LONDON MARKET OPEN: Stocks Rally On Covid-19 Case Stabilisation Hopes

(Alliance News) - Stock prices in London opened higher on Monday on hopes coronavirus lockdowns will ease, after the rise in the death toll in many countries slowed.

Italy reported its lowest daily toll in two weeks, while Spanish officials said deaths fell for the third straight day and France reported its lowest daily toll in a week.

Meanwhile, South Korea saw its fewest new cases in six weeks, while President Donald Trump said the US was showing signs of stabilising, despite the number of cases there passing 335,000 - the highest in the world.

The large-cap FTSE 100 index was up 120.33 points, or 2.2%, at 5,535.83.

The mid-cap FTSE 250 index was up 284.55 points, or 2.0%, at 14,383.56. The AIM All-Share index was up 0.7% at 663.98.

The Cboe UK 100 index was up 2.4% at 9,376.15. The Cboe 250 was up 0.9% at 12,236.75, and the Cboe Small Companies was flat at 7,938.68.

In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 3.3% and 3.6% respectively early Monday.

"European stock markets have opened higher on signs that infection rates could be peaking and that stay home orders could be rescinded by Easter. But although the overall tone feels better, every day sees more evidence of the toll the economic shutdown is having on individual companies," said London Capital Group's Jasper Lawler.

In the FTSE 100, Carnival was the best performer, up 13%. The cruise line operator was rebounding from sharp losses last week after it had raised new financing at a higher cost than expected. The stock fell 29% last week.

Rolls-Royce Holdings was up 9.4%, despite the jet engine maker joining the long list of blue-chips withdrawing financial guidance and scrapping its dividend.

Rolls-Royce said it exited 2019 in a robust liquidity and financial position. In response to the change in outlook resulting from the global spread of Covid-19 and to ensure cash headroom, Rolls-Royce took the "precautionary decision" in March to draw fully on its GBP2.5 billion revolving credit facility, it said.

Including this cash, which has been placed on short-term deposit, the company said its current gross cash balance is GBP5.2 billion. Rolls-Royce also secured an additional GBP1.5 billion revolving credit facility commitment with a consortium of banks, which will increase overall liquidity to GBP6.7 billion, it added.

However, in light of the coronavirus outbreak, Rolls-Royce decided that it was no longer recommending a final shareholder payment of 7.1 pence per share for 2019.

Meggitt and Melrose Industries, which like Rolls-Royce provide aftermarket services to the aerospace sector, were up 12% and 11% respectively in a positive read-across.

At the other end of the large-cap index, Smiths Group was the worst performer, down 1.0% after the engineer said trading was increasingly affected by the Covid-19 outbreak.

Smiths Group said trading to the end of March was hurt by early coronavirus disruption. The company added that this disruption is now accelerating, hitting both demand and supply in the near-term.

For the half-year ended January 31, pretax profit fell 48% to GBP46 million from GBP89 million the year before on revenue of GBP1.24 billion, up from GBP1.14 billion.

The Japanese Nikkei 225 index closed up 4.2%. The Hang Seng index in Hong Kong is up 2.2%. The Shanghai market was closed for the Tomb Sweeping Day holiday.

The pound was quoted at USD1.2259 Monday morning, up from USD1.2221 at the London equities close Friday.

UK Prime Minister Boris Johnson has spent the night in hospital after he was admitted for tests as his coronavirus symptoms persist.

He will stay for "as long as needed" in the London NHS hospital where he was taken as a "precautionary step" on the advice of his doctor - rather than as an emergency.

The news came just an hour after the Queen delivered a message of hope to the nation amid the Covid-19 pandemic, saying "we will overcome it" although we "may have more still to endure".

Meanwhile, Health Secretary Matt Hancock warned outdoor exercise could be banned if people continued to flout the social distancing rules.

The euro was quoted at USD1.0828, up from USD1.0791 late Friday. Against the yen, the dollar was quoted at JPY108.94, up from JPY108.55.

Two senior Germany government ministers called on Monday for collective EU measures to be used in the fight against the new coronavirus. EU member states are at odds over how much fiscal firepower to use to cushion the economic blow of the pandemic, with finance ministers due to revisit the issue on Tuesday.

Brent oil was quoted at USD33.42 a barrel Monday morning, up from USD33.05 late Friday. OPEC and Russia have postponed a virtual emergency meeting planned for Monday until Thursday, the government of Azerbaijan said over the weekend.

Oil prices fell to a low of around USD31.70 on Sunday on news the meeting was delayed, dimming hopes of swift action to support energy markets, but have since recovered.

"In the commodity space, the much-touted OPEC+ meeting has been pushed till Thursday. But the fact is that the meeting is still taking place, and this is all that matters. Hence, we have not seen much drop in oil prices...If the global lockdown starts to ease off, we could see the oil price improving a little more," said AvaTrade analyst Naeem Aslam.

Gold was quoted at USD1,616.47 an ounce, up from USD1,618.25 late Friday.

The economic events calendar on Monday has the UK construction PMI reading at 0930 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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