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(Alliance News) - Stocks in London ended higher on Thursday shrugging off a historic surge in US jobless claims, as investors took heart from a commitment from G20 leaders to support the global economy.
Separately, UK Chancellor Rishi Sunak also announced a package of support for self-employed workers. He said late on Thursday that the government will pay self-employed workers a grant of 80% of their average monthly profits up to GBP2,500 a month.
The leaders of the world's 20 largest economies vowed to inject more than USD5 trillion into the global economy, as part of their coordinated response to the coronavirus pandemic.
"We are injecting over USD5 trillion into the global economy, as part of targeted fiscal policy, economic measures, and guarantee schemes to counteract the social, economic and financial impacts of the pandemic," read the statement released after the conclusion of the virtual meeting led by Saudi Arabia.
Finance ministers and central bank governors of the G20 countries will coordinate and work closely with international organisations to develop and deliver "appropriate international financial assistance".
The FTSE 100 index closed up 82.96 points, or 1.5%, at 5,771.16.
The FTSE 250 ended up 476.81 points, or 3.2%, at 15,296.72, and the AIM All-Share closed up 14.24 points, or 2.2%, at 676.23.
The Cboe UK 100 ended up 2.5% at 9,789.20, the Cboe UK 250 closed up 4.1% at 13,290.90, and the Cboe Small Companies ended up 1.4% at 8,143.40.
In European equities, the CAC 40 in Paris ended up 2.5%, while the DAX 30 in Frankfurt ended up 1.3%.
CMC Markets analyst David Madden said: "Equity markets finished in positive territory as traders are hopeful about a rescue package from the US, in addition to that the G20 issued an optimistic message in relation to the Covid-19 crisis. The G20 have made it clear they are willing to do whatever it takes to combat the health situation.
"The group confirmed they will take the required steps in terms of healthcare as well as financing to tackle the emergency. The united front from the world leaders helped market confidence, because as far as the west is concerned, the battle is in its infancy."
In the FTSE 100, British Land closed down 2.6% after the property company said it has suspended all future dividend payments with immediate effect as it looks to save cash in the face of the Covid-19 crisis. British Land also outlined rental deferral measures for some of its retail customers.
Its portfolio has a 41% exposure to the sector as of September 30. The firm, which back in January proposed a 7.9825 pence third quarter payout, said it will "revisit" its dividend policy once the clouded market outlook clears.
British Land explained one of its centres, Valentine in Lincoln, has closed, though all of its others have stayed open "to provide important access to essential stores such as supermarkets and pharmacies". The company added that 200 individual units in its retail sites have kept their lights on, this is just 12% of its total, however. These measures will amount to GBP3 million in lost revenue and services charges.
Glencore closed down 1.3% after the commodities house said most operations are running as normal, though in some countries Covid-19-related restrictions have curtailed work.
In Canada, the Raglan nickel mine and the Matagami zinc mine, both in Quebec, will be on care & maintenance for the next three weeks after the province's government shut all non-essential business. However, in Ontario, mining is deemed an essential operation.
Glencore is moving ferroalloys operations in South Africa onto care & maintenance after the government started a 21-day lockdown from midnight Thursday.
The pound was quoted at USD1.2132 at the London equities close, up sharply from USD1.1764 at close Wednesday, as the greenback tanked as the coronavirus outbreak sent a record number of US workers to the unemployment line, the Department of Labor reported.
Many US cities and states have told residents to stay home, closing schools, restaurants, and other non-essential services to slow the spread of the pandemic.
US initial jobless claims for the week ended March 20, rose to a record 3.28 million, an increase of 3.0 million from the previous week's revised level. For the week ended March 13, claims were revised up to 282,000 from from 281,000.
Initial jobless claims are workers filing for unemployment benefit for the first time.
The figures showed a record number of workers applied for unemployment benefits, over four times the previous record set in 1982. All 50 US states have confirmed cases of Covid-19, with New York the worst hit, as nearly 1,000 people have died from complications of the virus
Robert Alster, head of investment services at Close Brothers Asset Management, said: "These dramatic figures offer a first glimpse into the effect state-wide lock-downs are having on the US economy. The US is very much a service led economy so staying at home really weighs on growth and employment.
"The reality is that more people are likely to lose their jobs until lock-downs are eased and, with no end in sight, the economy will almost certainly need at least another shot in the arm. Moving forward the Fed and the White House will be keen to get businesses back to work and consumers spending again. Once Covid-19 is on the retreat, time will tell how resilient consumer confidence is."
Meanwhile, the Bank of England said it can expand asset purchases further if needed, as the UK central bank held interest rates at a record-low level.
The Monetary Policy Committee voted unanimously to keep the Bank Rate at 0.1%, having cut it by 15 basis points in a special meeting last week. The MPC also voted to continue with its GBP200 billion programme of bond purchases, taking the total stock to GBP645 billion.
Between the special meetings held March 10 and March 19, there was a "significant further tightening" in financial conditions, both globally and in the UK, the Bank noted, amid disruption from the Covid-19 pandemic.
Further, due to a sharp fall in oil prices, inflation is likely to fall below 1% in the second quarter of this year, which would require the governor - Andrew Bailey, who became head of the bank less than two weeks ago - to write a letter to UK Chancellor of the Exchequer Rishi Sunak.
The BoE said it will continue to monitor the situation "closely" and stands ready to respond further to act against an "unwarranted tightening" in financial conditions, and to support the economy.
Richard Pearson, investment director at EQi commented: "All eyes will be on next month's inflation release which will prove a rollercoaster ride. We will see some prices rocket up, but as the Bank of England now says, it is most likely inflation will in fact drop significantly as demand for a whole range of goods in the ONS's basket collapses alongside the oil price shock.
"However, this is a paper tiger for savers worried about the value of their money against inflation. Once we see the other side of this crisis, and we will, inflation will likely shoot back up as fast as it collapsed, with pent up demand from locked down households unleashed on the high street and the economy."
The euro stood at USD1.1004 at the European equities close, up from USD1.0834 a day before. Against the yen, the dollar was trading at JPY109.57, down sharply from JPY111.60 late Wednesday.
Stocks in New York were higher at the London equities close following the Senate passage of a massive stimulus bill, shrugging off the unprecedented surge in US jobless claims.
The DJIA was up 5.4%, the S&P 500 index up 4.6% and the Nasdaq Composite up 4.0%.
The Senate late Wednesday unanimously approved a biggest-ever USD2 trillion rescue package that provides funding to the under-pressure health care system, boost unemployment payments and sets aside lending to small businesses that have been crippled by government-imposed shutdowns to control the spread of the coronavirus.
Passage in the Senate came after days of acrimonious debate and haggling. The bill now goes to the House, where the legislation's pace of advance will depend on whether last-minute objections delay passage.
The Senate bill allocates huge amounts to rescue US companies, including USD377 billion in assistance to small businesses and USD500 billion for loans to larger businesses and states.
Meanwhile, another USD17 billion in loans and guarantees goes to "businesses critical to maintaining national security." The Washington Post reported that category includes Boeing, which has been struggling both with the grounding of its 737 MAX aircraft and the hit to air travel brought on by the pandemic.
Dow constituent Boeing was up 15% on Wall Street.
Brent oil was quoted at USD27.06 a barrel at the London equities close, flat from USD27.08 at the close Wednesday.
"Oil prices appear stuck in a range as energy traders await the next major oversupply development. It seems market dislocations will happen as producers will start running out of room store crude. Roughly three-fourths of the world storage facilities are already full. If the Saudis and Russians follow through with the unleashing of record oil supply next month, energy markets will have to brace for another plunge in oil prices," said OANDA market analyst Edward Moya.
Gold was quoted at USD1,627.35 an ounce at the London equities close, up against USD1,607.66 late Wednesday.
The economic events calendar on Friday has US personal consumption expenditure index data at 1230 GMT - the core reading is the Federal Reserve's preferred gauge of inflation.
The UK corporate calendar on Friday has a financial outlook statement from energy provider SSE.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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