Covid test hopes a tonic for Royal Mail

Royal Mail shot to its highest price since February 2019 on Monday, on hopes it could win a £550m government contract against Amazon to deliver 215,000 Covid home-testing kits a day as part of the NHS Test and Trace.

Britain’s postal service company rose 8.5p to 261.7p.

Adding to optimism is an expected increase in online retail sales in the coming years, which will help to swell the UK addressable parcel market, according to a note by Citi.

Total ecommerce penetration in the UK will reach about 47pc by 2030, the analysts predict, and the UK parcel market will triple in size. In a more bullish stance, they now expect Royal Mail to take about 30pc of the UK parcel market by 2024, with a new target price of £4 compared to the previous £2.10.

Food delivery company Ocado slumped 197p to £22.83, on the back of fears that a return to normality with a potential vaccine could hurt one of lockdown’s biggest winners.

Adding to worries, Norwegian warehouse automation company AutoStore filed another lawsuit against Ocado, arguing it is the inventor and rightful owner of some of the grocer’s patents.

AutoStore is already seeking ownership of patents secured by Ocado for its “smart platform” technology. It filed complaints in US and UK courts last month claiming Ocado was infringing its intellectual property, and asked the US International Trade Commission for an order to stop the importation of Ocado’s “infringing products”.

Shares in struggling estate agent Countrywide soared over a potential £82m takeover by rival Connells.

Countrywide said it received a 250p-per-share offer from Connells, significantly higher than its 145p closing share price on Friday. It rose 41.4p to 215p.

Elsewhere, airline, transport and hospitality stocks shot up alongside a surging market, on optimism over a potential Pfizer vaccine.

The FTSE 100 added £70bn to the value of the UK’s blue-chip companies, in its best day since March.

Aerospace engineer Rolls-Royce lifted the market, having been one of the FTSE 100’s biggest losers of 2020. It rose more than 97pc in intra-day trading: the largest daily gain on record since it started trading on the London Stock Exchange in 1987.

Owner of British Airways IAG was the second largest gainer. It added 26.4p to 130p, while easyJet rose 189.4p to 722p.

Pub-related stocks, hurt by the lockdown, also surged. JD Wetherspoon added 187p to £11.04. British brewer Marston’s was up 11.2p to 59p.

As equities skyrocketed, the safe haven of gold fell, dragging miners of the precious metal with it.

Fresnillo lost the most on the FTSE 100, dropping 2.38p to 15p. Polymetal fell by 224.5p to £16.59, Hochshild by 45.2p to 225.2p and Centamin by 13.45p to 117.4p.

Funeral services company Dignity fell 8.29p to 601p despite revenues rising 4pc in the nine months to September to £234.5m.

It warned business could slow in the next two years given the pandemic this year could mean a lower number of deaths in the next two years.