be deployed, the eurozone has just overcome certain political hurdles to agree the Next Generation EU rescue fund and a multi-year budget to start deployment as soon as mid-next year.

The oil price is higher again this morning too, with Brent crude gaining 3% to $45 per barrel.

That’s its highest level since 2nd September, up from below $38 at the end of October.

Overnight, the American Petroleum Institute reported a larger drop in reserves than expected, suggesting a pick-up in demand for oil and gasoline.

Ongoing vaccine optimism is also lifting oil, as Marios Hadjikyriacos of XM explains:

Crude oil continues its relentless rally, the exodus from tech stocks is in full swing, and sovereign bond yields are marching higher, keeping the broader stock market on a tight leash.

Speaking of Rolls-Royce... it is also pledging to create 6,000 UK jobs within five years if the government backs its plans to build small nuclear reactors around the country.

The idea is to create most of the components at factories across the Midlands and the north of England, so they can be moved to existing nuclear sites around the country to be assembled.

My colleague Jasper Jolly explains:

The engineering company is part of a consortium that is pushing for the government to commit billions of pounds to build 16 of the small modular reactors (SMRs) around the UK.

The factory-built nuclear power stations are predicted to provide up to 440MW of electricity, enough to power a city of 450,000 homes for 60 years...

Small nuclear reactors were first developed in the 1950s to use in nuclear-powered submarines. Since then Rolls-Royce has designed reactors for seven classes of submarine and two separate land-based prototype reactors.

Bloomberg has calculated that more than $200bn has been wiped off China’s tech giants in the last two days.

They report that the antitrust clampdown triggered a wave of selling (just a day after vaccine optimism triggered a rotation out of tech stocks):

Chinese technology giants from Alibaba Group Holding Ltd. to Tencent Holdings Ltd shed almost $260 billion of market value over two days of frantic selling, as investors scrambled to assess the fallout from Beijing’s broadest attempt to rein in its most powerful private-sector firms.

Technology shares tumbled for a second day after Beijing issued regulations designed to curb the growing influence of internet-sector leaders including JD.com Inc., Meituan and Xiaomi Corp.

The Hang Seng Tech Index slumped 5.6% on Wednesday in Hong Kong, taking its two-day loss to 10% as of midday. Shares in the quintet of firms have sunk at least 8% over two sessions.