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(Alliance News) - Stock prices in London are pointed higher Friday after a series of European countries and the US laid out plans to re-open their economies after being brought to a standstill by the Covid-19 pandemic.
Investor sentiment was boosted further on news US pharma firm Gilead Sciences has seen positive results from its antiviral drug, Remdesivir, treating patients with coronavirus.
In early UK company news, Rio Tinto saw first-quarter production rise, Flutter Entertainment's revenue rose, but Auto Trader warned of continued "disruption" in the UK automotive market. Estate agent Foxtons launched a GBP22.0 million share placing.
IG says futures indicate the FTSE 100 index of large-caps to open 163.97 points higher at 5,792.40 on Friday. The FTSE 100 index closed up 30.78 points, or 0.6%, at 5,628.43 on Thursday.
CMC Markets Analyst David Madden said: "Stock markets in Europe broadly finished a little higher yesterday on the news that Germany will relax some of its restrictions in relation to the lockdown. Some businesses will re-open next week, and schools will re-open next month. Austria, Italy, and Spain have allowed resumption of some businesses, so the news out of Germany was welcomed. Governments are clearly keen to unwind the restrictions in a measured fashion, but the message is positive nonetheless."
The UK, however, has extended its lockdown by a further three weeks.
Sterling was quoted at USD1.2484 early Friday, firm against USD1.2466 at the London equities close on Thursday.
The euro traded at USD1.0864 early Friday, broadly flat against USD1.0868 late Thursday. Against the yen, the dollar was quoted at JPY107.77 versus JPY107.31.
In Asia on Friday, the Japanese Nikkei 225 index closed up 3.1%. In China, the Shanghai Composite is up 0.6%, while the Hang Seng index in Hong Kong is up 1.3%.
Oanda's Jeffrey Halley said: "US equity futures leapt by over 3.0%, followed shortly after by strong moves higher in Asian stock markets. The culprit was Gilead Sciences, a biotech company in the US, and their legacy anti-viral drug, Remdesivir. Media reports on a small-scale study at the University of Chicago, suggested that Remdesivir had comprehensively reduced symptoms in most Covid-19 patients."
He added: "It is only one study of a broader group that Gilead is conducting across the globe to create a statistically significant sample. With the end of April targeted for the collation of data, if proven effective, Remdesivir would be a game-changer in the Covid-19 pandemic fight. Especially being a tried and tested a legacy drug that has been around for many years."
China's economy contracted for the first time in decades last quarter as drastic measures to contain the coronavirus pandemic brought activity to a standstill, official data showed Friday.
Gross domestic product shrank 6.8% in the January-March quarter from the same period a year earlier, according to figures released by the National Bureau of Statistics.
It was the first negative growth reported by the world's second-largest economy since Beijing began logging quarterly data in the early 1990s.
The figure marks a sharp drop from China's six percent expansion in the fourth quarter of last year, but was slightly better than the 8.2% contraction forecast by economists in an AFP poll.
And analysts have warned of tougher times ahead, with weaker external demand for Chinese goods to weigh on growth as key export markets are battered by Covid-19.
In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 0.1%, the S&P 500 up 0.6% and Nasdaq Composite up 1.7%.
Madden commented: "The US economy continues to reel from the Covid-19 crisis. The latest jobless claims report came in at 5.24 million. The reading was awful, but traders took some solace in the fact that this was lower than the 6.6 million in the previous week. A fall in the rate of people applying for unemployment benefit is encouraging, but given the astronomical number, it’s hard to get too excited. When you tot up the last four reports, they show that more than 22 million people applied for unemployment insurance. It is staggering to think that more than 20 million people lost their jobs in one month."
In London, Rio Tinto achieved a "robust" production performance in the first quarter, with iron ore output up on a year ago.
For the first three months of 2020, Pilbara iron ore production rose 2% on a year before to 77.8 million tonnes, with shipments up 5% at 72.9 million. This was driven by a "strong recovery" across the network in March following tropical cyclone Damien in February, which hit Western Australia.
Bauxite production was up 8% at 13.8 million tonnes following the successful ramp-up of Amrun in Queensland, Australia in 2019. Third party shipments of 9.5 million tonnes in the quarter were 7% higher than that of a year ago.
However, aluminium production fell 2% to 783,000 tonnes and mined copper was down 8% at 133,000 tonnes in the quarter. Titanium dioxide slag output was down 1% to 293,000 tonnes, while the production of pellets and concentrate at the Iron Ore Co of Canada rose 3% to 2.6 million tonnes.
For 2020, Rio Tinto now expects capital expenditure to be around USD5 billion to USD6 billion, down from previous guidance of USD7 billion, due to Covid-19 restraints. Capital expenditure originally planned for 2020 could, though, flow into 2021 and 2022.
The miner largely held its production guidance for the year, though copper was nudged down to between 475,000 tonnes to 520,000 tonnes, from a range of 530,000 tonnes to 570,000 tonnes previously. Titanium dioxide slag is now guided to be at the lower end of the firm's previous 1.2 million to 1.4 million tonne range.
Gambling firm Flutter Entertainment saw group revenue rise 16% year on year in the three months to March 31, before the Covid-19 lockdowns, rising to GBP547 million versus GBP478 million.
Sports revenue was up 13% to GBP407 million, and Gaming revenue was 25% higher at GBP140 million.
Flutter Chief Executive Peter Jackson said: "The group performed very well in the period prior to the disruption to sporting events in mid-March. We delivered strong customer growth across each of our brands and benefited from favourable sports results across our sportsbooks.
"Following the widespread cancellation of sporting events, group revenues have been more resilient than we initially expected, helped by the continuation of horse racing in Australia and the US. Gaming continues to perform well across the group."
Following the UK government extending the country's lockdown for a further three weeks, Auto Trader said the automotive market will continue to face "unprecedented levels of disruption".
Car dealers will remain closed, Auto Trader said. Adding: "We will advise our customers today that, while they are required to remain closed during May, our advertising packages will continue to be free."
Turning to the midcaps, asset management peers Man Group and Brewin Dolphin both saw assets under management contract amid the pandemic.
At March 31, Man Group's FuM stood at USD104.2 billion, down from USD117.7 billion at the end of 2019.
While Man Group was able to record USD500 million in net inflows in the quarter, market movements shaved USD10.7 billion off funds.
Chief Executive Luke Ellis commented: "Given the extreme volatility in all markets, we are pleased to have outperformed peers on an asset weighted basis across the firm by 2.5% in the first quarter, and to see our absolute return strategies make gains for clients despite the large sell off seen. We saw net inflows in the quarter and continue to win mandates but we have seen a recent increase in redemptions as clients adjust their allocations in response to the market moves and heightened economic uncertainty."
At Brewin Dolphin, March 31 funds under management were GBP41.1 billion, down from GBP48.5 billion three months earlier and GBP45.0 billion six months prior.
In a similar story to Man Group, Brewin saw GBP400 million in net inflows, but market movements took GBP7.5 billion off total funds in the company's second quarter.
Brewin Chief Executive David Nicol said he was "encouraged" by the company's performance in the period.
"Not surprisingly, the rapid spread of Covid-19 and the unprecedented reaction of the global markets, has negatively impacted the value of our clients' funds and consequently our second quarter total income. We have a strong balance sheet with good cash generation, and a robust regulatory capital position, which will support us as markets recover and enable us to service the growing demand for financial advice in the UK and Ireland," he added.
Mediclinic International said on Friday trading for its recently-ended financial year was in line with expectations, though it has suspended its dividend in order to support liquidity in the face of Covid-19.
On a reported basis, revenue for the financial year ended March is expected to grow 5.5%, while pre-IFRS 16 Ebitda is set to fall 2.5%. At constant currency, revenue was up 4.0% and Ebitda down 3.5%.
As at the end of March, Mediclinic had "material" headroom to covenants in its existing debt facilities as well as a strong liquidity position. Cash and available facilities at the year-end stood around GBP515 million.
To further support the group's liquidity position, all non-urgent and non-committed capital programmes have been postponed - including suspending its dividend.
Publisher Future PLC said its acquisition of TI Media will complete shortly, following the announcement by the UK competition watchdog that it has accepted Future's undertakings and will end its investigation of the merger.
Future had announced the GBP140 million purchase of fellow magazine publisher TI Media last October.
The UK Competition & Markets Authority, however, raised concerns in January but later said it would pass the acquisition if Future agreed to sell three competing titles.
In late March, Future confirmed it has agreed to sell WorldSoccer, Amateur Photographer, and Trustedreviews.com. All are in an advanced stage of talks with potential buyers. After which, the CMA said those remedies meant the regulator now believes there are reasonable grounds to approve the acquisition.
Estate agent Foxtons will place 55.0 million shares at 40 pence, which it noted is a premium to the Thursday close of 38.70p. Foxtons said it had a cash balance of GBP21.9 million on March 31, but some of this represents creditor payments that now are subject to discussions.
Foxtons said revenue declined 3% in the first quarter before the UK lockdown was put in place.
Gold was quoted at USD1,693.70 an ounce early Friday, lower than USD1,728.30 on Thursday. Brent oil was trading at USD28.52 a barrel early Friday, up on USD27.78 late Thursday.
The economic events calendar on Friday has eurozone inflation readings at 1000 BST.
By Paul McGowan; paulmcgowan@alliancenews.com
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