LONDON MARKET CLOSE: Virus Optimism Boosts Stocks For Second Session

(Alliance News) - London stocks closed firmly higher for a second successive session on Tuesday, ...

Alliance News 7 April, 2020 | 5:09PM
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(Alliance News) - London stocks closed firmly higher for a second successive session on Tuesday, spurred on by virus optimism as some of Europe's hardest-hit countries appeared to be turning a corner.

Tuesday's hope lifted stocks even though both the UK and New York reported record daily death tolls.

Cruise operator Carnival led the charge in the FTSE 100, while Cineworld topped London's mid-cap index.

The FTSE 100 index closed up 122.06 points, or 2.2%, at 5,704.45 on Tuesday, adding to Monday's 3.1% rise.

The FTSE 250 ended up 756.60 points, or 5.1%, at 15,568.96, and the AIM All-Share closed up 31.95 points, or 4.7%, at 712.36.

The Cboe UK 100 ended up 2.0% at 9,653.29, the Cboe UK 250 closed up 5.0% at 13,361.34, and the Cboe Small Companies ended up 2.3% at 8,230.90.

In European equities on Tuesday, the CAC 40 in Paris ended up 2.1%, while the DAX 30 in Frankfurt ended up 2.8%.

"It has been another solid day of gains for European markets as optimism grows that Covid-19 infection and death rates have reached the peak of the crisis and are on their way back down across Europe," said Michael Hewson at CMC Markets.

Italy's day-to-day increase in new Covid-19 cases dipped again, for the lowest one-day increase in nearly three weeks. The country, ravaged by the virus, also saw a drop for the third straight day in intensive care beds occupied by infected patients.

Italy still has, by far, the world's highest coronavirus death toll - over 16,500 - but the pressure on intensive care units in the north has eased so much that the region is no longer airlifting patients to other regions.

In France, although daily deaths spiked to a record of 833, the rate of new intensive care hospitalisations has slowed dramatically.

However, Spain's daily coronavirus death rate shot up to 743 on Tuesday after falling for four straight days, lifting the total toll to 13,798, the health ministry said.

The number of new infections in the world's second hardest-hit country after Italy also grew at a faster pace, rising 4.1% to 140,510, it added. The number of new cases had risen by 3.3% on Monday.

Health ministry officials have said deaths occurring on the weekend are often registered a few days later, which may explain the rise.

"Despite today's setback in Spain, investors appear to be looking at events through the lens of increased stimulus, and the prospect that we're probably closer to the end of the outbreak than the beginning," said Hewson. "Whether that proves to be correct, only time will tell, but it's likely to be a bumpy ride along the way."

Stocks in New York were in the green at the London equities close, with the Dow Jones up 1.5%, the S&P 500 index up 1.8%, and the Nasdaq Composite up 0.9%.

In New York state, the US epicentre of the crisis, Governor Andrew Cuomo said there had been 731 Covid-19 deaths in the past 24 hours, a new record. The previous single-day record was 630, set on Friday.

Cuomo did add that hospitalisations appear to be "plateauing".

The UK has also also seen a new daily record, of 786 coronavirus deaths in the past 24 hours.

UK Prime Minister Boris Johnson was said to be "stable" after spending the night in intensive care following a worsening of his coronavirus symptoms.

The prime minister's official spokesman said he had been receiving "standard oxygen treatment" but had not required any other assistance in breathing. Johnson was transferred to the intensive care unit at St Thomas' Hospital, London, on Monday evening, after his condition deteriorated.

The pound was quoted at USD1.2325 at the London equities close Tuesday, up compared to USD1.2292 at the close on Monday.

The euro stood at USD1.0890 at the European equities close Tuesday, against USD1.0810 at the same time on Monday.

CMC's Hewson noted that Tuesday's risk-on mood in financial markets has caused the dollar to slip, helping both the pound and euro.

"The news that UK Prime Minister Johnson hasn't been diagnosed with pneumonia is welcome and suggests that, bar any complications, he could be out of intensive care by the weekend," he added.

Against the yen, the dollar was trading at JPY109.01, down compared to JPY109.06 late Monday.

Japan on Tuesday declared a month-long state of emergency over a spike in coronavirus cases, ramping up efforts to contain infections but stopping short of the strict lockdowns seen in other parts of the world.

The government has come under mounting pressure to tackle an outbreak that remains small by global standards but has raised concerns among Japanese medical experts, with warnings that local healthcare systems are already overstretched.

In commodities, gold was quoted at USD1,655.70 an ounce at the London equities close Tuesday against USD1,645.22 at the close on Monday.

Brent oil was quoted at USD33.02 a barrel at the London equities close Tuesday from USD32.26 late Monday.

In London, beleaguered cruise operator Carnival ended at the top of the FTSE 100, surging 22%.

Carnival said it has raised USD2.53 billion in total through its previously announced share issue and note offering.

The company raised USD575 million through the issue of 71.9 million shares at USD8 per share. On Thursday last week, Carnival had downsized its share placing to 62.5 million shares, after originally saying it would offer USD1.25 billion worth of stock.

This came after news that Saudi Arabia's Public Investment Fund has taken a sizeable stake in Carnival, a US regulatory filing showed on Monday. The Public Investment Fund - the sovereign wealth fund of Saudi Arabia - now holds a 8.2% stake in the cruise operator, or 43.5 million shares.

Other travel stocks, a sector hard-hit by the coronavirus due to government lockdowns and travel restrictions, finished higher. These included easyJet, ending up 15%, and Intercontinental Hotels Group, up 9.0%.

Mid-cap Cineworld rallied 49% after the cinema chain suspended scheduled and upcoming dividend payouts in an effort to conserve cash during the Covid-19 lockdowns.

All of Cineworld's 787 cinemas across 10 countries are closed as a result of Covid-19.

The movie theatre operator said it will not pay either the 2019 fourth-quarter dividend of 4.25 cents or any quarterly dividends for 2020. It is restricting capital expenditure to preserve cash and also is in spending discussions with its landlords, film studios and major suppliers.

Even with Tuesday's rise, Cineworld shares remain 73% lower since 2020 began.

Travis Perkins closed up 17% after Exane BNP raised the builders' merchant to Outperform from Neutral.

Plus500 closed 2.8% down despite reporting a surge in first quarter revenue.

The online trading services provider reported significantly increased levels of customer trading activity in the three months to the end of March.

As a result, Plus500 said revenue in the first quarter jumped to USD316.6 million, equivalent to 89% of revenue generated for the whole of 2019. In the first quarter of 2019, revenue totalled USD53.9 million.

On AIM, ASOS jumped 34% as it said it is working on a possible equity issue.

The online clothing retailer said it has stress tested its liquidity and is comfortable that, with mitigating actions, there is "sufficient liquidity" within its existing GBP350 million facility.

"ASOS recorded a strong performance over the first-half of the year. Sales growth was in excess of 20% as the strong momentum experienced over the peak period continued into January and February," said ASOS, adding it also recorded a strong first-half profit and Ebit margin.

While its financial position remains "robust", the duration and extent of the Covid-19 pandemic remains unknown.

"ASOS wants to ensure it can weather and exit the current trading environment in a position of strength. The company confirms that it is close to finalising a potential equity issuance and extension to its debt facilities," the company said.

The UK corporate calendar on Wednesday has full-year results from grocer Tesco and interim results from ASOS.

In Wednesday's economic calendar, Japanese machinery orders are at 0050 BST and minutes from the US Federal Reserve's last meeting at 1900 BST.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Travis Perkins PLC 1,095.50 GBX -3.35 -
easyJet PLC 680.00 GBX -8.11 -
Plus500 Ltd 1,326.50 GBX 1.18 -
InterContinental Hotels Group PLC 3,871.00 GBX -4.84
ASOS PLC 2,996.00 GBX 2.18
Carnival PLC 1,057.50 GBX -10.68

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