LONDON MARKET MIDDAY: Oil Lifts FTSE; Market Awaits US Jobless Claims

(Alliance News) - Market sentiment remained shaky on Thursday, but a rebound in oil prices was helping to support the FTSE 100 index in London.

Focus lies on US jobless claims due later, with analysts braced for a fresh record figure, amid coronavirus-related layoffs.

The FTSE 100 index was up 40.96 points, or 0.8%, at 5,495.53 on Thursday at midday.

However, the mid-cap FTSE 250 index was down 128.39 points, or 0.9%, at 14,418.81. The AIM All-Share index was down 0.1% at 665.15.

The Cboe UK 100 index was up 1.1% at 9,297.68. The Cboe 250 was down 0.3% at 12,468.22, and the Cboe Small Companies down 0.1% at 8,005.84.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.9% and 0.5% respectively Thursday afternoon.

Stocks were "cautiously higher" on Thursday, said Fiona Cincotta at City Index, as investors look to Italy's easing Covid-19 death rates with hope and oil prices edge up.

"However, it is questionable whether the lift in risk sentiment will be last the session, let alone into the weekend," she said.

Confirmed coronavirus infections around the world approached one million Thursday as the pandemic spread at a "near-exponential" rate.

The death toll from Covid-19 continued its relentless march upwards, with more than 46,000 people known to have died worldwide.

Britain and France both reported their highest daily death tolls from COVID-19 on Wednesday, although there were signs the epidemic could be peaking in Europe.

Italy's toll – the highest in the world – climbed past 13,000, while in Spain it surpassed 9,000. But epidemiologists said the infection rate was continuing to slow. Fernando Simon, head of Spain's health ministry's emergency coordination unit, said it appeared the country may have passed the peak.

The US, which now accounts for almost a quarter of reported global infections, logged its 5,000th death, according to a tally by Johns Hopkins University.

And, said President Donald Trump, things were going to get worse.

"We're going to have a couple of weeks, starting pretty much now, but especially a few days from now, that are going to be horrific," he said.

The US is rapidly becoming the worst-hit country, with its total number of infections rising above 216,000. More than three-quarters of Americans are under lockdown, including tens of thousands of prisoners, who were told Wednesday they would be confined to their cells for two weeks.

Against this backdrop, focus will be on US initial jobless claims due at 1330 BST.

"Recently investors had sought refuge in the dollar, with the fallout from the coronavirus creating a very risky trading environment with losses across nearly all sectors. Today however that move towards the dollar is on hold, with all eyes and ears on the US jobless claims due to be published later," said Ricardo Evangelista, senior analyst at ActivTrades.

"Should the numbers mark an improvement on the record 3.3 million new claims released last week, we will probably see a growth in risk appetite which, in the current context, could incite greenback losses," said Evangelista. "On the other hand, if the new jobless claims number is within last week's ballpark, fear is likely to once again take over and offer further support to the dollar."

FXStreet has a consensus initial jobless claims figure of 3.5 million for the week ended March 27, which would be up from the previous week's historic record of 3.3 million.

Stocks in the US are poised for a stronger start on Thursday. The Dow Jones is seen up 1.7%, the S&P 500 up 1.6% and the Nasdaq Composite up 1.2%.

The Dow Jones had, though, fallen 4.4% on Wednesday.

Sterling was quoted at USD1.2451 midday Thursday ahead of the US data, higher than USD1.2395 at the London equities close on Wednesday.

The euro traded at USD1.0929 on Thursday, flat versus USD1.0927 late Wednesday. Against the yen, the dollar was quoted at JPY107.40 versus JPY107.11.

Gold was quoted at USD1,587.80 an ounce on Thursday, soft against USD1,590.30 on Wednesday.

Brent oil was trading at USD27.49 a barrel early Thursday, up from USD25.38 late Wednesday, strengthening after President Trump said he will meet US energy executives this week to discuss plummeting oil values amid coronavirus and a Saudi-Russian price war.

This proved a boon for London's oil stocks. Royal Dutch Shell 'A' and 'B' shares were up 9.2% and 8.4%, respectively, while BP rose 7.9%.

Among the mid-caps, Cairn Energy rose 9.1% and oilfield services firm John Wood was up 7.3%.

At the bottom of the FTSE 100 was Carnival. The cruise operator was down 8.3% as it reduced the size of a share placing but said a note offering has been upscaled.

The P&O Cruises owner has been hit hard by the global Covid-19 pandemic, with port restrictions around the world forcing the company to halt cruise operations and offer refunds to customers.

Carnival will be offering 62.5 million shares at USD8.00 each. This will raise USD500 million approximately, but Carnival had previously said it would be offering USD1.25 billion worth of stock. In a separate announcement, Carnival said it will be offering USD4 billion worth of senior secured notes, rather than USD3 billion planned before.

"Earlier this year shares in cruise ship operator Carnival were trading above USD51. The troubled business is now issuing new stock at a mere USD8 a share as part of a broader USD6.25 billion rescue fundraising, suggesting that investors were only prepared to take equity if they got a bargain price to compensate for the high risks involved," said Russ Mould at AJ Bell.

In New York, Carnival shares closed down 33% at USD8.80 on Wednesday. Pre-market on Thursday, though, the stock was trading 10% higher.

Centrica dipped 7.1% after the British Gas owner cancelled its planned final dividend for 2019 amid the chaos caused by Covid-19.

Centrica in February declared a 3.5 pence per share final dividend for 2019. The annual total was 5.0p, rebased from 12.0p last summer. However, the company will no longer be paying that final return. This, it said, is a "prudent" decision given the financial impact of Covid-19.

There has been a rise in demand for energy due to more people working from home, but this has been countered by a fall in demand from businesses, Centrica said. It is expecting outflows due to deferred customer payments, and there will also be lower revenue from services for both houses and businesses.

FTSE 250-listed Bakkavor was down 15%. The fresh food firm pulled its final dividend and said it will furlough staff as the pandemic has battered sales.

Bakkavor said the early part of its financial year, which began on December 29, had been "encouraging". Since then, the virus outbreak created "significant operational challenges", first in China, and then in the UK and US.

Hays slid 9.6% to 98.90 pence. The recruitment firm warned its full-year profit will lag market consensus, ditched its interim dividend, and resorted to a GBP200 million share placing to shore up its finances.

Trading between January 1 and March 31 was in line with expectations, Hays said, with net fees were down by about 5% on a like-for-like basis.

"However, since then the rapidly escalating impact of Covid-19 has driven a very material deceleration in client and candidate activity. To date, across our major markets, the impact has been felt most in Europe, and least in Australia," Hays said.

Hays will look to raise GBP200 million through a share placing. This represents about 12% of existing shares based on the closing share price of 109p on Wednesday, Hays said.

By Lucy Heming; lucyheming@alliancenews.com

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