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(Alliance News) - Stocks in London climbed higher on Wednesday with traders looking past volatility in the oil market, focusing instead on the newest US stimulus package to counter the economic fallout from Covid-19.
Among the stocks leading the FTSE 100 higher were building materials firm CRH, gold miners, and copper producer Antofagasta. Helping to boost London's junior AIM market were Fevertree Drinks and retailer boohoo.
The FTSE 100 index was up 85.08 points, or 1.5%, at 5,726.11 midday Wednesday, rebounding after a 3.0% slump on Tuesday.
The mid-cap FTSE 250 index was up 111.79 points, or 0.7%, at 15,511.04 on Wednesday and the AIM All-Share index was up 1.2% at 761.79.
The Cboe UK 100 index was up 1.4% at 9,690.45. The Cboe 250 was up 0.7% at 13,371.81, and the Cboe Small Companies up 0.3% at 8,719.55.
In mainland Europe, the CAC 40 in Paris was up 0.6% while the DAX 30 in Frankfurt was 0.9% higher Wednesday afternoon.
"European markets are on the rise this morning, as yesterday's losses are regained in a period that is clearly one of discovery as we await the next big market driver," said Joshua Mahony, senior market analyst at IG.
"Oil's declines highlight the potential for an economic crunch in the US, given the wider impact a collapse of the sector could have on jobs and banks. Nevertheless, in an age of seemingly unlimited government backing, traders are unlikely to second guess Trump's desire to ensure economic outperformance through this crisis," Mahony continued. "Since his election, Trump has shown his willingness to ramp up debt in the name of economic growth. A USD484 billion financial package to help the US economy through this crisis is unlikely to be the last, with the government likely to push for further stimulus where possible."
Stocks in the US are pointed to a higher open on Wednesday, with the Dow Jones seen up 1.3%, the S&P 500 up 1.4% and the Nasdaq Composite up 1.4%.
The US Senate approved a bipartisan, nearly half-trillion-dollar coronavirus relief package Tuesday, with funding earmarked for devastated small businesses, overwhelmed hospitals, and a ramp-up of testing nationwide during the pandemic.
The essential job-saving measure, which passed by unanimous consent after more than a week of negotiations between Democrats, Republicans and the White House, now heads to the House of Representatives where a vote could occur as early as Thursday.
The effort is the government's latest massive cash infusion to prop up a collapsing economy amid a struggle to contain a pandemic that has killed 43,000 Americans and left some 22 million people jobless.
Also on Tuesday, US President Donald Trump ordered his administration to come up with a plan to aid US oil companies facing a massive supply glut and record-low crude prices.
Brent oil was down at USD18.87 a barrel on Wednesday from USD19.75 late Tuesday. Oil prices dipped to the lowest levels since 1999 overnight.
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 official statistics agency the 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 USD1.2346 Wednesday midday, higher against USD1.2291 at the London equities close on Tuesday.
The euro traded at USD1.0865 on Wednesday, flat on USD1.0864 late Tuesday. Against the yen, the dollar was quoted at JPY107.69, higher versus JPY107.54.
Remaining at the top of the FTSE 100 was CRH, up 6.3% as it still intends to propose a final dividend at Thursday's annual general meeting.
The Dublin-based building materials business reported a 3% rise in like-for-like sales for the three months ended March 31 compared to a year before. This included an 8% rise in like-for-like sales for its Americas Materials operations, while Europe Materials was broadly flat year-on-year as a "solid start to the year" was offset by lockdowns in March.
In a bid to mitigate damage from the virus pandemic, CRH has opted to halt all discretionary and non-essential spending "for the foreseeable future", as well as limiting its capital expenditure to only an essential maintenance level.
In March, CRH completed a round of share buybacks, returning EUR200 million to shareholders and taking the full buyback programme amount to EUR1.8 billion since it began in May 2018. However, given market volatility of late, the company has opted to postpone the programme until further notice.
However, a final dividend of EUR0.63 per share will be proposed at its annual general meeting on Thursday.
Gold miners also were among the session's winners, with Polymetal up 5.0% and Fresnillo up 3.9%.
The precious metal was higher despite Tuesday's risk-on mood. Safe haven gold was quoted at USD1,701.11 an ounce on Wednesday, higher than USD1,678.49 on Tuesday.
"It's now been a couple of weeks in which the correlation between gold and stock has been positive, with both moving in the same direction rather than their more typical inverse relationship. Yesterday saw stocks in red with gold also losing ground, while today bullion is recovering in conjunction with markets in green," observed Carlo Alberto De Casa at ActivTrades.
Another miner whose stock was rising was Antofagasta, up 4.0% as production increased in its first-quarter despite operating with just roughly two-thirds of its workforce due to Covid-19 related preventative measures.
Copper production in the period to March 31 was 2.9% higher year-on-year and climbed 4.6% quarter-on-quarter to 194,000 tonnes. Copper sales climbed 9.2% annually to 195,300 tonnes, a 0.8% rise from the fourth quarter of 2019.
At the bottom of the blue-chips was Centrica, down 3.8% after Jefferies cut the British Gas parent to Hold from Buy.
In the FTSE 250, Drax was up 8.1%. The Yorkshire electricity generator backed its full-year guidance added it is "vigilant" as the Covid-19 pandemic unfolds.
Drax says it is in line to meet analyst consensus for adjusted earnings before interest, tax, depreciation, amortisation of GBP398 million. This includes a potential hit of GBP60 million in its Customer segment as a result of reduced demand.
Drax added that it will still pay its final dividend of 9.5 pence per share.
On London's junior AIM market, Fevertree shares surged 17% after the premium tonic water maker reported a revenue rise in 2019, but noted that sales in restaurants and bars have since been hit by the Covid-19 pandemic.
Undeterred, Fevertree upped its annual dividend by 4.0% to 15.08 pence per share from 14.50p.
In 2019, Fevertree's revenue was 9.7% higher at GBP260.5 million from GBP237.4 million. Pretax profit was 4.1% lower, however, at GBP72.5 million from GBP75.6 million.
In its On-trade channel - meaning pubs, bars and restaurants - trading has been hurt as venues have been forced to close as due to Covid-19 lockdowns. In the Off-trade segment - meaning sales in grocery stores and other food retailers - the initial weeks of the health crisis saw "strong sales".
boohoo was up 6.3%. The online fashion retailer had bumper annual earnings but as focus shifts to the Covid-19 pandemic, it reported contrasting fortunes in the months of March and April.
Revenue in the year ended February 29 jumped 44% to GBP1.23 billion from GBP856.9 million, with pretax profit rocketing 54% to GBP92.2 million from GBP59.9 million.
boohoo 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.
By Lucy Heming; lucyheming@alliancenews.com
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