(Alliance News) - Stock prices in London opened higher on Monday following historic losses suffered by equities markets last week, with investors optimistic central banks will provide support to mitigate the fallout from the coronavirus.
In a rare statement, the Bank of Japan said it "will strive to provide ample liquidity and ensure stability in financial markets" to divert risks linked to instability in global markets caused by the spread of the disease.
The announcement came after Federal Reserve Chair Jerome Powell on Friday said the US central bank was following developments in the virus outbreak and said it "will use our tools and act as appropriate to support the economy".
In addition, the Reserve Bank of Australia is widely expected to cut interest rates at its monetary policy decision on Tuesday.
The global death toll from the coronavirus epidemic surpassed 3,000 on Monday after dozens more died at its epicentre in China and cases soared around the world with a second fatality on US soil. The virus has now infected more than 88,000 people and spread to over 60 countries after first emerging in China late last year.
The FTSE 100 index was up 183.45 points, or 2.8%, at 6,764.06. The large-cap index closed down 215.79 points, or 3.2%, at 6,580.61 on Friday and ended the week down 11%, its worst weekly performance since the 2008 financial crisis.
The FTSE 250 was up 487.04 points, or 2.5% at 19,817.96, and the AIM All-Share was up 11.19 points, or 1.3% at 867.83.
The Cboe UK 100 index was up 2.9% at 11,430.20. The Cboe UK 250 was up 1.8% at 17,723.66, and the Cboe UK Small Companies was flat at 11,375.40.
In European equities, the CAC 40 in Paris was up 1.5% and the DAX 30 in Frankfurt up 1.3%.
In the FTSE 100, WM Morrison Supermarkets rose 6.0% after Bernstein raised the supermarket chain to Outperform from Market Perform.
Royal Dutch Shell 'A' was up 4.8%, Shell 'B' was up 4.7% and BP was up 4.3%, tracking spot oil prices higher. Shell is London's largest company by market capitalisation, while BP is third largest.
Brent oil was quoted at USD51.78 a barrel Monday morning, up sharply from USD49.02 at the equities close Friday.
Analysts at ING said: "The more recent pressure on prices will likely be getting OPEC+ members more nervous and increasing the likelihood that they will take significant action at the OPEC+ meeting on Thursday and Friday this week. These price levels will even start getting the Russians a bit worried, as they move closer to their fiscal breakeven level. This ties in with comments from President Putin over the weekend, where he said Russia will continue to cooperate with OPEC. The key question though is how much will OPEC+ agree to cut."
Rolls-Royce Holdings was up 4.5% after Bank of America Merrill Lynch upgraded the jet engine maker to Neutral from Underperform.
Last week, Rolls-Royce said that it had a "good" end to 2019 after a "challenging" first half, with a narrowed pretax loss and revenue rise.
Conversely, International Consolidated Airlines Group was the only blue chip in the red, down 0.4% at 470.20 pence after Berenberg cut its price target on the British Airways parent to 620p from 700p.
In the FTSE 250, Senior was the best performer, up 8.5%. The aerospace parts maker on Monday reported "robust" annual results, despite the grounding of Boeing Co's 737 MAX causing disruption.
Senior's revenue increased 3% in 2019 to GBP1.11 billion, but excluding currency movements, the figure actually declined by 1%.
Pretax profit for the year fell by 53% at actual rates to GBP28.7 million, and the adjusted figure declined by 5% to GBP78.5 million. Senior's profit was hit by a GBP22.0 million loss in disposal following the sale of its Flexonics operations in France early in 2019.
Free cash flow was higher at GBP58.3 million in 2019, up 53% from GBP45.3 million in 2018.
Rickmansworth, Hertfordshire-based Senior has proposed a final dividend of 5.23 pence per share. This would take the year's total to 7.51p, meaning a 1.2% year-on-year increase.
The Japanese Nikkei 225 index closed up 1.0%. In China, the Shanghai Composite ended up 3.2%, while the Hang Seng index in Hong Kong closed up 0.9%.
The pound was quoted at USD1.2842 early Monday, up from USD1.2753 at the London equities close Friday.
UK Prime Minister Boris Johnson has pledged to "drive a hard bargain" as the UK outlined its negotiating objectives for the upcoming trade talks with the US.
The first round of post-Brexit trade talks between the UK and EU are due to start on Monday, with the two sides well apart on a final agreement.
The UK government said it wants to open up opportunities for British businesses and investors while also ensuring the NHS is not for sale via the desired free trade agreement.
The euro was quoted at USD1.1087 early Monday, up from USD1.1000 at the London equities close Friday. Against the yen, the dollar was trading at JPY108.24, firm from JPY108.12.
Gold was quoted at USD1,604.00 an ounce Monday morning, up sharply from USD1,585.25 late Friday.
Production at Chinese factories declined at the fastest pace on record in February. with the coronavirus outbreak denting the manufacturing sector, numbers showed on Monday.
Caixin's manufacturing purchasing managers' index slumped to 40.3 points, a sharp fall from 51.1 in January, and also heavily below the 50.0 mark which separates growth from decline.
It was also weaker than the 40.9 recorded in November 2008, during the global financial crisis.
The economic events calendar on Monday has manufacturing PMI readings from the eurozone, UK and the US at 0900 GMT, 0930 GMT and 1445 GMT respectively.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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