LONDON MARKET MIDDAY: FTSE 100 Boosted By Gold, Oil And Airlines

(Alliance News) - London stocks surged at the start of the week, led by gold miners, oil firms and airline stocks, as markets look to the continued easing of Covid-19 lockdowns across the globe.

The FTSE 100 index was up 123.56 points, or 2.1%, at 5,923.33 on Monday. The FTSE 250 was up 396.30 points, or 2.5%, at 16,057.07, and the AIM All-Share was up 1.6% at 821.87.

The Cboe UK 100 was up 2.1% at 10,010.88, the Cboe UK 250 was up 2.4% at 13,612.16, and the Cboe UK Small Companies up 0.4% at 8,720.80.

In European equities on Monday, the CAC 40 in Paris was up 2.1%, while the DAX 30 in Frankfurt was up 2.8%

"European markets are surging this morning, with the losses that dominated much of last week now in the rear-view mirror. The impending easing of lockdown measures throughout the US and Europe continues to provide both a source of both optimism and anxiety given the potential implications if they are successful or not. However, Jerome Powell has reminded us that markets are likely to remain well supported irrespective of the outcome of the impending lockdown easing policies," said Joshua Mahony, senior market analyst at IG.

Federal Reserve Chair Jerome Powell over the weekend said the US is facing a severe economic downturn amid the global pandemic, but will not suffer another Great Depression and will see a recovery begin later this year.

The US on Sunday recorded 820 new coronavirus fatalities in the previous 24 hours, with the country's total death count nearing 90,000, a Johns Hopkins University tracker reported.

The world's top economy was strong before the Covid-19 outbreak hit, like a natural disaster, causing nationwide business shutdowns, Powell said. And the banking system had been rebuilt stronger since the global financial crisis.

For the April-June period, the economic data "will be very, very bad. There'll be a big decline in economic activity, big increase in unemployment," Powell told the CBS programme "60 Minutes."

But "there're some very fundamental differences" between the current crisis and the Great Depression of the last century, he said.

The US economy could "easily" collapse by 20% to 30% this quarter, and unemployment could peak at 20% to 25%, but, "it should be a much shorter downturn than you would associate with the 1930s." The other key difference is, rather than raising interest rates, the Fed slashed lending rates to zero and is prepared to come up with new ways to support growth, Powell said.

Gold rallied in the wake of Powell's comments.

"The Fed Chairman's warning suggests taking an investment strategy that's defensive against weak growth and more monetary stimulus and gold covers both," said Jasper Lawler, head of research at London Capital Group.

The precious metal was trading at USD1,762.74 an ounce Monday midday, having traded above the USD1,764 mark in the morning, its highest level in seven-and-a-half years. The precious metal was quoted at USD1,743.84 at the London equities close Friday.

London-listed gold miners gained as the safe haven metal jumped. Fresnillo was up 11% at midday and Polymetal International up 4.2%, while mid-cap miners Hochschild and Centamin were up 11% and 5.0%, respectively.

It was also a good session for oil as markets looked to the lifting of lockdowns.

With infection and death rates falling in some of the worst-hit countries, governments are slowly allowing businesses to re-open and people to venture out again, with top-tier football returning in Germany – albeit in empty stadiums.

Once the worst-hit country in the world, Italy on Monday took its latest step in a cautious, gradual return to normality, allowing businesses and churches to reopen after a two-month lockdown. Spain is also set to further ease its lockdown measures.

California's governor said the state was 75% up and running, New York is also lifting the shutters in some regions, and Apple said almost 100 of its stores were now open.

And extra trains are expected to take thousands more people back to work under the UK government's plan to accelerate economic activity by lifting lockdown restrictions.

After the first weekend in which people in England could enjoy sunbathing and picnics outdoors, public transport operators were preparing to carry many more commuters to building sites, factories and offices on Monday.

The move comes at the start of the first full working week since UK Prime Minister Boris Johnson set out his plan for easing the coronavirus lockdown in England, urging those employees unable to work from home to return to their places of employment.

The pound was priced at USD1.2127 on Monday, flat on USD1.2125 at the London equities close Friday. The euro was quoted at USD1.0812, soft versus USD1.0818.

Against the yen, the dollar was quoted at JPY107.27, firm versus JPY107.23.

Brent was quoted at USD34.35 a barrel Monday midday, up sharply from USD31.27 late Friday. BP shares were up 4.7% at midday while Royal Dutch Shell 'A' and 'B' shares rose 4.5% and 4.6%, respectively.

Also higher in London at the start of the week were airline stocks, taking off after some good annual results from low-cost carrier Ryanair.

Ryanair's revenue in the financial year that ended March 31 was 10% higher annually at EUR8.49 billion from EUR7.70 billion. Pretax profit, however, was down by 29% year-on-year to EUR670.3 million from EUR948.1 million.

Weighing on Ryanair's profit was a EUR407.2 million charge for fuel hedge ineffectiveness. Without taking that accounting hit, pretax profit would have come in 14% higher at EUR1.08 billion. The bulk of the ineffectiveness costs were in relation to the Covid-19 pandemic.

Nonetheless, profit after tax before exceptional items came in at EUR1.00 billion, up 13% on the year before and at the top end of guidance.

The airline described the year ahead as "difficult". Ryanair expects to operate fewer than 1% of its scheduled flight programme in April, May and June - its first quarter. It expects a EUR200 million loss in the first quarter, with a reduced loss in the second.

Russ Mould, investment director at AJ Bell, remarked that Ryanair's outlook was "merely terrible rather than apocalyptic".

Ryanair shares were up 10% at midday. British Airways owner International Consolidated Airlines was up 6.1% and easyJet also 6.1% higher in a positive read-across.

By Lucy Heming; lucyheming@alliancenews.com

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