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(Alliance News) - Stocks in London opened Friday on the front foot despite rising a stark warning from the World Health Organisation over rising coronavirus cases in Europe.
The FTSE 100 index was up 58.88 points, or 1.0%, at 6,206.02 early Friday. So far this week, though, the blue chip index is down 1.4%
The mid-cap FTSE 250 index was up 72.66 points, or 0.4%, at 17,184.78. The AIM All-Share index was up 0.4% at 886.97.
The Cboe UK 100 index was up 0.7% at 10,490.73. The Cboe 250 was up 0.4% at 14,667.65, and the Cboe UK Small Companies was down 0.5% at 9,397.92.
"After a strong close on Wall Street, European stocks are looking to play catch up, although grim coronavirus statistics and growing fears over a second wave will keep risk sentiment in check," said CityIndex's Fiona Cincotta.
The reopening of tourist sites and beaches has been tempered by a new warning from the World Health Organization that Europe is not yet in the clear.
WHO regional director Hans Kluge warned that in 11 nations, "accelerated transmission has led to very significant resurgence that if left unchecked will push health systems to the brink once again in Europe".
Cincotta continued: "Fears of lockdown restrictions being re-imposed or economies being reopened at a slower pace have weighed on sentiment across the week resulting in choppy trading and a constant struggle between the bulls and the bears. Whilst the FTSE closed the previous session in positive territory and aims for another jump higher on the open, the index is on track for a 2% loss across the week. Meanwhile the S&P is on track for a flat weekly move despite being up as much as 1.8% and down by as much as 2.4% at different points across the week."
Cincotta said we can expect a quiet session on Friday "with little on the European economic calendar to grab traders' attention".
Wall Street ended in the green, driven by lenders, who gained prior to the results of banking system stress tests for the year being performed by the Federal Deposit Insurance Corp, a US banking regulator. This was despite reports showing that another 1.5 million Americans have been sent to the unemployment line and that the US economy shrank by 5% in the first quarter of 2020.
Following the stress tests, the US Federal Reserve ordered 34 major US banks to suspend share buybacks in the third quarter and limit dividend payments to shareholders. The decision is the first such move since the global financial crisis 12 years ago, and limits how banks can spend their capital amid the coronavirus pandemic that has caused a sharp economic downturn.
The Dow Jones Industrial Average closed up 1.2%, while the S&P 500 and Nasdaq Composite both added 1.1%.
In London, Tesco was up 1.1% in early trade after opening lower. The FTSE 100-listed supermarket Tesco said it saw an uptick in sales in the first quarter of its financial year.
For the 13 weeks to May 30, Tesco's total sales improved 8% year-on-year to GBP13.38 billion, with like-for-like sales improving 7.9%.
In the UK, sales were up 9.1% to GBP9.91 billion and like-for-like sales improved 8.7%.
Growth was most marked online, the supermarket noted, with online sales up 49% for the quarter as a whole and the rate of growth increasing to nearly 100% by the end of May.
Sales in its convenience store business grew by 9.5% including a particularly strong performance from One Stop.
Chief Executive Dave Lewis said Tesco has transformed its stores with "extensive" social distancing measures so that everyone who was able to shop in store "could do so safely".
"The costs of doing this have been significant and only partly offset by business rates relief and increased volume. We see the balance as an investment in supporting our customers at a time when they need it most," he added
Looking ahead, Tesco's current expectation is that Retail operating profit in the current year is likely to be at a similar level to financial 2020 on a continuing operations basis.
Rentokil was 3.5% higher after JPMorgan raised the pest control and hygiene services firm to Overweight from Neutral.
In the midcaps, 888 Holdings jumped 11% in morning trading. The gambling firm's adjusted earnings before interest, tax, depreciation and amortisation for 2020 will be ahead of previous expectations following a strong year-to-date trading performance.
Average daily revenue in the year-to-date has been 34% higher than the prior year, the company said, due to increased levels of customer acquisition during the second half of 2019 and the structural shift towards online gaming accelerated by the Covid-19 pandemic during recent months.
Gibraltar-based 888 said that despite the encouraging trading momentum it remains "mindful" of possible headwinds in the second half of the year including the potential for a period of prolonged global economic uncertainty that could impact discretionary spending by consumers.
easyJet was 2.5% higher. The budget airline has signed a sale and leaseback agreement for six Airbus A320neo aircraft for cash proceeds of USD255 million.
The aircraft will be sold to leasing company SMBC Aviation Capital and leased back for terms of between 110 and 122 months, the low-cost airline added. The lease obligations is expected to total GBP155 million.
Proceeds, which make up part of the expected GBP500 million to GBP650 million in funding from sale and leasebacks announced by the company in May, will be used to maximise liquidity and further strengthen easyJet's financial position.
Weir Group gained 3.8% after it completed the refinancing of its main banking facilities, with a syndicate of 12 global banks.
The facilities comprise a new USD950 million revolving credit facility which will mature in June 2023 with the option to extend for up to a further two years and a new GBP200 million term loan, which will mature in March 2022.
The margin on the new facilities is slightly higher than current levels, Weir noted, which reflects market conditions but remains "highly competitive" and significantly lower than the group's existing long-term bonds.
Weir said its covenant terms remain unchanged and noted it continues to be "highly" cash generative and has a "strong" liquidity position - which includes about GBP500 million of immediately available committed facilities and cash balances.
Turning to trading, Weir said Minerals business continues to show "resilience" in the second quarter, with aftermarket orders similar to the first quarter.
Its ESCO unit has shown "resilience" but has seen customers run down ore stockpiles. In Oil & Gas, Weir saw a "significant" step-down in North American activity levels in during the quarter.
At the other end of the FTSE 250, Aston Martin Lagonda was 6.1% lower as it plans to sell new shares totalling up to 19.99% of its current issued share capital in an attempt to secure enough cash to "successfully emerge from the extended Covid-19 lock-down".
At its current market capitalisation of about GBP900 million, the share offer could raise up to GBP180 million. Aston Martin completed a GBP536 million rights issue back in April.
The price at which the shares are to be sold will be determined at the close of the bookbuilding process, the luxury carmaker said.
The institutional placing will be run by Barclays, JPMorgan, Morgan Stanley and Deutsche Bank. A retail offer also will be made via PrimaryBid.
"The directors of the company are confident that this additional flexibility will allow the company to pursue its strategy to realise its full potential to operate as a true luxury company and remain focussed on ensuring the company builds the appropriate capital structure for the longer term," Aston Martin added.
Yew Tree Overseas has agreed to subscribe for 25% of the placing and Prestige Motor will buy 7.8%.
Separately, Aston Martin said its retail sales in the second quarter were hit by the Covid-19 disruption. Wholesales are expected to be lower in the second quarter than in the first quarter and wholesale average selling price will continue to suffer from its de-stocking process.
In Asia on Friday, the Japanese Nikkei 225 index closed up 1.1%. In Hong Kong, the Hang Seng is 0.9% lower in late trade. Financial markets in Shanghai remained closed on Friday for the Dragon Boat Festival holiday.
The US Senate on Thursday unanimously approved a bill that would lay out sanctions on Chinese officials who undermine Hong Kong's autonomy as Beijing pushes forward with a controversial security law.
The House of Representatives still needs to pass the bill, which would allow sanctions in the US against Chinese officials and the Hong Kong police as well as banks that do business with them.
The vote comes as China presses forward with a security law that would enforce punishment over subversion and other perceived threats in Hong Kong, which saw massive protests last year in support of maintaining the financial hub's freedoms.
Against the yen, the dollar was quoted at JPY107.07, soft versus JPY107.17.
Sterling was quoted at USD1.2407 early Friday, flat from USD1.2405 at the London equities close on Thursday.
The euro traded at USD1.1214 early Friday, flat from USD1.1216 late Thursday.
Gold was priced at USD1,764.10 an ounce early Friday, higher than USD1,760.11 on Thursday. Brent oil improved to USD41.38 a barrel early Friday from USD40.44 late Thursday.
Still to come, US personal consumption expenditure index figures at 1330 BST - the core reading is the Federal Reserve's preferred gauge of inflation.
By Paul McGowan; paulmcgowan@alliancenews.com
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