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London close: Stocks finish stronger amid coronavirus curve hopes

By Josh White

Date: Monday 06 Apr 2020

London close: Stocks finish stronger amid coronavirus curve hopes

(Sharecast News) - London stocks held on to their gains for the close on Monday, even after the release of uninspiring data, as investors took heart from a slowdown in new coronavirus cases and deaths.
The FTSE 100 ended the session up 3.08% at 5,582.39, and the FTSE 250 was ahead 5.06% at 14,812.36.

Sterling was stronger against most of its major trading pairs, last rising 0.27% against the dollar to $1.2302, having fallen on Sunday night on news that Prime Minister Boris Johnson had been admitted to hospital with persistent coronavirus symptoms, and advancing 0.25% on the euro to €1.1390.

In commodity markets, oil prices remained weaker after OPEC cancelled a meeting with Russia about potential production cuts.

Brent crude was last down 3.62% at $32.92 per barrel, having shed about 10% in immediate response to the cancellation of the meeting, while West Texas Intermediate had lost 5.78% to $26.79.

"Coming off the back of a week which saw huge declines in payrolls and a record-breaking spike in initial jobless claims, the current outperformance highlights the relatively robust nature for stock markets compared with the weeks gone by," said Joshua Mahony, senior market analyst at IG.

"Today's gains have provided a huge boost for some of the more beleaguered stocks, with housebuilders and travel companies finally gaining ground despite huge concerns in the face of the coronavirus."

Mahony said that, with a decline in daily mortality rates in places such as France, Italy and New York, the markets were experiencing some optimism that the current restrictions could be shorter than many had previously speculated.

"However, without a cure or vaccine, any easing on the current restrictions would likely be short-term in nature, sparking a likely surge in cases before long."

On home shores, a survey out earlier showed the UK construction sector suffered its worst contraction in March since April 2009 as the coronavirus pandemic took its toll.

The IHS Markit/CIPS UK construction total activity index slid to 39.3 from 52.6 in February, coming in well below expectations for a reading of 44.0.

A reading below 50.0 signals contraction, while a reading above indicates expansion.

Survey respondents "overwhelmingly" attributed the decline in activity to the impact of the Covid-19 pandemic, with all three broad categories of construction work recording a fall in output.

Civil engineering activity suffered the steepest rate of decline, followed closely by commercial building work.

Employment fell at the fastest pace since September 2010 and business expectations slumped to the weakest level since October 2008.

"As measures to contain the coronavirus Covid-19 pandemic were put in place across the UK, construction sites closed and builders lost their jobs on a frightening scale as overall activity fell to an extent not seen since April 2009," explained Duncan Brock, group director at the Chartered Institute of Procurement & Supply.

"New orders were reduced to a trickle as the scale of the disease dawned on clients and lockdown severely hindered any further progress."

Elsewhere, a survey from GfK showed consumer confidence fell in March at the fastest rate since records began.

GfK released an interim Covid-19 "flash" report using data gathered between 16 and 27 March.

It showed that the long-running consumer confidence index slid 25 points between the first two and last two weeks of March to -34, with all measures that make up the index down.

"The last time we saw such a decline was during the 2008 economic downturn," said Joe Staton, client strategy director at GfK.

"Our falling confidence in our personal financial situation and the wider economy reflects the new concern for many across the UK.

"Despite record grocery sales, and recent peaks for purchases of freezers, televisions and home office equipment as people prepared for a long period in the home, the major purchase index is down 50 points - a stark picture for some parts of the retail industry in the short to medium term."

In equity markets, Legal & General surged 16.66% after saying late on Friday that it still intends to pay a final dividend for 2019 despite a warning from the Bank of England.

Meanwhile, investors were taking the latest batch of Covid-19 updates in their stride.

Rolls-Royce was rallied 18.32% as it pulled its dividend and implemented pay cuts from the boardroom to the shop floor, moving to mitigate the impact of the coronavirus pandemic.

The aircraft engine maker said it would cut salary costs across its global workforce by at least 10% in 2020.

Salaries for senior managers and the executive team would be reduced by 20%, comprising a cut and deferral with an extra bonus deferral for the chief executive and chief financial officer.

Sports betting and gambling company GVC Holdings rocketed 18.5% after saying it now expects the closure of retail outlets and cancellation of sports events to result in ?50m of losses per month after taking mitigating actions, versus a previous estimate of ?100m per month.

However, it also said it was withdrawing its second interim dividend.

Bodycote rose 11.45% after saying that first-quarter trading had not been "significantly" impacted by the pandemic but that its proposed final dividend was under review given current uncertainty.

WH Smith was also up 8.32% after announcing that it has secured new lending facilities of ?120m that are conditional on raising new equity.

Smiths Group reversed earlier losses to close up 2.5%, after saying trading was increasingly affected by the Covid-19 crisis as the engineering company reported a 6% increase in operating profit.

On the downside, gambling software company Playtech was knocked 4.85% lower after a downgrade to 'neutral' at JPMorgan.

Market Movers

FTSE 100 (UKX) 5,582.39 3.08%
FTSE 250 (MCX) 14,812.36 5.06%
techMARK (TASX) 3,266.56 3.46%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 297.70p 18.32%
Melrose Industries (MRO) 88.72p 17.88%
Legal & General Group (LGEN) 186.30p 16.66%
Carnival (CCL) 716.00p 16.46%
Barratt Developments (BDEV) 447.40p 16.42%
easyJet (EZJ) 552.40p 16.29%
Intermediate Capital Group (ICP) 942.00p 15.92%
Meggitt (MGGT) 250.70p 15.53%
Taylor Wimpey (TW.) 117.00p 15.27%
JD Sports Fashion (JD.) 467.00p 14.55%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 206.10p -3.42%
United Utilities Group (UU.) 826.20p -2.78%
Halma (HLMA) 1,848.50p -2.17%
Spirax-Sarco Engineering (SPX) 7,710.00p -1.91%
London Stock Exchange Group (LSE) 7,064.00p -1.89%
Pennon Group (PNN) 1,025.50p -1.87%
Morrison (Wm) Supermarkets (MRW) 182.40p -1.78%
Reckitt Benckiser Group (RB.) 6,160.00p -1.47%
Admiral Group (ADM) 2,175.00p -1.14%
Centrica (CNA) 31.48p -1.13%

FTSE 250 - Risers

GVC Holdings (GVC) 573.20p 18.50%
Bakkavor Group (BAKK) 76.40p 17.72%
Vistry Group (VTY) 599.00p 17.45%
William Hill (WMH) 79.90p 16.13%
G4S (GFS) 81.04p 15.90%
Redrow (RDW) 362.00p 15.58%
Crest Nicholson Holdings (CRST) 188.90p 15.20%
IWG (IWG) 200.60p 14.96%
Micro Focus International (MCRO) 370.20p 14.76%
Grafton Group Units (GFTU) 550.00p 14.63%

FTSE 250 - Fallers

Ascential (ASCL) 176.50p -8.36%
Provident Financial (PFG) 152.50p -5.63%
Hyve Group (HYVE) 15.48p -5.61%
Playtech (PTEC) 168.70p -4.85%
Drax Group (DRX) 170.00p -2.69%
GCP Student Living (DIGS) 124.40p -2.51%
Biffa (BIFF) 168.00p -2.47%
Senior (SNR) 62.85p -2.33%
Essentra (ESNT) 256.80p -1.98%
LXI Reit (LXI) 105.00p -1.70%

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