Written by Citywire

April, 2020

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FTSE rallies as coronavirus deaths slow

The FTSE 100 has rallied after a slowdown in coronavirus deaths in France and Italy over the weekend, while European governments began preparations to ease lockdowns put in place to contain the spread of the pandemic.

The UK blue-chip index jumped 93 points, or 1.7% to 5,506, joining in a global stock market rally as the pace of the increase in coronavirus deaths slowed over the weekend. UK ‘mid-cap’ companies on the FTSE 250 rallied 3.5%.

Other European markets also enjoyed gains. Germany’s DAX 30 was up 3.5%, Italy’s FTSE MIB rose 2.8% and France’s CAC 40 traded 2.9% higher. Asian markets rallied overnight, with Japan’s Nikkei 225 closing 4.2% higher and Hong Kong’s Hang Seng rising 2.1%.

Italy on Sunday reported 525 deaths from the coronavirus on Sunday, the smallest daily increase in two weeks. France also reported a slowing of deaths yesterday, with Sunday’s 357 figure down from 441 on Saturday.

European governments meanwhile signalled timelines for a potential easing of the lockdowns put in place to contain the spread of the virus.

Spain’s prime minister Pedro Sanchez said on Saturday a ban on all non-essential work including manufacturing and construction would be lifted after Easter, while Italy signalled a ‘phase two’ of its lockdown could begin next month.

On the FTSE 100, the rally was broad-based, with only a handful of stocks failing to make gains. Legal & General (LGEN) surged 16.2% to 185.6p after the insurer late on Friday announced it intended to pat its 2019 final dividend, despite pressure from the Prudential Regulation Authority over payouts.

‘The board has carefully considered the need to act prudently in maintaining safety and soundness, and in doing ensure that Legal & General plays its full part in supporting the real economy,’ it said. ‘It also recognises the importance of dividend income to many institutional and retail shareholders, particularly in the current environment.’

The PRA, the supervisory arm of the Bank of England, wrote to insurers last week urging them to ‘pay close attention to the need to protect policyholders and maintain safety and soundness’ in ‘considering any distributions to shareholders’.

Rolls-Royce (RR) rose 16.5% to 293.1p despite scrapping its dividend and financial targets, as the aircraft engine maker announced it had secured an additional £1.5bn credit facility to help it through the downturn brought about by the coronavirus pandemic. Fellow aerospace engineer Meggitt (MGGT) rose 14% to 248.4p.

Travel stocks and house builders, which have been among the worst hit by the sell-off sparked by the Covid-19 pandemic, were also among the big blue-chip risers.

Cruise ship operator Carnival (CCL) rose 12.9% to 693.8p, InterContinental Hotels Group (IHG) was up 9.9% at £31.22 and British Airways owner International Consolidated Airlines (IAG) rallied 7.1% to 212.1p.

Among house builders, Barratt Developments (BDEV) rose 11% to 426.5p, Taylor Wimpey (TW) rallied 10.5% to 112p and Persimmon (PSN) traded 8.9% higher at £17.68.

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