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(Alliance News) - The FTSE 100 was given a boost by oil majors on Thursday on hopes that Saudi Arabi and Russia could agree on production cuts, as the coronavirus crisis continues to play on the minds of investors.
The FTSE 100 index closed up 25.65 points, or 0.5%, at 5,480.22.
The FTSE 250 ended down 110.40 points, or 0.8%, at 14,436.80, and the AIM All-Share closed down 2.48 points, or 0.4%, at 663.63.
The Cboe UK 100 ended up 0.7% at 9,266.60, the Cboe UK 250 closed down 0.5% at 12,435.97, and the Cboe Small Companies ended down 0.5% at 7,976.71.
In Paris the CAC 40 and the DAX 30 in Frankfurt both ended flat.
Stephen Jones, at Kames Capital, commented: "The market is still not taking on board the second- and third-order impacts of the last six weeks' worth of deterioration. Where it has been supported aggressively in the likes of investment-grade bonds, the market is getting it right because there is a buyer of last resort in central banks.
"But from looking at the earnings downgrades and guesswork of economic forecasting, we believe equities are still not pricing the severity of the crisis enough. That drives our current caution."
In the FTSE 100, oil major Royal Dutch Shell ended the best performer, followed by peer BP, tracking spot oil prices higher. Shell 'A' shares closed up 8.5%, Shell 'B' up 9.4% and BP up 5.9%.
Shell is London's largest company by market capitalisation, while BP is the third largest.
Brent oil was quoted at USD30.02 a barrel at the London equities close, up almost 30% from USD25.38 at the close Wednesday.
Oil prices surged after President Donald Trump said Thursday that after speaking to Saudi Arabia's leader he expects a slashing of oil production, defusing a Saudi-Russian price war that facilitated a crash in oil markets.
"Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia," Trump tweeted, referring to Crown Prince Mohammed bin Salman and Vladimir Putin.
"I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!" Trump tweeted. "Could be as high as 15 Million Barrels," he added in a subsequent post.
The North Sea benchmark spiked to an intraday high of USD36.16 in the wake of Trump's tweet.
OANDA markets analyst Edward Moya commented: "All the fine details seem to still be up in the air so President Trump's tweet might have been premature. Oil is a tangible asset and with global storage tanks nearing capacity, production cuts were going to happen regardless of an agreement being reached by the top three energy oil producers. It should also be expected that the US will contribute to production, even though no details were mentioned."
Hikma Pharmaceuticals closed up 5.8% after JPMorgan double upgraded the drugmaker to Overweight from Underweight.
At the other end of the large cap index, Carnival ended the worst performer, down 22% after the cruise line operator reduced the size of a share placing but said a note offering has been upscaled.
The Anglo-American firm has been hit by the Covid-19 pandemic, with port restrictions around the world forcing the company to halt cruise operations and offer refunds to customers. Carnival will be offering 62.5 million shares at USD8.00 each. This will raise USD500 million approximately, but Carnival had previously said it would be offering USD1.25 billion worth of stock.
In a separate announcement, Carnival said it will be offering USD4 billion worth of senior secured notes, rather than USD3 billion planned before.
"Investors brave enough to back the fundraising might think they are getting a bargain, yet Carnival is ploughing through cash at a high rate. The prospectus for the fundraising says it needs USD1 billion a month to cover operating costs, cash refunds of customer deposits, servicing debt and some other factors. That implies it needs life to return to normal by autumn otherwise it could be asking investors for even more money," AJ Bell's Russ Mould said.
Centrica closed down 8.6% after the Brtish Gas parent cancelled the planned final dividend for 2019 amid the chaos caused by Covid-19. Centrica in February declared a 3.5 pence per share final dividend for 2019.
The annual total was 5.0p, rebased from 12.0p last summer. However, the company will no longer be paying that final return. This, the energy provider said, is a "prudent" decision given the financial impact of Covid-19. Centrica said it is difficult to quantify exactly how big that impact will be. It has identified GBP400 million of spending reductions including halting all non-essential costs and delaying capital and infrastructure projects.
Additionally, the sale of oil & gas business Spirit Energy has been paused until financial and commodity markets have "settled", Centrica added.
Rolls-Royce Holdings closed down 8.8% after UBS downgraded the jet engine maker to Neutral from Buy.
The pound was quoted at USD1.2402 at the London equities close, up from USD1.2395 at the close Wednesday.
Meanwhile, UK Prime Minister Boris Johnson is still showing signs of coronavirus, Downing Street has said, as it confirmed the government is working with nine potential suppliers over a new Covid-19 antibody test.
The prime minister's seven days of self-isolation end on Friday but it is unclear whether he plans to leave the Downing Street flat where he has been staying.
It comes as 2,921 people were confirmed to have died in hospital after testing positive for coronavirus in the UK as of 1700 BST on Wednesday.
The euro stood at USD1.0878 at the European equities close, down from USD1.0927 late Wednesday, amid an absence of a united response to the coronavirus damage from the eurozone.
European Commission President Ursula von der Leyen admitted that the bloc had failed to support Italy in the early days of the coronavirus crisis, but insisted it was now changing its ways.
"It must be recognized that, in the first days of the crisis, faced with the need for a joint European response, too many thought only of their own problems at home," she wrote in a column for Italian newspaper La Repubblica.
Italians were angered by an initial refusal by France and Germany to supply the country - faced with the worst coronavirus outbreak in the world - with protective equipment.
The feeling of abandonment in Italy, where the Covid-19 death toll now stands at more than 13,000, intensified when Germany and the Netherlands resisted calls for a common EU debt instrument.
So-called 'coronabonds' could help bring down Italy's borrowing costs and ease access to funds.
Against the yen, the dollar was trading at JPY107.77, up from JPY107.11 late Wednesday.
Stocks in New York were higher at the London equities close boosted by energy stocks after Trump's tweet, shrugging off a record number of US workers being sent to the unemployment line due to the coronavirus outbreak.
The DJIA was up 1.3%, the S&P 500 index up 1.5% and the Nasdaq Composite up 1.1%.
US initial jobless claims doubled on the previous week to reach a fresh historical high due to Covid-19, data from the Department of Labor showed.
For the week ended March 28, seasonally-adjusted initial claims were a whopping 6.6 million, with the previous week's level revised up by 24,000 to stand at just over 3.3 million.
The latest reading marked the highest level of initial claims in the history of the series, the Department of Labor said. The previous record had been held by claims in the previous week, ended March 21, which in turn was the highest since October 1982 when claims stood at 695,000.
In the worst single week after the 2008 crash, claims stood at 665,000. The latest figure was nearly ten times this.
The latest claims figures prelude the closely-watched US jobs report for March on Friday, although the numbers could mask the full extent of the damage Covid-19 has caused on the world's largest economy.
The US economy is expected to have lost 100,000 jobs in March, while the unemployment rate is seen at 3.8%, up from 3.5% in February.
Robert Alster, at Close Brothers Asset Management, said: "To soften the impact, fiscal and monetary levers will need to be used in tandem, and speed is of the essence. The Federal Reserve's USD2.2 trillion rescue package will help, but huge numbers of small and mid-size businesses will be looking to the treasury for further support. Similarly, consumers will benefit from the helicopter payments but are lacking the income support that we've seen in the UK.
"Further questions arise over Federal independence; constitutional authority for public-health interventions lie primarily with the states, but any social or economic response needs to be co-ordinated or they risk failing. Now more than ever the Fed needs to be ready to take drastic measures in response to the data."
Gold was quoted at USD1,610.10 an ounce at the London equities close, higher against USD1,590.30 late Wednesday.
The economic events calendar on Friday has services PMI readings from Germany, the eurozone, the UK and US at 0855 BST, 0900 BST, 0930 BST and 1445 BST respectively.
The UK corporate calendar on Friday has a trading statement from online trading company CMC Markets.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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