LONDON MARKET CLOSE: Housebuilders Help FTSE 100 Extend Rally

(Alliance News) - Stocks in London ended higher on Thursday shrugging off a slew of weak PMI reports, with the FTSE 100 given a boost from the housebuilding sector.

The blue chip index closed up 55.98 points, or 1.0%, at 5,826.61. The FTSE 250 ended 207.90 points higher, or 1.3%, at 15,794.04, while the AIM All-Share closed up 9.38 points, or 1.2%, at 775.27.

The Cboe UK 100 ended up 0.9% at 9,851.28, the Cboe UK 250 closed up 1.9% at 13,642.09, and the Cboe Small Companies ended up 0.7% at 8,799.04.

In Paris the CAC 40 ended up 1.0%, while the DAX 30 in Frankfurt ended up 1.2%.

IG Group said: "Stocks have managed to overcome a host of economic hurdles today, with a raft of plummeting economic datapoints doing little to dent market sentiment.

"The housebuilders are today's big outperformers thanks to Taylor Wimpey, with the firm announcing a plan to restart construction in early May. While demand could be slow given economic concerns, markets are seeing this as a precursor to a wider opening for other manufacturing and building firms."

In the FTSE 100, Taylor Wimpey ended up 9.4% after the housebulder said it plans to restart work on its building sites in early May.

In March, Taylor Wimpey had closed all show homes, sales centres, and construction sites except for any work needed to make sites secure. Taylor Wimpey plans to restart work on its building sites the week beginning May 4 with its own staff following new safety guidelines, while subcontractors will resume the following week.

Taylor Wimpey said the value of its order book grew by 12% year-on-year to GBP2.68 billion from GBP2.40 billion. Total completions were down 14% annually to 2,271 from 2,644 in the first 16 weeks of the year.

Peers Barratt Developments, Persimmon and Berkeley ended up 8.7%, 8.4% and 5.1% respectively, in a positive read-across.

Meggitt closed up 6.7% after the aerospace and defence contractor said it booked a single-digit revenue rise in its first quarter, though it has begun to see a "softening" in trading in its civil aerospace division.

The company announced cost cuts of as much as GBP450 million, including salary and job cuts. Revenue in the three months to March 31 rose 5% on an organic basis, Meggitt said, with the company seeing growth in the defence division but "softer" trading in civil aerospace and energy.

Further, Meggitt said that to mitigate the likely slump in demand, it will use furlough schemes. It has also taken the "difficult decision" to cut 15% of its workforce.

At the other end of the large cap index, Unilever closed down 1.8% after the consumer goods firm reported flat sales in its first quarter, with demand for household goods boosted by the pandemic, but lockdowns hitting its ice cream business.

Revenue in the first three months of 2020 climbed 0.2% annually to EUR12.4 billion, though underlying sales growth was flat. Volumes rose 0.2%, the consumer goods firm said, though this was offset by prices slipping at the same rate.

The Anglo-Dutch firm withdrew its sales performance targets for the year, which forecast growth at the lower end of a 3% to 5% range, saying it could not "reliably assess the impact" of the virus, although it said it would still pay its interim dividend.

Unilever's first-quarter dividend was held at EUR0.4104 per share. It provided no comment on its decision to pay the quarterly dividend, at a time when other listed companies have been opting to stop payouts to preserve cash.

The pound was quoted at USD1.2391 at the London equities close, up from USD1.2323 at the close Wednesday, unfazed by weak purchasing managers' index readings.

Covid-19 lockdowns resulted in UK private sector activity slumping to previously unseen levels, data from IHS Markit showed.

The IHS Markit/Chartered Institute of Procurement & Supply flash composite purchasing managers' index for April collapsed to a record low of 12.9 from 36.0 in March. Prior to March, the survey's record low was 38.1, hit in November 2008.

Any reading under 50 indicates contraction in the sector.

The services sector was the worst hit, slumping to a record low PMI score of 12.3 in April from 34.5 in March. Hotels and restaurants were among those reporting the steepest drop in output within the service sector.

The UK manufacturing PMI fell to 32.9 from 47.8 the month before, with lower output linked to plant shutdowns and reduced production capacity. Consensus had seen the April services reading at 29.0 and the manufacturing reading at 42.0.

Meanwhile, human trials for a coronavirus vaccine in the UK are due to get under way, with hundreds of people volunteering to be part of the study.

Researchers from the University of Oxford will administer the first dose to a healthy person on Thursday afternoon, while another will be given a meningitis vaccine, used in the trial for comparison. The Oxford Vaccine Group hopes to repeat the process with six more volunteers on Saturday, moving to larger numbers on Monday.

Up to 1,102 participants will be recruited across multiple study sites in Oxford, Southampton, London and Bristol. The Oxford team hopes to have at least a million doses of its candidate ready in September.

The euro stood at USD1.0835 at the European equities close, flat from USD1.0829 late Wednesday, shrugging off weak PMI data from the continent.

Business activity in the eurozone in April suffered the worst fall ever recorded due to Covid-19 lockdowns, IHS Markit said.

The flash composite purchasing managers' index slumped to just 13.5 in April from 29.7 in March, marking a record low for the series. FXStreet consensus had seen the reading at 25.7.

By comparison, the lowest reading seen during the global financial crisis was 36.2, reached in February 2009, IHS Markit highlighted.

The April services PMI tumbled to 11.7, another record low, from 26.4, while the manufacturing reading dropped to 33.6 from 44.5.

"Today's PMIs are consistent with massive GDP contractions in the second quarter. With many lockdowns set to be eased next month, activity should start to recover in the last part of Q2. But longer-than-expected lockdowns could lead to an even deeper recession than we currently envisage," Oxford Economics said.

Meanwhile, European Central Bank President Christine Lagarde warned colleagues against "doing too little, too late" but Europe remains deeply split between virus-hit southern nations like Italy and Spain, and richer northern countries.

Worldwide, governments are trying to balance pressure to ease lockdowns and repair almost unprecedented economic damage, against dire warnings that moving too fast could unleash a second wave of Covid-19 cases.

Other nations are still in the early stages of the fight against a disease that has killed more than 180,000 people and infected 2.6 million worldwide, even as it appears to be peaking in Europe and the US.

Despite the announcement of vaccine trials, experts warn that any real cure is more than a year away, and that confinement measures will be needed for a long time to come.

"Make no mistake: we have a long way to go. This virus will be with us for a long time," the WHO's Tedros Adhanom Ghebreyesus told a virtual press conference.

Against the yen, the dollar was trading at JPY107.60, marginally lower from JPY107.81 late Wednesday.

Stocks in New York were higher at the London equities close despite another dreadful round of US unemployment claims that showed another surge in workers out of a job.

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

US initial jobless claims continued their downward trend in the week to April 18, though they remain substantially high by historical standards, official data showed.

The Department of Labor said seasonally-adjusted initial claims were 4.4 million for the week ended April 18, down from the previous week's 5.2 million and 6.6 million the week before that. Market consensus had pencilled in 4.2 million claims for the week to April 18.

This takes the number of initial claims filed to over 26 million since the Covid-19 crisis began to bite in March, wiping out all of the post-Great Recession employment gains in the US.

Analysts at ING said: "It is clear that while the initial wave of job losses were concentrated in retail and hospitality due to the shutdowns, it is spreading to suppliers and to other industries. Terrible manufacturing surveys point to job losses and the business service sector is certainly not going to be immune.

"As such, it will be interesting to see what happens in the states that are re-opening parts of their economy from this weekend - Georgia, Tennessee, South Carolina and Florida. We would assume jobless claims will fall back sharply here, but if consumers remain reluctant to go shopping or visit a restaurant due to lingering Covid-19 fears, then employment is not going to rebound quickly. As such it would be another signal that a V-shaped recovery for the US economy is highly unlikely."

Brent oil was quoted at USD22.78 a barrel at the London equities close, up sharply from USD20.44 at the close Wednesday.

"Oil's rebound continues as production cuts are being brought forward. Algeria and Kuwait have signaled they are cutting production immediately and this will likely be a recurring theme over the next week. The OPEC + cuts are poised to start next month but others will probably cut earlier and deeper as tank tops are reached," said OANDA market analyst Edward Moya.

Gold was quoted at USD1,737.15 an ounce at the London close, up from USD1,708.20 late Wednesday.

The economic events calendar on Friday has UK retail sales figures at 0700 BST and US durable goods data at 1330 BST.

The UK corporate calendar on Friday has a trading statement from industrial flow control equipment maker Rotork.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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