London close: Stocks finish firmer as investors cheer stimulus
London stocks finished well into the green Tuesday, extending gains even after the release of dismal UK data, with sentiment underpinned by the Federal Reserve’s latest stimulus package.
The FTSE 100 ended the session up 9.05% at 5,446.01, and the FTSE 250 was 8.37% higher at 14,172.73.
Sterling was also stronger against both of its major trading pairs, rising 1.89% against the dollar to $1.1760, and adding 1.27% on the euro to €1.0896.
Gains among equities came despite the release of data showing that the coronavirus caused a record slump in UK business activity even before the government imposed extraordinary measures to curb the spread of the disease.
The IHS Markit/CIPS flash purchasing managers index plunged to 37.1 in March from 53.0 in February.
It was the lowest level recorded, exceeding the fall at the peak of the financial crisis, and was far below expectations for a score of 45.0.
The latest industrial trends survey from the Confederation of British Industry was nothing to rave about either, showing that the total orders balance fell to -29 in March from -18 in February.
Still, that was above consensus expectations of -35.
“As the Fed turns its stimulus efforts up to 11, and even Germany mulls over some fiscal stimulus for the ‘post-virus economy’, perhaps the most encouraging comment we have seen so far, investors have been able to put the dire PMI figures this morning behind them,” said analysts at IG.
“Everyone was prepared for a set of shockers, and that is precisely what we got, but they are not a surprise; it is at times like this that the market’s propensity to look forward is demonstrated most effectively.”
IG said that, while the headlines focussed on the UK lockdown and the dire PMI figures, investors were looking to a world beyond March and April.
“New cases and deaths in Italy have been declining for several days, and if the US and UK follow this pattern eventually, then worrying about more bad news will be old news.
“Signs of life in the market, even in the hard-pressed FTSE 100, are there to be seen, and the 25% bounce in BP, along with double-digit percentage gains in Shell, point towards a bigger rebound for equities.
“Both companies are holding above their 2016 lows, which at least provides hope they have found a floor, at least for now.”
Confidence in the UK banking system was also bolstered, after it was revealed the Bank of England's Monetary Policy Committee said it was “well positioned” to withstand the severe disruption brought about by the pandemic, as it pledged to take further action to underpin financial stability if needed.
The committee, which is tasked with identifying risks to the country’s financial system and protecting it, said the “nature and global impact” of the pandemic was “unprecedented in recent history”, but it insisted it “stands ready” to protect the system as needed.
The comments were made during its most recent meetings on 9 and 19 March, minutes of which were released on Tuesday morning.
Meanwhile, market participants were looking across the Atlantic as well, waiting for Congress to agree on a roughly $2trn rescue package.
In equity markets, corporate releases were almost exclusively Covid-19 updates again.
UK insurer Prudential shot up 15.45% after saying it was actively looking at other options for its US unit Jackson along with plans for a minority public offering, as market turmoil continued due to the coronavirus outbreak.
It also said it remains "financially resilient" in the face of the pandemic, which has hammered financial markets.
Taylor Wimpey reversed earlier losses, closing up 1.97% after it scrapped almost £500m of dividends as the housebuilder halted construction and closed show homes in response to the Covid-19 crisis.
Fellow housebuilder Redrow - which has already drawn criticism for deciding to keep its sites open - was 7.83% firmer after it cancelled its dividend. and said it expected its sales rate to be "seriously impaired" over the coming weeks.
It pointed to labour and materials shortages as the UK government ordered restrictions on movement to combat the coronavirus.
Rio Tinto was 4.93% firmer after it said it would curtail operations in South Africa and Canada to comply with measures imposed by the countries' governments in response to the Covid-19 crisis.
The miner said all mining at its Richards Bay Minerals operation in South Africa would cease by midnight on 26 March for three weeks.
JD Sports Fashion surged 18.77% after it pulled guidance, and said it was delaying publication of full-year results after the UK government ordered nonessential shops to close down in response to the Covid-19 pandemic.
Retailer Dunelm was up 6.88% after it confirmed it was closing all of its stores and said it will not be paying a dividend due to the virus outbreak.
Miniature wargames manufacturer Games Workshop was on the back foot, falling 4.33% after saying its performance had been hit by the Covid-19 outbreak and that it will be closing its stores, headquarters, factory and warehouses in the UK and the US with immediate effect.
FTSE 100 - Risers
Carnival (CCL) 1,062.00p 28.26%
BP (BP.) 312.35p 21.58%
Royal Dutch Shell 'B' (RDSB) 1,296.20p 21.41%
Anglo American (AAL) 1,320.00p 20.90%
Royal Dutch Shell 'A' (RDSA) 1,357.20p 20.38%
Evraz (EVR) 252.10p 19.99%
Phoenix Group Holdings (PHNX) 557.50p 19.26%
M&G (MNG) 139.00p 19.01%
JD Sports Fashion (JD.) 432.10p 18.77%
Intermediate Capital Group (ICP) 797.00p 18.51%
FTSE 100 - Fallers
Reckitt Benckiser Group (RB.) 5,683.00p -3.10%
ITV (ITV) 58.50p -2.53%
Ocado Group (OCDO) 1,245.00p -1.62%
Associated British Foods (ABF) 1,607.50p -1.23%
AstraZeneca (AZN) 6,808.00p -0.34%
Tesco (TSCO) 211.80p -0.19%
Unilever (ULVR) 3,936.50p 0.10%
Croda International (CRDA) 4,186.00p 0.63%
Vodafone Group (VOD) 111.24p 0.94%
GlaxoSmithKline (GSK) 1,387.80p 0.96%
FTSE 250 - Risers
William Hill (WMH) 55.50p 34.12%
Cairn Energy (CNE) 89.25p 30.39%
FirstGroup (FGP) 52.15p 30.31%
Cineworld Group (CINE) 52.42p 29.11%
3i Infrastructure (3IN) 237.00p 27.42%
Kaz Minerals (KAZ) 361.00p 26.49%
Energean Oil & Gas (ENOG) 456.00p 25.45%
GVC Holdings (GVC) 436.70p 23.75%
Sirius Real Estate Ltd. (SRE) 60.00p 23.46%
IWG (IWG) 163.25p 23.44%
FTSE 250 - Fallers
Hill & Smith Holdings (HILS) 1,071.00p -7.43%
Bakkavor Group (BAKK) 66.50p -5.00%
McCarthy & Stone (MCS) 48.26p -4.62%
Games Workshop Group (GAW) 4,106.00p -4.33%
Biffa (BIFF) 228.00p -4.20%
CLS Holdings (CLI) 164.60p -2.95%
Vietnam Enterprise Investments (DI) (VEIL) 316.50p -2.91%
Hiscox Limited (DI) (HSX) 949.00p -2.67%
Hastings Group Holdings (HSTG) 170.80p -2.40%
Sabre Insurance Group (SBRE) 242.00p -1.83%