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(Alliance News) - London stocks extended gains on Tuesday, the FTSE 100 racking up more than 100 points as investors looked to easing Covid-19 lockdowns.
Meanwhile, BP and Royal Dutch Shell shrugged off further turmoil in oil markets to both post share price gains - the former rising even after posting a substantial drop in first-quarter earnings.
The FTSE 100 index closed up 111.71 points, or 1.9%, at 5,958.50, adding to Monday's 1.6% rise.
The FTSE 250 ended up 338.86 points, or 2.1%, at 16,291.58 on Tuesday and the AIM All-Share closed up 10.01 points, or 1.3%, at 804.96.
The Cboe UK 100 ended up 2.2% at 10,075.00, the Cboe UK 250 closed up 2.1% at 14,031.11, and the Cboe UK Small Companies ended up 0.7% at 8,965.25.
In European equities on Tuesday, the CAC 40 in Paris ended up 1.4%, while the DAX 30 in Frankfurt ended up 1.3%.
"There is growing sense of optimism the lockdowns have helped contain Covid-19, and a loosening of restrictions seems to be on the horizon. A number of countries have already reopened some small aspects of their economies, and there is hope the trends will continue. Sadly the pandemic is still spreading, but it would appear the growth rate has cooled, so dealers have another reason to be bullish," said David Madden, market analyst at CMC Markets.
Italy – the first European country to go into lockdown seven weeks ago – began allowing some construction and factory workers to go back to work on Monday. From next week, Italians will be able to exercise outdoors and visit relatives – but only if they wear masks and refrain from hugs and handshakes.
Spain has already begun easing its tight lockdown and was set to announce more detailed plans on Tuesday, as was France, which has said it will begin to ease confinement on May 11. Florists, dentists and others went back to work in Switzerland in the first stage of a three-phase plan.
UK Prime Minister Boris Johnson, emerging on Monday from his own battle with the virus, called for patience in the UK, saying it was too early to follow suit by relaxing lockdown rules.
The Times reported that schools will remain shut next month, but shops selling non-essential items will be allowed to reopen if customers can be kept two metres apart. People could also be allowed to mix with a wider group of friends or family, according to the paper.
Figures on Tuesday showed at least 24,000 people in the UK have died after suffering confirmed or suspected Covid-19.
Some 24,243 deaths involving coronavirus have now been registered across the UK, analysis by the PA news agency shows, as the Care Quality Commission reported there had been more than 4,000 deaths in care homes in England. However the true toll is thought to be far higher.
The pound was quoted at USD1.2436 at the London equities close Tuesday, compared to USD1.2421 at the close on Monday.
The euro stood at USD1.0834 at the European equities close Tuesday, against USD1.0836 at the same time on Monday. Against the yen, the dollar was trading at JPY106.89 compared to JPY107.21 late Monday.
While European stocks had a good session on Tuesday, Wall Street was tinged with red in morning trade.
"US stocks are turning negative as investors start to abandon tech-heavy positions before the technology giants start to report. Alphabet posts earnings after the close, Facebook and Microsoft report tomorrow, and Amazon and Apple deliver results on Thursday," said Edward Moya, senior market analyst at Oanda.
Stocks in New York were in negative territory at the London equities close, with the Dow Jones down 0.1%, the S&P 500 index also 0.1% lower, and the tech-heavy Nasdaq Composite down 0.9%.
Brent oil was quoted at USD19.98 a barrel at the London equities close Tuesday, firm on USD19.22 late Monday. WTI crude, however, was quoted at USD12.19, down from USD12.53.
A week ago, WTI prices crashed into negative territory as the expiry date for the May contract loomed. Oil markets have plunged in recent weeks as lockdowns and travel restrictions to fight the coronavirus around the world batter demand.
USO - the world's biggest oil-focused exchange-traded fund which tracks WTI - said on Monday it would be switching out of the June contract in favour of spreading its portfolio across the July, August, September, October and December contracts.
"Oil trade will remain volatile, but any major relief rallies will likely be heavily sold into until the entire energy space starts delivering deeper production cuts," said Oanda's Moya.
Despite further turmoil in oil markets, London's oil majors managed to end the session higher. Royal Dutch Shell's 'A' and 'B' shares ended up 2.4% and 3.0% respectively.
BP closed 2.6% higher even as it reported a sharp drop in first-quarter earnings. It said the oil and gas industry is suffering from supply and demand shocks "on a scale never seen before", but it kept its dividend intact.
Earlier this year, BP Chief Financial Officer Brian Gilvary had said for 2020, the company's breakeven price would be around the mid-USD50s mark. On Tuesday, BP said it is aiming to use cost cuts to drive its cash balance point below USD35 a barrel in 2021.
For the quarter ended March 31, underlying replacement cost profit - BP's preferred metric - was USD800 million, down 67% from USD2.4 billion for the same period a year earlier.
BP said it was dealing with an "exceptionally challenging environment" and "demand destruction".
Still, the oil major declared a first-quarter dividend of 10.5 US cents, up 2.4% from 10.25 cents in the fourth quarter and first quarter of 2019.
Russ Mould, investment director at AJ Bell, commented: "Management will doubtless look to defend the dividend as best it can but, as Equinor has shown, events could still force its hand and it would therefore be rash of the company to say it will defend the dividend whatever the circumstances, even as they will be aware of shareholders' thirst for income."
Earlier in April, Norway's Equinor cut its dividend.
Safe haven asset gold weakened on Tuesday amid the broadly brighter market mood. The precious metal was quoted at USD1,701.40 an ounce at the London equities close Tuesday against USD1,712.14 at the close on Monday.
Gold miner Fresnillo ended down 2.0%, tracking the price of the metal lower, while Hochschild Mining and Centamin ended down 2.2% and 3.2% respectively.
HSBC ended up 1.0% on Tuesday despite reporting a sharp drop in first quarter profit as the London-headquartered, Asia-focused bank upped its expected credit loss in the face of the Covid-19 pandemic.
HSBC said it expects the global health crisis to hurt revenue in 2020 - due to lower customer activity - resulting in "materially" lower profit compared to 2019. For 2019, Europe's largest lender reported pretax profit of USD13.34 billion.
As a result, HSBC has been forced to up its expected credit loss by USD3.03 billion in the first quarter, from USD585 million a year before. For the three months ended March, pretax profit dropped 48% to USD3.23 billion from USD6.21 billion a year prior.
In the FTSE 250, Games Workshop rallied 9.1% as the wargames manufacturer and seller said it has commenced a phased re-opening of its business.
Following the suspension of all its operations in March, the retailer will start making trade sales in Europe and North America this week and online orders from May 1. Games Workshop noted that while majority of its stores remain closed, a small number have re-opened in China, the Netherlands and Scandinavia.
It added that it will continue to re-open stores across the world as local restrictions are lifted.
On AIM, Burford Capital jumped 17% as it reported a decline in profit for 2019, but said the first quarter of 2020 has been strong.
The litigation finance company posted a USD225.5 million pretax profit for 2019, down 26% from the previous year's USD305.1 million profit, as total income dipped 14% to USD366.0 million from USD425.0 million.
In the first four months of 2020, Burford said it "has obtained court results or arbitral awards that, if paid in full, would generate substantial income and cash receipts". This includes close to USD800 million of cash receipts and over USD450 million of balance sheet cash receipts, as well as over USD500 million of income.
Wednesday's corporate calendar has first quarter results from clothing retailer Next, lender Barclays, housebuilder Persimmon and drugmaker AstraZeneca. At 0500 BST are quarterly results from Standard Chartered, and at midday is GlaxoSmithKline's first quarter release.
The economic calendar on Wednesday has the British Retail Consortium's shop price index at 0001 BST followed by eurozone consumer confidence at 1000 BST, German inflation at 1300 BST and US GDP at 1330 BST.
At 1900 BST is an interest rate decision from the US Federal Reserve, followed by a press conference with Fed Chair Jerome Powell at 1930 BST.
From a policy standpoint, no change is expected given the Fed has already slashed the federal funds rate to a range of 0.00% to 0.25% while also launching a number of initiatives to support credit to businesses as well as local governments.
By Lucy Heming; lucyheming@alliancenews.com
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