Level 2

London midday: Stocks extend gains on US stimulus hopes

By Michele Maatouk

Date: Tuesday 11 Aug 2020

London midday: Stocks extend gains on US stimulus hopes

(Sharecast News) - London stocks were sharply higher by midday on Tuesday as investors bet on further US stimulus, shrugging off bleak UK jobs data.

The FTSE 100 was up 2.4% at 6,194.78, extending earlier gains.

Chris Beauchamp, chief market analyst at IG, said: "It might be that US political leaders are finally managing to make progress towards an actual deal, after President Trump's move to steal the limelight with an executive order over the weekend. The possibility of more tax cuts has also lifted sentiment, resulting in substantial gains for European markets and a rise for US futures."

Hopes of US stimulus meant markets remained buoyant despite the release of dire UK jobs figures from the Office for National Statistics, which showed that employment fell at its fastest rate in more than a decade between April and June, while wages shrank as the Covid-19 pandemic took its toll.

Employment declined by 220,000 on the quarter, marking the largest quarterly fall since the wake of the financial crisis in 2009. The data also showed that a further 81,000 people fell off company payrolls last month, giving a total of 730,000 since March, when the coronavirus lockdown began.

Meanwhile, between January to March and April to June, the total actual weekly hours worked fell by a record 191.3 million, or 18.4%, to 849.3 million hours. This was the largest quarterly decline since estimates began in 1971, with total hours dropping to its lowest level since September to November 1994.

The unemployment rate was unchanged in June at 3.9% versus expectations of an increase to 4.2%, but this was just a reflection of the fact that more people gave up looking for work. Average earnings excluding bonuses were down 0.2%, while earnings including bonuses were 1.2% lower compared to expectations for a 1.1% fall.

Ruth Gregory, senior UK economist at Capital Economics, said: "Overall, we doubt the apparent stability in the ILO unemployment rate will last long. Indeed, with further rises in unemployment in the coming months all but inevitable as the furlough scheme unwinds, this is just the lull before the storm.

"Our forecast that the unemployment rate will peak at 7% in mid-2021 and remain above its pre-pandemic level of 4% until the end of 2022, suggests that the economic recovery will be slow going."

In corporate news, InterContinental Hotels was on the rise despite suffering a $233m (£178m) loss in the first half as occupancy at its hotels plunged during the Covid-19 crisis.

Ladbrokes owner GVC Holdings racked up strong gains, with traders pointing to the fact that media and technology company IAC/InterActive Corp has made a $1bn investment in MGM Resorts, with which GVC has a joint venture.

Plus500 gained as the trading platform more than tripled its interim dividend and reported soaring first-half revenue and profit driven by "unprecedented" volatile markets during the pandemic.

Cineworld surged amid takeover speculation after a US judge granted the government's request to end the Paramount Decrees, a set of antitrust rules from the 1940s and 1950s that banned film studios from owning theatres.

Online software development and gaming company Gamesys rallied as it declared a maiden dividend and said full-year gaming revenue and adjusted earnings were set to be ahead of its previous expectations.

On the downside, precious metals miners Fresnillo, Polymetal, Centamin and Hochschild all lost ground as gold prices fell amid a firmer US dollar.

Market Movers

FTSE 100 (UKX) 6,194.78 2.38%
FTSE 250 (MCX) 18,007.49 1.59%
techMARK (TASX) 3,919.59 1.83%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 216.20p 7.19%
GVC Holdings (GVC) 765.20p 6.87%
Evraz (EVR) 345.30p 5.82%
Informa (INF) 421.70p 5.29%
Associated British Foods (ABF) 2,001.00p 4.82%
InterContinental Hotels Group (IHG) 4,192.00p 4.77%
Barclays (BARC) 111.66p 4.71%
Royal Dutch Shell 'A' (RDSA) 1,229.40p 4.65%
Burberry Group (BRBY) 1,413.00p 4.63%
Standard Chartered (STAN) 425.40p 4.62%

FTSE 100 - Fallers

Polymetal International (POLY) 1,945.00p -3.38%
Fresnillo (FRES) 1,255.50p -2.90%
Hikma Pharmaceuticals (HIK) 2,277.00p -0.87%
SEGRO (SGRO) 970.40p -0.35%
Rentokil Initial (RTO) 539.40p 0.00%
Reckitt Benckiser Group (RB.) 7,504.00p 0.08%
Homeserve (HSV) 1,353.00p 0.30%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,664.00p 0.42%
Croda International (CRDA) 5,884.00p 0.51%
Land Securities Group (LAND) 588.40p 0.55%

FTSE 250 - Risers

Cineworld Group (CINE) 51.40p 25.21%
Virgin Money UK (VMUK) 97.68p 9.85%
Aston Martin Lagonda Global Holdings (AML) 76.25p 8.93%
Gamesys Group (GYS) 1,116.00p 8.77%
Plus500 Ltd (DI) (PLUS) 1,349.50p 7.70%
Aggreko (AGK) 470.00p 6.67%
Carnival (CCL) 1,033.00p 6.60%
Fisher (James) & Sons (FSJ) 1,194.00p 6.04%
Royal Mail (RMG) 203.20p 5.83%
easyJet (EZJ) 639.20p 5.76%

FTSE 250 - Fallers

Centamin (DI) (CEY) 209.50p -4.51%
Hochschild Mining (HOC) 289.20p -3.66%
ICG Enterprise Trust (ICGT) 816.00p -2.86%
Petropavlovsk (POG) 32.45p -2.84%
Ninety One (N91) 215.00p -2.18%
Sirius Real Estate Ltd. (SRE) 72.80p -1.49%
Serco Group (SRP) 138.30p -1.36%
Domino's Pizza Group (DOM) 320.60p -1.35%
Kainos Group (KNOS) 1,154.00p -1.03%
Energean (ENOG) 619.00p -0.96%


Email this article to a friend

or share it with one of these popular networks:

Top of Page