UK markets on the front foot as optimism trumps US/China worries

Wed, 27th May 2020

The rally in global equities continued on Wednesday with UK markets firmly higher at midday, matching gains seen across much of Europe and echoing the positive performance overnight in New York. At 12pm, the benchmark FTSE 100 index was close to 1.5% ahead at 6,154.94, with the mid cap FTSE 250 also rallying, up 1.7% to 17,222.07. Providing the fuel for rising markets is increasing optimism over widespread reopening measures across global economies, although tensions in Hong Kong and between the US and China continued to fester. Asian shares fell broadly overnight, although Tokyo held up as Japan said it will carry out another $1.1trn stimulus package on top of a $1.1trn programme already launched last month. The Hang Seng in Hong Kong slid by almost 1%. US shares surged on Tuesday, with the Dow rising more than 2%, and the S&P 500 up more than 1%, trading above 3,000 for the first time since 5 March easing marginally below this level. Gold was weaker, testing $1,700 again as US yields rallied on economic reopening, but 10 year Treasury yields peeled back off the highs at 0.7% due, maybe, to the US/China tensions. MOVING UK MARKETS Hard hit travel related stocks again led the way, with cruise operator Carnival soaring 17% to £12.98, and retirement services supplier Saga, which also runs cruises, soaring 40% to 24.58p. Engineering businesses were also very strong, with Melrose and Rolls-Royce jumping 15% and 13% respectively, while various leisure and restaurant operators were strong, including Garfunkel's-owner Restaurant Group, up 25% to 66.1p. Grocery technology and delivery business Ocado headed the FTSE loser board, sliding a little shy of 7% to £19.67, albeit, after a stunning rally of late. Elsewhere, soft drinks maker Britvic rose 2% higher to 736.46p as cost cutting helped it post a rise in first-half profit. The maker of Robinsons and Tango drinks deferred a decision on paying a dividend until later in the year. Subprime lender Provident Financial rose 5.0% to 191.9p, even as it reported a fall in new customer numbers, having tightened its lending standards in the wake of the Covid-19 crisis. Provident Financial also touted the strength of its balance sheet and said it was holding regulatory capital some 33% above the minimum regulatory requirement. COMMERCIAL PROPERTY Property developer British Land firmed 3.2% to 392p despite it reporting wider losses on lower rental income, as the Covid-19 pandemic heaped further pressure on struggling retailers. Shopping centre owner Hammerson was 3% higher at 76.5p after David Atkins decided to step down as chief executive after a 10 year stint in the hot seat. Wealth manager St. James's Place gained 5.7% to 926.6p on announcing that it had boosted its funds under management during the month of April on-year, assisted by positive net inflows. Services provider to the housing sector Mears rose 0.9% to 166.96p as it swung to a full-year loss, having written down the value of discontinued domiciliary care operations. Normalised profit at Mears edged up 1%, on the back of higher revenue. Pawnbroker Ramsdens jumped 9.5% to 155p after it reported a 30% rise in annual profit as it boosted foreign exchange, jewellery and pawnbroking revenue. Ramsdens didn't declare a final dividend, citing Covid-19 pressures that have forced the closure of its stores. LITTLE GLISTER FOR GOLD MINER Petropavlovsk plunged 6.6% lower to 23.5p as the Russia-focused gold producer booked a modest fall in annual profit after higher sales were offset by one-off expenses. Detection technology supplier Kromek rallied 9.2% to 22.11p, having won a $5.2m contract extension from the US Department of Defense to detect and identify pathogens in an urban environment. Compliance and energy services group Sureserve fell 0.8% to 42.15p despite posting a rise in first-half profit, as higher sales at its compliance division offset a weaker energy performance. Luxury furniture retailer Walker Greenbank firmed 8.6% to 38p, having moved to restart manufacturing at its two UK factories. At 12:29pm: (LON:CCL) Carnival PLC share price was +224.5p at 1335.5p (LON:MRO) Melrose Industries PLC share price was +19.93p at 125.88p (LON:OCDO) Ocado Group PLC share price was -144.5p at 1962.5p (LON:RR.) RollsRoyce Holdings PLC share price was +49.75p at 364.55p (LON:SAGA) Saga share price was +4.16p at 21.66p Story provided by StockMarketWire.com

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