22nd Apr 2020 08:42
(Alliance News) -Â Stocks in London perked up on Wednesday amid a tumultuous week for oil, with the commodity remaining under pressure but focus returning to the lifting of Covid-19 lockdowns across Europe.
"After big slides yesterday caused by the turmoil in oil markets, things look a little brighter on Wednesday," said Jasper Lawler at London Capital Group.
The FTSE 100 index was up 55.39 points, or 1.0%, at 5,696.42 early Wednesday. The mid-cap FTSE 250 index was up 31.91 points, or 0.2%, at 15,431.16. The AIM All-Share index was up 0.4% at 755.84.
The Cboe UK 100 index was up 0.9% at 9,637.74. The Cboe 250 was up 0.2% at 13,302.61, and the Cboe Small Companies up 0.4% at 8,726.13.
In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt was 0.9% higher early Wednesday.
"Progress on the reopening of European economies was lost in the fog of oil madness but continues to be a main driver for optimism. Austria, one of the first to ease restrictions, plans to continue easing them according to Chancellor Sebastian Kurz. Austria has seen sub-100 virus case growth in the past three days in an early sign its exit plan is working," LCG's Lawler said.
In Europe, several countries besides Austria, including Germany, Norway and Denmark, have begun to relax restrictions while still calling for the public to practice social distancing.
Italy's Prime Minister Giuseppe Conte has promised to soon unveil a plan to start reopening the hard-hit country.
While Germany is allowing smaller shops to reopen, authorities cancelled Oktoberfest, a beloved beer-swilling festival in southern Bavaria, for the first time since World War II. Spain also announced it was scrapping its annual bull-running festival in Pamplona, a centuries-old tradition that normally draws hundreds of thousands.
In the US, President Donald Trump said he would partial block immigration "to protect American workers" from the economic shock of the coronavirus.
Trump said he would stop the issuing of green cards for 60 days, but exempt temporary workers such as seasonal farm laborers.
The US is the hardest-hit country in the world, with nearly 45,000 deaths and more than 800,000 coronavirus infections, and healthcare infrastructure in major hotspots like New York City has struggled to cope.
While the mood in markets was more upbeat on Wednesday, Oil remained under pressure.
Brent oil slipped to USD17.25 a barrel early Wednesday, trading around its lowest levels since 1999, from USD19.75 late Tuesday.
On Monday, WTI for May delivery collapsed to an unprecedented low of minus USD40.32 as traders scrambled to sell it before the contract expired Tuesday, but could find few buyers with storage capacity fast filling up.
Prices have plunged as lockdowns and travel restrictions introduced worldwide to stem the spread of the new coronavirus hammered demand.
"The sell-off that has been trigged in the Brent prices today is highly likely to put more pressure on OPEC+ to cut the oil production more. Of course, it will be Saudi Arabia that needs to cushion the additional burden," said Naeem Aslam at AvaTrade.
"I believe it is likely that we may see another emergency meeting becoming a reality within a week from today because the realism is that Saudi Arabia's economy is heavily dependent on oil, and the Covid-19 situation has already left a massive dent on its economy," he added.
The impact from the recent collapse in oil markets was seen in UK inflation data released earlier on Wednesday.
The annual inflation rate eased to 1.5% in March from 1.7% in February. Month-on-month, prices were flat after a 0.4% rise the month before.
"The inflation rate slowed again in March mainly due to falling prices for clothing and motor fuel," commented Mike Hardie, head of inflation at the official statistics agency ONS.
Liquid fuel prices slumped 25% year-on-year in March amid a slide in oil prices due to reduced demand given global lockdowns to stem the spread of Covid-19.
The ONS noted that petrol prices fell by 5.1 pence per litre between February and March, compared with a rise of 1.2p per litre between the same two months a year ago. This was the largest monthly fall in petrol prices since December 2018.
Sterling was quoted at USD1.2319 early Wednesday following the data, higher against USD1.2291 at the London equities close on Tuesday.
The euro traded at USD1.0866 early Wednesday, flat on USD1.0864 late Tuesday. Against the yen, the dollar was quoted at JPY107.58, flat versus JPY107.54.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.7%. In China, the Shanghai Composite ended up 0.6%, while the Hang Seng index in Hong Kong is up 0.4% in late trade.
Gold was quoted at USD1,689.00 an ounce early Wednesday, higher than USD1,678.49 on Tuesday.
At the top of the FTSE 100 in early trade was CRH, the building materials firm rising 4.1% as it retained plans to pay its final dividend.
The company said it had a "good" first three months of the year, with like-for-like sales up 3%.
To mitigate the financial impact of Covid-19, CRH has suspended all non-essential and discretionary spending.
Following a "prudent and precautionary decision" to draw down its EUR3.5 billion revolving credit facility, the group now has cash and cash equivalents of over USD6 billion.
"This is sufficient to meet all maturing debt obligations for the next 4.5 years and the weighted average maturity of the remaining debt is 10.4 years. There are no financial covenants associated with the group's debt obligations," CRH highlighted.
CRH has decided to postpone its share buyback programme until further notice, but has proposed a final dividend of EUR0.63 per share for consideration at Thursday's AGM.
At the bottom of the index was Sage, down 4.8% after Goldman Sachs cut the accounting software firm to Sell from Neutral.
FTSE 250 constituent Beazley shed 5.3% as it estimated the total claims from Covid-19 to be USD170 million net of reinsurance.
In an "unpredecented" first quarter, gross premiums written were up 13% to USD840 million.
Beazley expects the cost of Covid-19 across the political, accident and contingency division, which includes event cancellation, personal accident and accident and health, is around USD70 million net of reinsurance. The marine, property and reinsurance divisions should see claims around USD100 million.
Fellow insurer Hiscox, however, was up 1.9%. It expects to pay net claims of USD150 million due to Covid-19 for event cancellation and abandonment, media and entertainment and other segments including travel.
In the event that restrictions on travel and mass gatherings are extended beyond six months, Hiscox expects that these claims could increase by an additional USD25 million.
On AIM, boohoo was up 3.8% after the fast fashion retailer said revenue surged 44% to GBP1.23 billion in its financial year that ended February 29, while pretax profit jumped 54% to GBP92.2 million.
The online seller said strong momentum was maintained into the new financial year, though trading since the middle of March has been mixed due to Covid-19. However, performance has improved in more recent weeks and it is now seeing "improved" year-on-year sales growth in April.
"We remain cautious regarding our outlook, as a result of the uncertainty caused by the Covid-19 pandemic," the AIM-listed company said.
By Lucy Heming;Â [email protected]
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