LONDON MARKET CLOSE: Stocks Higher As Oil Rebounds From Historic Rout

(Alliance News) - Stocks in London ended higher on Wednesday fuelled by a rebound in oil prices from a two-decade low.

The FTSE 100 index closed up 129.60 points, or 2.3%, at 5,770.63. The FTSE 250 ended 186.89 points higher, or 1.2%, at 15,586.14, while the AIM All-Share closed up 12.81 points, or 1.7%, at 765.89.

The Cboe UK 100 ended up 2.2% at 9,750.90, the Cboe UK 250 closed up 0.9% at 13,388.60, and the Cboe Small Companies ended up 0.6% at 8,740.00.

In Paris the CAC 40 ended up 1.3%, while the DAX 30 in Frankfurt ended up 1.6%.

"The monster rebound in the oil market has boosted sentiment in stocks, and in turn the major equity benchmarks are set to finish the day deep into positive territory. Oil has been the driving force in the markets this week, so the feelgood factor has boosted confidence across the board. The energy acts as a proxy for global demand, so its sharp recovery from its recent colossal losses, sends out a positive message," said CMC Markets analyst David Madden.

In the FTSE 100, CRH closed up 6.7% after the Irish building materials firm said its year had started well with higher like-for-like sales in the first quarter.

CRH reported a 3% rise in like-for-like sales for the three months ended March 31 compared to a year before. This included an 8% rise in like-for-like sales for its Americas Materials operations, while Europe Materials was broadly flat year-on-year as a "solid start to the year" was offset by lockdowns in March.

In Building Products, like-for-like sales were up 3% from 2019. In a bid to mitigate damage from the virus pandemic, CRH has opted to halt all discretionary and non-essential spending "for the foreseeable future", as well as limiting its capital expenditure to only an essential maintenance level.

Further, CRH has postponed its share buyback programme but confirmed a final cash dividend of EUR0.63 per share will be proposed at its annual general meeting on Thursday.

Antofagasta closed up 6.3% after the Chilean miner said production increased in its first-quarter despite operating with just roughly two-thirds of its workforce due to Covid-19 related preventative measures.

Copper production in the period to March 31 was 2.9% higher year-on-year and climbed 4.6% quarter-on-quarter to 194,000 tonnes. Copper sales climbed 9.2% annually to 195,300 tonnes, a 0.8% rise from the fourth quarter of 2019. Gold production was 4.7% higher year-on-year at 65,100 ounces, which Antofagasta attributed to higher grades at the Centinela mine in Chile.

Oil majors ended in the green tracking spot oil prices higher. BP closed up 6.0%, while Royal Dutch Shell 'A' and 'B' shares closed up 5.7% and 4.8% respectively.

Brent oil was quoted at USD20.44 a barrel at the London equities close, up from USD19.75 at the close Tuesday, recovering from historic declines.

The North Sea benchmark slumped to a low of USD15.97 a barrel overnight, its lowest level since mid-1999 as demand dries up in light of the coronavirus outbreak.

However, prices recovered as US President Donald Trump said Wednesday he had ordered the US military to attack and destroy any Iranian vessel that harasses US Navy ships.

"I have instructed the US Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea," Trump said on Twitter.

The order came one week after 11 small armed Iranian Revolutionary Guards Corps speedboats swarmed around US Navy and Coast Guard ships in international waters in the northern Gulf.

"A much-needed rebound from Brent Crude allowed the Western indices to hold onto their growth this Wednesday - and in some cases, saw an improvement on their initial gains. It would be nice for oil's push higher to come from a less troublesome catalyst. Donald Trump's order for the navy to 'shoot and destroy' Iranian gunboats that 'harass' American ships caused some investors to return to the black stuff, lifting Brent Crude back towards USD21 per barrel with a near 8% comeback," said Spreadex analyst Connor Campbell.

At the other end of the large-cap index, Centrica closed down 3.7% after Jefferies downgraded the British Gas parent to Hold from Buy.

The pound was quoted at USD1.2323 at the London equities close, up from USD1.2291 at the close Tuesday.

Stirling recently has tended to fall within the category of riskier currencies that are suffering from the global economic downturn.

On the economic front, the UK inflation rate softened in March on lower fuel prices, amid the global plunge in oil markets, data from the Office for National Statistics showed.

The annual inflation rate eased to 1.5% in March from 1.7% in February. Month-on-month, prices were flat after a 0.4% rise the month before. The figures came in line with market expectations.

Sandra Holdsworth, head of rates at Kames Capital said: "The data was collected before the shutdown in the economy but already is signalling the trends that will develop over the coming months...The biggest change was in the energy sector where price inflation was reduced significantly, offsetting this to a small extent was an increase in food inflation rates, importantly though this was not enough to offset the weakness in other sectors.

"Consumer price inflation is now expected to fall below 1.0% year-on-year over the next few months meaning that the Bank of England is likely to ease monetary policy further."

The euro stood at USD1.0829 at the European equities close, down from USD1.0864 a day before.

Meanwhile, Germany greenlighted the launch of a clinical trial on human volunteers for a vaccine against Covid-19, the country's regulatory body PEI said.

Against the yen, the dollar was trading at JPY107.81, up from JPY107.54 late Tuesday.

Stocks in New York were higher at the London equities close after two successive days of losses, fuelled by another economic stimulus bill passed by the Senate.

The DJIA was up 1.5%, the S&P 500 index up 1.8% and the Nasdaq Composite up 2.1%.

The US Senate approved a new USD480 billion pandemic relief package, with funding earmarked for devastated small businesses, overwhelmed hospitals, and a ramp-up of testing nationwide.

On the US corporate front, subscriptions to Netflix surged by almost 16 million in the last quarter, boosting profits, as consumers gravitated to the streaming service while other entertainment options were shuttered due to government lockdowns to combat the coronavirus.

However, shares of Netflix, which had rallied in anticipation of the earnings report, fell 2.1%.

Gold was quoted at USD1,708.20 an ounce at the London equities close, up from USD1,678.49 late Tuesday.

The economic events calendar on Thursday has PMI readings from France, Germany, the eurozone and UK at 0815 BST, 0830 BST, 0900 BST and 0930 BST respectively.

The UK corporate calendar on Thursday has first-quarter earnings from housebuilder Taylor Wimpey, information and analytics provider RELX and from aeroparts maker Meggitt.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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