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(Alliance News) - Even a spate of worst-ever PMI readings were unable to dent the FTSE 100's ascent on Tuesday, London's blue-chip index bolstered by oil stocks as Brent prices improved and investors hopeful as Italy reported another decline in daily Covid-19 deaths.
The FTSE 100 index was up 212.31 points, or 4.3%, at 5,206.20 at midday. The FTSE 250 was up 521.73 points, or 4.0%, at 13,599.74, and the AIM All-Share up 3.1% at 614.73.
The Cboe UK 100 was up 4.8% at 8,823.92, the Cboe UK 250 was up 3.5% at 11,816.60, and the Cboe Small Companies up 0.8% at 7,566.73.
In European equities on Tuesday, the CAC 40 in Paris was up 4.5%, while the DAX 30 in Frankfurt was up 5.8%.
"As the Fed turns its stimulus efforts up to 11, and even Germany mulls over some fiscal stimulus for the 'post-virus economy', perhaps the most encouraging comment we have seen so far, investors have been able to put the dire PMI figures this morning behind them," said Chris Beauchamp, chief market analyst at IG.
"Everyone was prepared for a set of shockers, and that is precisely what we got, but they are not a surprise; it is at times like this that the market's propensity to look forward is demonstrated most effectively," said Beauchamp.
Released in the morning, IHS Markit's survey results showed UK private sector activity slumped to record low levels amid public health measures to contain the novel coronavirus spread.
The UK's flash composite output index for March slumped to a record low for the survey of 37.1 from February's 53.0. Any reading above 50 indicates expansion and one below, contraction.
The prior low of 38.1 was seen in November 2008, IHS Markit noted, at the height of the banking crisis. The flash PMI signalled a fall in employment across the manufacturing and services sectors "to an extent not seen since July 2009".
The services purchasing managers' index sagged to 35.7, another record low, from 53.2 in February as measures to curb the spread of Covid-19 caused demand to slump.
The UK data followed IHS Markit earlier showing the eurozone's own composite PMI registered just 31.4 in March, down from 51.6 in February and the lowest level in over a decade.
The pound was quoted at USD1.1759 Tuesday midday, up from USD1.1471 at the London close Monday. The euro was at USD1.0869, higher than USD1.0741 late Monday.
Against the yen, the dollar was trading at JPY110.75, down from JPY111.47.
"While the headlines major on the UK lockdown and the dire PMI figures, investors are looking to a world beyond March and April. New cases and deaths in Italy have been declining for several days, and if the US and UK follow this pattern eventually, then worrying about more bad news will be old news," the IG analyst said.
Italy has now seen its daily fatalities come down from a world record 793 on Saturday to 651 on Sunday and 601 on Monday. The number of new declared infections fell from 6,557 on Saturday to 4,789 on Monday.
The top medical officer for Milan's devastated Lombardy region appeared on television smiling for the first time in many weeks. "We cannot declare victory just yet," Giulio Gallera said. "But there is light at the end of the tunnel."
Italy's toll now stands at 6,077 – more than that of China and third-placed Spain combined.
In the US, stocks are poised for a bright start. The Dow Jones is seen up 5.0%, the S&P 500 up 5.1% and the Nasdaq up 4.9%.
To come is a US PMI at 1345 GMT. FXStreet consensus has the services reading coming in at 42.0 and the manufacturing figure at 42.8.
In London at midday, oil majors were bolstering the FTSE 100. BP shares were up 10% while Royal Dutch Shell 'A' shares were up 11% and 'B' shares up 12%.
Brent oil was quoted at USD28.05 a barrel Tuesday at midday, up from USD25.30 late Monday.
"The rebound in risk appetite this morning is bringing some welcome reprieve for oil prices, which are also up around 4% on the day. This is, of course, coming from some exceptional lows as the impending global recession is compounded by the oil price war to pummel crude prices," said Craig Erlam at Oanda.
Oil was not the only commodity gaining on Tuesday, as safe haven gold climbed despite the risk-on mood. The precious metal was priced at USD1,561.90 an ounce, up from USD1,543.08. Gold had been suffering as investors raised cash to face the inevitable economic downturn.
This helped FTSE 100-listed Polymetal International climb 12%, with precious metals mining peer Fresnillo up 8.8%.
Elsewhere among the blue-chips, Prudential was up 15% as the life insurer reported "resilient" operations across all of its geographies.
Prudential said its operations in Asia have been providing "outstanding" service to customers in a challenging environment. Teams in the US, the UK and Africa are learning from the experience of their colleagues in Asia, with business continuity plans executed smoothly.
At Prudential's 2019 results, announced earlier this month, the company said it is planning a minority initial public offering for Jackson, subject to market conditions. In light of continued turmoil in public equity markets, Prudential on Tuesday said it is ensuring that, alongside preparations for the proposed IPO, it continues to actively evaluate other options for Jackson, driven by the focus and objectives that underline our strategic priorities.
Taylor Wimpey was at the bottom of the FTSE 100, down 4.7% after the housebuilder cancelled its dividend amid the Covid-19 crisis, a move which will save it more than GBP500 million.
The firm reported 2019 results at the end of February, declaring a final dividend of 3.80 pence per share and a special payout of 10.99p. These would have cost around GBP125 million and GBP360 million respectively, Taylor Wimpey said.
Taylor Wimpey has closed all show homes, sales centres, and construction work except what is needed to make sites secure. Sales offices closed from Monday evening. Taylor Wimpey stressed it is well capitalised, saying a large order book and "quality" long-term land bank gives it high resilience.
In the FTSE 250, Games Workshop was down 6.9% as it decided to suspend operations worldwide amid the coronavirus outbreak.
The battle-games company said trading in the nine months to the end of February was in line with expectations. However, in March, since the Covid-19 outbreak has spread more widely, the company's performance globally has been hurt. Games Workshop said it will be temporarily closing all of its stores, headquarters, factory and warehouses with immediate effect.
By Lucy Heming; lucyheming@alliancenews.com
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