ADVFN Morning London Market Report: Wednesday 25 March 2020

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London open: Stocks rise on US stimulus package

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London stocks rose in early trade on Wednesday as investors cheered news that White House and Senate leaders have agreed a $2 trillion package to help prop up the US economy during the coronavirus pandemic.

At 0840 GMT, the FTSE 100 was up 1.4% at 5,524.07.

Spreadex analyst Connor Campbell said: “Lacking the same intensity as Tuesday – which is fair; that session was the best since 2008 – the markets nevertheless continued to rebound on Wednesday as US politicians finally reached an agreement on a stimulus plan.

He said the package, which should be passed later in the day, “was exactly what investors were looking for after days of intransigence by both Republicans and Democrats”.

“The only worry is, if the measures announced in the last few days – that is, the Fed’s unlimited QE and this $2 trillion plan – don’t create a sustained rebound, it is unclear what will. There are always the plans the G7 hinted at on Tuesday, though given the level of international co-operation required for that, who knows when they will materialise.”

Investors were also mulling over the latest UK inflation data, which showed that consumer price inflation fell to 1.7% in February from 1.8% in January, in line with consensus expectations. However, core inflation rose to 1.7% from 1.6%, coming in above consensus expectations of 1.5%.

Ruth Gregory, senior UK economist at Capital Economics, said the decline in CPI inflation “is a small sign of things to come”.

“We expect the effects of the coronavirus crisis to drag inflation below 1.0% in the months ahead.”

On the corporate front, there was another string of Covid-19 updates, with dividend suspensions galore again.

Rentokil International said it was cancelling its dividend and cutting pay in an effort to conserve more than £500m in cash to strengthen its finances against the Covid-19 crisis. The pest control and hygiene services company said it took the actions after the virus had a greater impact on its business in the past 10 days.

Housebuilder Bellway will postpone its interim dividend, it said, as it warned of a slowdown in demand due to the Covid-19 outbreak and subsequent government-ordered lockdown.

Fellow housebuilder Persimmon said it has begun the orderly shutdown of its construction sites and closed all of its sales sites, as it announced the cancellation of its dividend.

Construction and regeneration company Morgan Sindall withdrew its guidance and warned on profits as it said the pandemic was disrupting operations.

Airport food concession operator SSP cancelled its interim dividend, cut jobs and said it was in advanced talks with the UK government on a financial support package as European revenues slumped by 80% due to the coronavirus.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Micro Focus International Plc +17.07% +61.00 418.30
2 Royal Bank Of Scotland Group Plc +14.14% +17.00 137.25
3 International Consolidated Airlines Group S.a. +12.99% +28.00 243.50
4 Barclays Plc +12.87% +12.36 108.38
5 Whitbread Plc +12.34% +332.00 3,022.00
6 Marks And Spencer Group Plc +11.51% +11.47 111.15
7 Burberry Group Plc +11.24% +140.50 1,390.50
8 Legal & General Group Plc +10.86% +17.55 179.10
9 Rsa Insurance Group Plc +10.72% +41.10 424.60
10 London Stock Exchange Group Plc +10.11% +698.00 7,600.00

 

Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.
# Name Change Pct Change Cur Price
1 Rentokil Initial Plc -8.23% -30.50 339.90
2 Hsbc Holdings Plc -2.62% -13.50 501.50
3 Halma Plc -1.22% -22.50 1,820.50
4 Morrison (wm) Supermarkets Plc -0.86% -1.55 178.20
5 Land Securities Group Plc -0.33% -2.00 610.80
6 Just Eat Plc -0.00% -0.00 861.00
7 Nmc Health Plc -0.00% -0.00 938.40

 

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Share Type Amount Price Return Ex-Date Pay Date
Capital & Regional plc Final 11p £1.57 7.00% 02-Apr-20 26-May-20
Standard Life Aberdeen Plc Final 14.3p £2.05 7.00% 02-Apr-20 19-May-20
Provident Financial plc Final 16p £2.79 5.70% 02-Apr-20 22-May-20
Somero Enterprises Inc – Ordinary Shares – Reg S Final 11.123p(14c)(E) £2.12 5.20% 02-Apr-20 24-Apr-20
Phoenix Group Holdings Plc Final 23.4p £5.65 4.10% 02-Apr-20 19-May-20
Man Group Limited Final 4.052p(5.1c) £1.02 4.00% 02-Apr-20 15-May-20
Mondi Final 49.475p(55.72¢) £13.00 3.80% 02-Apr-20 14-May-20
TP ICAP Plc Final 11.25p £3.17 3.50% 02-Apr-20 19-May-20
IMI plc Final 26.2p £7.70 3.40% 02-Apr-20 15-May-20
Travis Perkins plc Final 33p £10.56 3.10% 02-Apr-20 13-May-20
Moneysupermarket.Com Group Plc Final 8.61p £2.76 3.10% 02-Apr-20 14-May-20
Taylor Wimpey Final 3.8p £1.57 2.40% 02-Apr-20 15-May-20
Melrose Industries Plc. Final 3.4p £1.41 2.40% 02-Apr-20 20-May-20
Synectics Plc Final 3.5p £1.48 2.40% 02-Apr-20 07-May-20
CLS Holdings Final 5.05p £2.33 2.20% 02-Apr-20 29-Apr-20
Intercontinental Hotels Group Final 68.246p(85.9c) £33.32 2.00% 02-Apr-20 14-May-20
ConvaTec Group Plc Final 3.162p(3.98c) £1.63 1.90% 02-Apr-20 14-May-20
VinaCapital Vietnam Opportunity Fund Limited Interim 4.688p(5.9c)(E) £2.47 1.90% 02-Apr-20 24-Apr-20
Murray International Trust plc Quarterly 17.5p £9.41 1.90% 02-Apr-20 15-May-20
Invesco Enhanced Income Limited Quarterly 1.25p £0.68 1.80% 02-Apr-20 30-Apr-20
Henderson High Income Trust plc Quarterly 2.475p(E) £1.43 1.70% 02-Apr-20 24-Apr-20
Smiths Group plc Interim 14.6p(E) £10.16 1.40% 02-Apr-20 24-Apr-20
Lowland Investment Co plc Quarterly 16p(E) £11.20 1.40% 02-Apr-20 30-Apr-20
Fisher (James) & Sons Final 23.4p £16.42 1.40% 02-Apr-20 08-May-20
Smith & Nephew plc Final 18.353p(23.1c) £13.19 1.40% 02-Apr-20 06-May-20
Chemring Group plc Final 2.4p £1.96 1.20% 02-Apr-20 24-Apr-20
Finsbury Growth & Income Trust Plc Interim 8.5p(E) £6.95 1.20% 02-Apr-20 15-May-20
Schroder Income Growth Fund plc Quarterly 2.5p(E) £2.20 1.10% 02-Apr-20 27-Apr-20
Primary Health Prop. Quarterly 1.475p(E) £1.40 1.10% 02-Apr-20 22-May-20
Ferguson Plc. Interim 55.137p(69.4c)(E) £53.82 1.00% 02-Apr-20 28-Apr-20
Capital Partners plc Interim 17.5p £17.96 1.00% 02-Apr-20 30-Apr-20
Softcat Plc Interim 5.1p(E) £9.37 0.50% 02-Apr-20 08-May-20
F&C Investment Trust Plc Quarterly 2.97p(E) £5.77 0.50% 02-Apr-20 06-May-20

 

US close: S&P 500 jumps by most since October 2008 amid wild swings in VIX

Wall Street’s main market gauges snapped higher after the speaker of the House of Representatives, Nancy Pelosi, voiced “real optimism” that a deal on a coronavirus spending bill could be voted on Tuesday, or Wednesday at the latest.

By the end of trading, the S&P 500 was 9.38% higher at 2,447.33 and just below technical resistance at 2,450, alongside a more than 2,000 point jump on the Dow Jones Industrials to 20,704.91, while the Nasdaq Composite put on 8.12% to 7,417.86.

According to Bloomberg data, it was the biggest one day gain for the S&P 500 since October 2008, while the Dow Industrials saw its largest percentage point advance since 1933.

The next level of technical resistance for the S&P 500 lay at 2,550.

The VIX volatility index remained up by 0.13% at 61.67, but well off its recent highs of 85.47, having fallen to 36.24 earlier in the session.

West Texas Intermediate crude oil futures rose 3.91% to $24.31 a barrel on the ICE and the yield on the benchmark 10-year US Treasury note added six basis points to 0.85%.

Overnight, Pelosi had indicated that the roughly $2.0trn spending package would not get past the House, which was controlled by the Democrats, unless a proviso was added for Congressional oversight of the $500bn of proposed financing for companies.

“Things like a $500 billion slush fund was really insulting,” Pelosi said, according to Bloomberg.

June gold futures on COMEX were more than 5% higher to $1,675.10/oz. as the US dollar funding squeeze abated, with analysts at Goldman Sachs pointing to prospects for an expanded Fed balance sheet and doubts around the euro area’s survival as the proximate cause.

In parallel the US dollar index fell 0.69% to 101.78.

Stock in Best Buy was 17% higher after the discount retailer reported strong demand for the products needed during a prolonged lockdown, such as freezers and PC screens.

Investors were also eyeing graphics card maker Nvidia, with analysts at Needham pointing out its string cash position, which was second only to that of Taiwan Semiconductor.

Elsewhere in the semiconductor sector, Intel shelved its share buyback programme due to the uncertainty around the Covid-19 pandemic.

To take note of, there was talk in markets that a government support package for airlines was in the works, while at least one analyst broached the possibility of a bailout package for Boeing .

On the home front, sales of newly-built homes ran at a faster-than-expected clip last month.

According to the Department of Commerce, in February the annualised pace of new home sales fell by 4.4% month-on-month to reach 765,000.

Economists had forecast 750,000.

And in the background, G-7 leaders pledged to do whatever it takes to restore economic growth.

To take note of, some analysts were skeptical regarding what some observers said was a ‘trial balloon’ by President Trump regarding reopening the US economy by 12 April.

“If the current rate of growth were to be sustained, with cases doubling every three days, the U.S. will have four million cases in just over two week’s time,” said Ian Shepherdson at Pantheon Macroeconomics.

“This is why the president’s talk of the country opening up again by Easter is just fanciful.”

 

Wednesday newspaper round-up: Profiteering, carers, self-employed help

The online shopping platforms eBay and Amazon Marketplace are failing to crackdown on a surge in profiteering by sellers due to the coronavirus, a consumer group has warned, after its investigation uncovered a wide range of products on sale at “extortionate” prices. Which? found “consistent overpricing” of household items, including cleaning products, hand sanitiser, thermometers, baby formula and tampons, which have all been in high demand since the coronavirus outbreak but in short supply in supermarkets and pharmacies. – Guardian

Private healthcare company Cera Care is creating 10,000 new jobs for home carers to support elderly or vulnerable people during the coronavirus outbreak, and to provide work for those who have lost their jobs. The firm said it will offer successful applicants training courses and assessments through its digital platform, allowing them to become formally certified as carers and able to start earning money after 10 days. – Guardian

The Chancellor is weighing up an unprecedented rescue package for Britain’s 5 million self-employed workers that could follow measures introduced in Denmark and Norway. An option being considered by the Treasury is paying contractors a proportion of their income using earnings made in recent years, it is understood. Sources close to the discussions said there were still major sticking points over how to support the self-employed, including avoiding handing out money to wealthy contractors. – Telegraph

The Bank of England has launched an emergency liquidity scheme to ensure commercial lenders do not run out of cash as it warned that immediate disruption from the pandemic could be more severe than its banking stress tests. Underlining the risks to the financial system, the Bank has activated its contingent term repo facility (CTRF), an unlimited and cheap source of funding for commercial banks that desperately need cash. – The Times

 

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