LONDON MARKET CLOSE: Stocks Rally On Optimism Over Lockdowns Lifting

Tue, 26th May 2020 17:01

(Alliance News) -Â London stocks returned from holiday with a spring in their step, boosted on Tuesday as travel stocks rallied on the easing of lockdowns across Europe.

Meanwhile, both retailers and the pound got a lift after the UK government set out steps to allow non-essential shops to re-open next month.

The FTSE 100 index closed up 74.48 points, or 1.2%, at 6,067.76. The FTSE 250 ended up 534.56 points, or 3.3%, at 16,933.42, and the AIM All-Share closed up 11.07 points, or 1.3%, at 854.24.

The Cboe UK 100 ended up 1.2% at 10,259.54, the Cboe UK 250 closed up 3.5% at 14,452.07, and the Cboe UK Small Companies ended up 1.3% at 9,018.65.

"Like in the UK, the US markets returned from their Memorial Day break keen to cling to the weekend's positive developments, rather than the increasingly frosty relationship between Beijing and Washington," said Connor Campbell, financial analyst at Spreadex.

"This both echoed and enhanced the situation in Europe...What the continent brought to the table was news that both Germany and Spain are eyeing easing travel restrictions, giving a huge boost to airlines et al. (it didn't hurt that Lufthansa was also on the receiving end of a EUR9 billion bailout)," said Campbell.

In European equities on Tuesday, the CAC 40 in Paris ended up 1.5%, while the DAX 30 in Frankfurt ended up 1.0%.

Madrid and Barcelona have cautiously emerged from one of the world's strictest lockdowns, with parks and cafe terraces open for the first time in more than two months.

The Spanish government also announced that it would scrap quarantine for foreign arrivals from July 1, in the hope of helping the battered tourism sector.

As gyms and swimming pools reopened in Germany, Iceland, Italy and Spain, slowing infection rates in Greece allowed restaurants to resume business a week ahead of schedule â€“ but only for outdoor service.

Italian foreign minister Luigi di Maio says he is working with EU colleagues to agree on June 15 as a coordinated day for member states to reopen their borders and tourist regions.

And in the UK, fashion stores, betting shops and charity stores all will be allowed to welcome back customers from June 15.

Gift shops in museums, retail spaces in theatres, libraries, heritage sites and tourism sites also will be allowed to open â€“ paving the way for visitors to return to tourist hotspots.

Minister for the Cabinet Office Michael Gove said shoppers would need to "exercise restraint" by not trying on clothing and testing goods ahead of purchase.

The announcement of the new rules was overshadowed by Gove being forced to defend government adviser Dominic Cummings over his decision to travel nearly 300 miles from his primary residence to seek childcare.

The pound rallied to USD1.2346 at the London equities close Tuesday, compared to USD1.2190 at the close on Friday.

The euro stood at USD1.0978 at the European equities close Tuesday, against USD1.0886 at the same time on Friday. Against the yen, the dollar was trading at JPY107.62 compared to JPY107.51 late Friday.

Stocks in New York were in the green at the London equities close, with the Dow Jones up 2.5%, the S&P 500 index up 1.8%, and the Nasdaq Composite up 0.8%.

In commodities, Brent oil was quoted at USD35.61 a barrel at the London equities close Tuesday from USD34.72 late Friday.

Gold fell amid Tuesday's risk-on mood. The precious metal was quoted at USD1,713.19 an ounce at the London equities close Tuesday against USD1,733.00 at the close on Friday.

In London, travel stocks were the top performers on hopes that there may be something to salvage of the summer holiday season as countries in Europe prepare to open their borders to tourists in the coming weeks.

British Airways owner International Consolidated Airlines ended up 23%, easyJet up 19% and cruise operator Carnival up 13%. In the FTSE 250, Anglo-German travel operator TUI surged 52%.

Airlines were also boosted by news of Lufthansa's EUR9 billion government bailout.

As part of the bailout, the government would receive a 20% stake in the company. Some of the conditions Berlin has set before it will take part include more stringent environmental protections.

The deal, which provides for aid and equity measures worth EUR9 billion, is yet to be approved by Lufthansa's supervisory board and the European Commission's competition watchdog.

Lufthansa shares closed up 6.8%.

Commenting on the Lufthansa bailout, Ryanair said the cash injection will increase the flag carrier's "monopoly like grip on the German air travel market".

The Irish budget carrier added that it plans to operate about 40% of its normal July schedule. This followed news that Spain would remove travel restrictions on July 1, and Italy, Cyprus, Greece, and Portugal all announced plans to reopen for the key summer tourist period.

Ryanair shares rallied 12% on Tuesday.

Another group among the risers in London were retailers on UK plans to allow non-essential shops to reopen in mid-June.

JD Sports Fashion closed up 10%, Primark owner Associated British Foods up 8.6% and Next up 5.3%.

Elsewhere in London, Aston Martin shares jumped 28% after confirming Chief Executive Officer Andy Palmer has stepped down with immediate effect, with the luxury carmaker appointing Mercedes executive Tobias Moers as his replacement.

Palmer's position as chief executive had been the subject of speculation since billionaire Lawrence Stroll led a consortium that bought a 25% stake in Aston Martin last month, and then sold part of that to another consortium led by Mercedes-AMG Formula 1 team principal Toto Wolff.

Tuesday's announcement confirmed a report in the Financial Times newspaper on Sunday.

Moers will be based at Aston Martin's headquarters in Gaydon, Warwickshire and will join the company on August 1.

He is currently CEO of the AMG sports car arm of Mercedes Benz, itself part of 4% Aston Martin shareholder Daimler. Since assuming his current role in 2013, Moers has led a major expansion of Mercedes-AMG, doubling its model range and increasing sales.

Softcat shares fell 6.5% after it reported trading in the quarter ended April 30 was "satisfactory".

In a brief trading update, Softcat said it saw growth in revenue, gross profit and operating profit in its third quarter. Cash receipts from customers have remained broadly in line with normal trends, Softcat added.

The firm continued: "There remains a high degree of uncertainty in the coming months and Softcat is not immune to the challenges faced by the wider economy. However, we have moved seamlessly to a remote working model, and the board is encouraged by the resilience of the business thus far."

In Wednesday's UK corporate calendar, there are full-year results from British Land while soft drinks maker Britvic posts interim results and subprime lender Provident Financial puts out first quarter results.

In the economic calendar for Wednesday, Kantar's latest UK grocery market share figures are out at 0800 BST.

By Lucy Heming;Â lucyheming@alliancenews.com