LONDON MARKET MIDDAY: Stocks Leap As Spain And Italy Offer Virus Hope

(Alliance News) - London stocks continued to rally on Tuesday as both Italy and Spain saw a dip in new infections again, with markets growing increasingly hopeful on a return to normality.

Beleaguered Carnival was sat at the top of the FTSE 100, while the FTSE 250's near 1,000 point rally was lead by Cineworld.

The FTSE 100 index was up 149.18 points, or up 2.7%, at 5,731.57 at midday. The FTSE 250 was up 927.63 points, or 6.3%, at 15,739.99, and the AIM All-Share was up 4.3% at 709.56.

The Cboe UK 100 was up 2.6% at 9,709.88, the Cboe UK 250 was up 6.3% at 13,526.92, and the Cboe Small Companies 2.0% at 8,201.30.

In European equities on Tuesday, the CAC 40 in Paris was up 3.5%, while the DAX 30 in Frankfurt was up 4.0%.

"A strong start again on Tuesday, as investors grow increasingly optimistic that the continent has turned a corner in the fight against the coronavirus," said Craig Erlam at Oanda.

"There are really encouraging signs that the worst hit countries in Europe are seeing significant improvements, that the lockdown measures are working and that life may soon be able to at least start to return to normal," said Oanda. "This is the moment investors have been waiting for, a time when they can start to put a date on normality and in some way quantify the damage."

Italy's day-to-day increase in new Covid-19 cases dipped again, for the lowest one-day increase in early three weeks. The country, ravaged by the virus, also saw a drop for the third straight day in intensive care beds occupied by infected patients.

Italy still has, by far, the world's highest coronavirus death toll - over 16,500 - but the pressure on intensive care units in the north has eased so much that the region is no longer airlifting patients to other regions.

In Spain, deaths and new infections dropped again. The health ministry reported 637 new deaths, the lowest toll in 13 days, for a total of over 13,000 dead. New infections were also the lowest in two weeks.

However, outbreaks in other places were headed in the opposite direction.

France recorded its highest 24-hour death toll since the epidemic began, 833. And Japan considered a state of emergency for Toyko and other areas because of soaring infections in the country with the world's third-largest economy and its oldest population.

The US has emerged as one of the world's worst-hit nations, with a steadily mounting number of fatalities and millions facing the possibility of economic ruin.

Baltimore-based Johns Hopkins University, which has been keeping a running tally of coronavirus numbers, said more than 368,000 US cases had been confirmed, with 10,986 deaths by late Monday.

In the UK, Prime Minister Boris Johnson was moved to intensive care after his Covid-19 symptoms worsened. Johnson, 55, was conscious and did not immediately need to be put on a ventilator, his office said.

Sterling initially slipped late Monday after the news, but has since bounced back. The pound was quoted at USD1.2315 on Tuesday midday, up from USD1.2292 at the London equities close on Monday.

The euro was quoted at USD1.0880, higher versus USD1.0810. Against the yen, the dollar was quoted at JPY109.07, flat on JPY109.06.

Oil was at USD33.78 a barrel on Tuesday, up from USD32.26 late Monday. Gold was trading at USD1,656.41 an ounce, up from USD1,645.22 late Monday.

In New York on Tuesday, stocks are poised to follow European counterparts. The Dow Jones is called up 3.3%, the S&P 500 up 2.9% and the Nasdaq up 2.6%.

One stock set to advance at the US open is Carnival, trading 19% higher pre-market and sat at the top of London's FTSE 100 at midday.

The cruise operator was 25% higher in London after raising USD2.53 billion in total through its previously announced share issue and note offering.

The company raised USD575 million through the issue of 71.9 million shares at USD8 per share. On Thursday last week, Carnival had downsized its share placing to 62.5 million shares, after originally saying it would offer USD1.25 billion worth of stock.

This came after news that Saudi Arabia's Public Investment Fund has taken a sizeable stake in Carnival, a US regulatory filing showed on Monday. The Public Investment Fund - the sovereign wealth fund of Saudi Arabia - now holds a 8.2% stake in cruise operator Carnival, or 43.5 million shares.

Despite Tuesday's rise, the stock still remains 76% lower since 2020 began.

Other travel-focused firms were higher on Tuesday, including easyJet, up 19%, and British Airways owner International Consolidated Airlines, up 12%.

"A recession still remains a given; but hopes are rising that it could well be manageable and not turn into a depression, and that is boosting airlines and travel shares this morning, a sector that has so far borne the brunt of the huge sell off since February 21st," said Michael Hewson at CMC Markets.

Intercontinental Hotels Group was up 12%.

Elsewhere in the FTSE 250, Cineworld shares surged 37%. The cinema chain has suspended scheduled and upcoming dividend payouts in an effort to conserve cash during the Covid-19 lockdowns.

All of Cineworld's 787 cinemas across 10 countries are closed as a result of Covid-19.

The movie theatre operator said it will not pay either the 2019 fourth-quarter dividend of 4.25 cents or any quarterly dividends for 2020. It is restricting capital expenditure to preserve cash and also is in spending discussions with its landlords, film studios and major suppliers.

Executive directors have agreed to defer full payment of salaries and bonuses, the company said, adding that the fees of non-executive directors have also been deferred. Cineworld added it is discussing ongoing liquidity requirements with its revolving credit facility banks.

Assura was down 7.6% after raising GBP185 million through the placing of 240.2 million shares at 77 pence each.

On Monday, FTSE 250-listed Assura said it intended to raise around GBP180 million through a placing in order to fund its development and acquisitions pipeline worth GBP165 million.

Within the GBP165 million pipeline, GBP85 million are on-site development opportunities due to be completed by December, GBP67 million are acquisition opportunities consisting of individual properties, all due to be completed within the next three-to-six months.The final GBP17 million are asset enhancement capital projects aimed at growing rental income.

By Lucy Heming; lucyheming@alliancenews.com

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