LONDON MARKET MIDDAY: Stocks Climb Higher With G7 Virus Talks Awaited

(Alliance News) - Stocks continued to rebound on Tuesday amid hopes for stimulus to counter the coronavirus outbreak, with Australia's central bank being the first to cut interest rates in response to the virus and investors waiting a G7 call.

The FTSE 100 was 130.98 points higher, or up 2.0%, at 6,785.87 at midday in London. The index gained 1.1% on Monday.

The FTSE 250 was up 522.29 points, or 2.7%, at 19,823.99, and the AIM All-Share was up 2.5% at 882.98.

The Cboe UK 100 was up 1.9% at 11,480.26, the Cboe UK 250 was up 2.4% at 17,741.64, and the Cboe Small Companies up 1.6% at 11,574.94.

In European equities on Tuesday, the CAC 40 in Paris was up 2.0%, while the DAX 30 in Frankfurt was up 2.3%.

"European stocks are following their US and Asian counterparts higher this morning, as hopes of a global stimulus push helped lift market sentiment. The housing sector has led the way higher for the FTSE, with a sharp jump in the construction PMI bringing a renewed sense of optimism for the sector," said Joshua Mahony, senior market analyst at IG.

The Australian Reserve Bank became the first central bank to cut interest rates on fears the coronavirus outbreak could push the country into recession.

The RBA lowered rates by 25 basis points to a record low of 0.50% in an effort to offset the impact of COVID-19.

The announcement came as other institutions, such as the Federal Reserve and European Central Bank, indicated they were willing to take action to mitigate the economic pressure of the outbreak.

Bank of England Governor Mark Carney on Tuesday said BoE policymakers had met Monday to "review a range of macroeconomic and financial system scenarios and their implications, and they will continue to meet as needed and will act as appropriate".

The outgoing governor added that he was in "continual contact" with his successor Andrew Bailey, who takes over in just under a fortnight.

Investors now await a meeting of finance ministers and central bank chiefs from G7 countries.

US Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell "will lead a call with their G7 counterparts tomorrow morning," the department confirmed in a statement on Monday. The G7 countries includes Canada, France, Germany, Italy, Japan, the UK and the US.

The G7 will hold a conference call to "coordinate" responses to the coronavirus's impact, French Finance Minister Bruno Le Maire said on Monday. A similar meeting of eurozone finance ministers will be held on Wednesday, he said.

Governments have been scrambling to respond to the outbreak which has now killed more than 3,000 people and infected almost 90,000 as it spreads to more and more countries, inflaming fears of widespread economic disruption.

"Traders will hope that today's meeting between G7 finance ministers results in a commitment to raise fiscal spending in response to this crisis. The expectation of a sharp rise in monetary and fiscal stimulus provides plenty of short-term optimism, yet pessimists will likely wait for that initial bullish wave to pass before once again hitting the sell button should the virus continue to spread," said IG's Mahony.

In the US on Tuesday, stocks are pointed to a higher start with the Dow Jones called up 1.0%, the S&P up 0.9% and the Nasdaq 1.2% higher.

In the UK, housebuilders were among the gainers after a buoyant construction PMI.

The purchasing managers' index reached 52.6 in February, up from 48.4 in January, to hit the highest reading in over a year. It was the first time the index had registered above the no-change mark of 50.0 since April 2019.

"There were widespread reports that pent-up demand released since the general election had helped to boost workloads, especially in relation to house building and commercial construction projects," said Tim Moore, economics director at IHS Markit.

The pound was quoted at USD1.2778 on Tuesday following the data, firm from USD1.2773 at the London equities close Monday.

Housebuilders gained. Persimmon was up 5.1% at midday, Taylor Wimpey up 4.3% and Barratt Developments up 3.2%.

Meanwhile, travel stocks were rebounding, having suffered in recent weeks from worries over demand from holidaymakers amid the coronavirus outbreak.

British Airways parent International Consolidated Airlines was up 6.5%, Anglo-German travel operator TUI up 5.3% and easyJet up 3.8%.

In the FTSE 250, 4imprint surged 17% as it posted profit growth for 2019 and said it is on track to meet its USD1 billion revenue target ahead of schedule.

The marketing firm reported a USD54.0 million pretax profit for its financial year ended December 28, up 22% from USD44.3 million the previous year.

This primarily resulted from 4imprint's 17% revenue rise to USD860.8 million from USD738.4 million, with all revenue growth organic. This included 17% revenue growth in North America to USD839.3 million from USD714.6 million, but a 9.6% UK and Ireland revenue decline to USD21.6 million from USD23.9 million.

4imprint aims to achieve USD1 billion of revenue by 2022 and said its 2019 trading momentum has put it in a "good position" to achieve this goal earlier than expected.

Greggs was up 5.3% after reporting a double-digit sales rise during a "record" year.

In the financial year ended December 28, sales rose 14% to GBP1.17 billion from GBP1.03 billion. Pretax profit was 31% higher at GBP108.3 million from GBP82.6 million in 2018. Like-for-like sales in company-managed shops climbed by a record 9.2%.

The company also reported company-managed like-for-like sales in the nine weeks to February 29 were 7.5% higher year-on-year, helped by a "strong" January. February alone proved to be more difficult, with Greggs reporting a "significant slowdown" due to bouts of heavy rainfall in the UK.

CMC Markets shares climbed 11% as it raised its full-year expectations, with "recent market conditions" boosting activity on its online trading platform.

CMC expects net operating income ahead of the market consensus range of GBP199.0 million and GBP202.3 million in the financial year ending March 31. This could represent a hike of as much as 55% from GBP130.8 million in the year prior, which was hampered by "regulatory change and market conditions".

CMC said that in calendar year 2020 to date, "performance across the business has continued to be strong".

"In addition, the recent market conditions experienced have seen heightened trading activity amongst CMC's clients over and above the strong performance delivered to date," it added.

In forex, the euro was at USD1.1112 on Tuesday, lower from USD1.1157 at the last London close. Against the yen, the dollar was trading at JPY107.93, down from JPY108.02.

Gold was at USD1,602.32 an ounce on Tuesday, up from USD1,594.61 late Monday. Brent oil was priced at USD53.27 a barrel, up from USD51.70.

By Lucy Heming; lucyheming@alliancenews.com

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