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(Alliance News) - The FTSE 100 started the week on strong footing with markets hopeful hard-hit Europe is beginning to turn a corner in its fight against Covid-19.
In London, Rolls-Royce was leading the blue-chips higher, while UK housebuilders were also among the gainers despite some woeful construction data from the UK.
The large-cap index was up 111.00 points, or 2.1%, at 5,526.50 on Monday at midday. The mid-cap FTSE 250 index was up 597.93 points, or 4.2%, at 14,697.14. The AIM All-Share index was up 2.6% at 676.06.
The Cboe UK 100 index was up 2.3% at 9,368.45. The Cboe 250 was up 4.2% at 12,647.43 and the Cboe Small Companies up 0.9% at 8,005.00.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 3.6% and 4.4% respectively in the early afternoon on Monday.
"European markets have kicked off the week in impressive fashion, with the FTSE 100 seeing the first weekend gap higher since the selloff began back in February," said Joshua Mahony, senior market analyst at IG.
"With a decline in daily mortality rates across the likes of France, Italy, and New York, we are seeing some optimism that the current restrictions could be shorter than many had previously speculated," said Mahony. "However, without a cure or vaccine, any easing on the current restrictions would likely be short-term in nature, sparking a likely surge in cases before long."
Monday has provided a boost for "some of the more beleaguered stocks", Mahony noted, with housebuilders and travel companies finally reclaiming some lost ground.
Housebuilders Barratt Developments and Taylor Wimpey both were up 11%, while Persimmon was 8.6% higher.
This was despite data showing the UK construction sector saw activity in March decline at the fastest rate since 2009.
The IHS Markit/Chartered Institute of Procurement & Supply construction activity index dropped to 39.3 in March from 52.6 in February, with firms overwhelmingly attributing the fall to Covid-19.
All three categories of construction work recorded a fall in output in March, with civil engineering leading the decline, followed closely by commercial building work.
Residential activity fell at a "comparatively modest pace", said IHS Markit, but firms often commented on an expected slump in house building from stoppages on site due to Covid-19 prevention measures.
The figure was even more dire in the eurozone. The IHS Markit eurozone construction purchasing managers' index plunged to 33.5 in March from 52.5 in February, pointing to the steepest decline in construction activity across the currency area since February 2009 during the global financial crisis.
IHS Markit said the downturn in construction activity was broad-based across the eurozone, with Italy recording the sharpest decline.
The pound was quoted at USD1.2292 Monday midday, up from USD1.2221 at the London equities close Friday.
The euro was quoted at USD1.0807, up from USD1.0791 late Friday. Against the yen, the dollar was quoted at JPY109.23, up from JPY108.55.
Global deaths from the Covid-19 pandemic have soared past 60,000, with Europe continuing to bear the brunt of the virus which has left roughly half the planet confined at home.
There are now more than 1.2 million confirmed cases across the globe, and around 65,000 people have died since the virus first emerged in China late last year, according to a Johns Hopkins University tally.
US President Donald Trump warned Americans to brace for a "very horrendous" number of coronavirus deaths in the coming days. "This will probably be the toughest week," he said at the White House. "There will be a lot of death."
There was, however, some encouraging news from Europe over the weekend. Worst-hit Italy cheered after seeing its number of intensive care virus cases drop for the first time – from 4,068 on Friday to 3,994 on Saturday.
In New York, stocks are pointed to a substantial boost. The Dow Jones was up 3.9%, the S&P 500 up 4.0%, the Nasdaq up 4.2%.
Gold was quoted at USD1,634.72 an ounce, up from USD1,618.25 late Friday.
Brent oil was at USD32.88 a barrel on Monday, down from USD33.05 late Friday.
Oil prices fell on Sunday after a meeting to discuss output cuts between OPEC and its allies was delayed. They rose early Monday but have since reversed again.
Oil prices have tumbled to levels not seen for years due to the coronavirus pandemic and a price war between Russia and Saudi Arabia, the kingpin of exporting group OPEC.
Prices had bounced back from 18-year lows last week after President Trump said that Riyadh and Moscow would draw a line under their dispute and agree to major output cuts.
But analysts had been sceptical about a quick resolution, and doubts only grew when the meeting between OPEC and its allies, including Russia, was delayed. They had been expected to meet via video conference to discuss oil production cuts on Monday but the meeting has been postponed to Thursday, the government of energy-rich Azerbaijan said at the weekend.
London-listed oil stocks were lower on Monday. BP shares were down 1.4%, while Royal Dutch Shell 'A' and 'B' shares were down 0.6% and 0.8% respectively.
Elsewhere in the FTSE 100, Rolls-Royce Holdings was up 19% after the engine maker took actions to cope with the Covid-19 pandemic. It suspended its shareholder payout, withdrew financial guidance for 2020 and secured a new loan amid the grounding of aircraft around the world.
In response to the change in outlook and to ensure cash headroom in the event of a prolonged reduction in trading activity, Rolls-Royce took the precautionary decision in March to draw fully on its GBP2.5 billion revolving credit facility, it said.
London-based Rolls-Royce also secured an additional GBP1.5 billion revolving credit facility commitment with a consortium of banks, increasing its overall liquidity to GBP6.7 billion.
The company also has decided to cancel a final shareholder payment of 7.1 pence per share with respect to 2019.
"We are executing a number of specific mitigations to reduce our cash expenditure which will have a cash flow benefit of at least GBP750 million in 2020 in addition to our ongoing transformation plans," the company explained.
Towards the bottom of the FTSE 100 index was Smiths Group, down 1.6% after the engineer posted a 48% year-on-year drop in first half pretax profit and said that Covid-19 disruption was "accelerating".
Smiths also said it is withdrawing forward guidance for the year ending in July as it is "too early to assess the full impact of Covid-19".
Smiths on Monday said it is now seeing generally weaker demand - with the exception of in its Medical business - due to contract delays, lower oil prices and airport closures.
For the six months to January 31, Smiths recorded pretax profit of GBP46 million, down sharply from GBP89 million a year ago. The drop was attributed to a doubling in exceptional costs to GBP114 million from GBP57 million. Stripping out these exceptional costs, pretax profit rose 10% year-on-year to GBP160 million from GBP146 million.
In the FTSE 250, Playtech was down 8.6% after Deutsche Bank cut the gaming and betting firm to Hold from Buy.
By Lucy Heming; lucyheming@alliancenews.com
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