LONDON MARKET CLOSE: FTSE 100 Manages To End Historic Week Higher

(Alliance News) - Stocks in London staged a partial rebound on Friday buoyed by stimulus measures taken by global economies to deal with the economic hit caused by the coronavirus.

China's central bank said Friday it would cut the reserve requirements for banks, releasing around CNY550 billion in funding as the country fights to control the economic fallout of the virus.

The People's Bank of China said in a statement that it would cut the reserve requirement ratio on March 16 by 50 to 100 basis points for banks that meet its assessment criteria, reducing the amount of cash they must hold.

The move follows that of the New York Federal Reserve which on Thursday said it would inject USD1.5 trillion into short-term funding markets, in three tranches of USD500 billion.

The FTSE 100 index closed up 128.63 points, or 2.5%, at 5,366.11, but ending the week down 17%. The large cap index on Thursday saw GBP160 billion wiped off its value, suffering its worst intraday drop in 33 years.

The FTSE 250 ended down 155.42 points, or 1.0%, at 15,562.00, ending the week down 17%.

The AIM All-Share closed up 6.19 points, or 0.8%, at 741.28, and ended the week down 13%.

The Cboe UK 100 ended up 1.4% at 9,016.78, the Cboe UK 250 closed down 1.7% at 13,580.76, and the Cboe Small Companies ended down 1.6% at 9,799.71.

In Paris the CAC 40 ended 1.8% higher, while the DAX 30 in Frankfurt ended up 0.8%.

IG Group's Chris Beauchamp said: "This week will go down in the history books as one of the craziest periods ever witnessed by markets. But it could be just the beginning. The predictions about the impact of the virus, apparently so far-fetched a few weeks ago, now seem oddly prescient.

"With the US, Germany and UK still to go through the worst of it, those holding on to shares even after the past week may soon regret their decision not to sell earlier. Stocks are much cheaper than a month ago, but are set to get much cheaper if the past week is anything to go by."

On the London Stock Exchange, heavyweight mining stocks - which have high exposure to China - ended among the blue chip risers as risk-on sentiment returned. BHP closed up 12%, Rio Tinto, up 9.6%, Anglo American, up 8.2%, and Glencore up 6.7%.

In addition, Sirius Minerals after the close said its takeover by Anglo American has been sanctioned by the High Court of Justice.

Coca-Cola HBC closed up 7.9% after Citigroup raised the soft drinks bottler to Buy from Neutral.

At the other end of the large cap index, Carnival ended the worst performer down 9.9%. The Anglo-American cruise line operator on Thursday said its Princess Cruises division will voluntarily pause its global operations in response to the "unpredictable circumstances" evolving from the spread of Covid-19 virus.

TUI closed down 6.5% after the Financial Times reported on Thursday that the Anglo-German travel company decided to halt pre-payments and suspend contracts with some of its hotels to survive the severe downturn in the travel industry caused by coronavirus.

In the FTSE 250, Premier Oil closed up 27% after the oil and gas company said it continues to perform well with production to the end of February of 76,600 barrels of oil equivalent a day.

The company's annual output guidance stands between 70,000 to 75,000 barrels of oil equivalent a day, excluding the proposed UK acquisitions.

At the other end of the midcaps, Cineworld Group ended the worst performer, down 23%, as the Brentford, London-headquartered firm suffered from more high-profile movie release delays due to the coronavirus outbreak.

On Thursday, Universal Studios announced the latest instalment of its money-spinning Fast & the Furious franchise would be delayed. Fast 9 - which stars Vin Diesel and John Cena - was set to come out in May but has now been postponed to April 2021.

In addition, Walt Disney Co's Mulan and the New Mutants have also been delayed for the time being, with no new release dates set by Disney just yet.

The pound was quoted at USD1.2392 at the London equities close, down sharply from USD1.2512 at the close Thursday. Sterling is down 5.0% this week, as the Bank of England announced a shock interest rate cut to 0.25% from 0.75% on Wednesday.

On Friday, the central bank laid out its reasons for cutting interest rates in a surprise decision as authorities try to grapple with the effects of Covid-19.

Minutes of Tuesday's meeting, released on Friday, revealed that the central bank's agents reported the effects of Covid-19 were "broadening and moving fast". They also said that there are signs that customers are stockpiling and that manufacturing has taken a hit.

The bank further warned that the consumer price index - which tracks inflation - could fall below 1% in April, and "there was likely to be a material near-term weakening of activity related to Covid-19" despite "significant policy measures".

The committee indicated that the fall could go further if the economic shock caused by coronavirus deepens.

Alex Kuptsikevich, FxPro senior analyst told Alliance News: "The pound failed to develop the offensive following the partial recovery of stock indices. The dollar adds to most of its major competitors. Unlike stock markets, the trend remains unchanged from almost the beginning of the week. Also, against the pound plays investors' fears of problems in the main Britain's export markets - the EU and the US.

"Another factor is decisive Bank of England policy easing. Earlier this week, the rate was reduced by 0.5%, other significant measures to feed the money markets were announced, and there are also hints of the possibility of new rate cuts. The pound has a very close correlation with the stock markets, and its current decline makes us think that soon the indices may also return to slump."

The BoE's next scheduled rate decision is on March 26.

The euro stood at USD1.1075 at the European equities close, flat from USD1.1077 late Thursday.

In economic news from the continent, Germany's consumer price inflation rate in February was in line with estimates, according to figures released by Destatis.

Germany's consumer price index rose 1.7% year-on-year in February, unchanged from December's annual pace.

On a monthly basis, inflation was 0.4% higher, again unchanged from the month before and in line with market expectations, according to FXStreet. Both February figures were unchanged from provisional estimates.

Against the yen, the dollar was trading at JPY107.22, up sharply from JPY105.62 late Thursday.

Stocks in New York were higher at the London equities close, winning back some of the ground lost in Thursday's rout as Washington policymakers reported progress on stimulus to address the coronavirus's economic hit.

The DJIA was up 1.5%, the S&P 500 index up 1.6% and the Nasdaq Composite up 1.4%.

The gains came a day after the Dow suffered its worst session since 1987 and the longest bull market ever ended as the S&P 500 officially went into bear market territory after falling 20% from its most recent peak level.

Treasury Secretary Steven Mnuchin said President Donald Trump's administration and congressional leaders were "very close" to an agreement on a stimulus package that reportedly will include paid sick leave and small business tax relief.

Uncertainty over the stimulus package and sharp partisan rhetoric was an exacerbating factor in Thursday's session, where selling was also spurred by Trump's shock travel ban on Europe and a series of cancellation announcements from professional sports leagues, entertainment companies and others that deepened recession fears.

Brent oil was quoted at USD33.07 a barrel at the equities close, up from USD32.82 at the close Thursday. However, the North Sea benchmark remains 27% lower over the past week.

Markets have been shaken by an oil price war between Saudi Arabia and Russia, compounded by fears that travel restrictions will further dampen energy demand.

Gold was quoted at USD1,356.80 an ounce at the London equities close, lower against USD1,572.65 late Thursday.

The economic events calendar on Monday has China retail sales figures overnight and Italy inflation readings at 1000 GMT.

The UK corporate calendar on Monday has annual results from financial services provider Old Mutual and a trading statement from recruiter SThree.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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