London close: Stocks finish higher on US stimulus, Russian vaccine hopes
Market Close Report
15:13, 11th August 2020

(Sharecast News) - London stocks closed Tuesday's session positive, as investors bet on a possible Covid vaccine from Russia as well as further US stimulus, shrugging off bleak UK jobs data.
The FTSE 100 ended the session up 1.71% at 6,154.34, and the FTSE 250 was ahead 1.54% at 17,997.18.

Sterling was mixed by the afternoon, last gaining 0.11% on the dollar to $1.3088, but losing 0.16% against the euro to €1.1119.

"It's been an absolutely stellar session for markets in Europe today driven higher by hopes of a new US stimulus plan with President Trump's recent executive orders being used as a starting point baseline, a possible capital gains tax cut, as well as reports of a new coronavirus vaccine, developed by Russian scientists, and which is expected to go into full production in September," said CMC Markets chief market analyst Michael Hewson.

"The airline and travel sector has been one of the main beneficiaries of the vaccine reports, with IAG, Norwegian Air and Carnival all pushing higher.

"We've also seen broad based gains from the auto sector in Germany, after car sales in China surged for the fourth month in a row, with July seeing a gain of 16% year on year, with electric vehicle sales rising 19%."

Sentiment was boosted earlier after Russian President Vladimir Putin said the country had become the first to approve a Covid-19 vaccine, after less than two months of human testing.

The vaccine now faced the final stage of clinical trials to test safety and efficacy, but was apparently likely to be available to the public soon.

It was not, however, among the World Health Organization's (WHO) list of six vaccines that had reached phase three clinical trials, which involve more widespread testing in humans.

Hopes of US stimulus meant markets remained buoyant despite the release of dire UK jobs figures from the Office for National Statistics, which showed that employment fell at its fastest rate in more than a decade between April and June, while wages shrank as the Covid-19 pandemic took its toll.

Employment declined by 220,000 on the quarter, marking the largest quarterly fall since the wake of the financial crisis in 2009.

The data also showed that a further 81,000 people fell off company payrolls last month, giving a total of 730,000 since March, when the coronavirus lockdown began.

Meanwhile, between January to March and April to June, the total actual weekly hours worked fell by a record 191.3 million, or 18.4%, to 849.3 million hours.

That was the largest quarterly decline since estimates began in 1971, with total hours dropping to its lowest level since September to November 1994.

The unemployment rate was unchanged in June at 3.9% versus expectations of an increase to 4.2%, but this was just a reflection of the fact that more people gave up looking for work.

Average earnings excluding bonuses were down 0.2%, while earnings including bonuses were 1.2% lower compared to expectations for a 1.1% fall.

"Overall, we doubt the apparent stability in the ILO unemployment rate will last long," said Ruth Gregory, senior UK economist at Capital Economics.

"Indeed, with further rises in unemployment in the coming months all but inevitable as the furlough scheme unwinds, this is just the lull before the storm.

"Our forecast that the unemployment rate will peak at 7% in mid-2021 and remain above its pre-pandemic level of 4% until the end of 2022, suggests that the economic recovery will be slow going."

In corporate news, InterContinental Hotels was 4.8% higher despite suffering a $233m (£178m) loss in the first half as occupancy at its hotels plunged during the Covid-19 crisis.

Ladbrokes owner GVC Holdings racked up gains of 9.64%, with traders pointing to the fact that media and technology company IAC/InterActive Corp has made a $1bn investment in MGM Resorts, with which GVC has a joint venture.

Plus500 gained 10.69% as the trading platform more than tripled its interim dividend and reported soaring first-half revenue and profit driven by "unprecedented" volatile markets during the pandemic.

Cineworld surged 28.96% amid takeover speculation after a US judge granted the government's request to end the Paramount Decrees, a set of antitrust rules from the 1940s and 1950s that banned film studios from owning theatres.

Online software development and gaming company Gamesys rallied 9.16% as it declared a maiden dividend and said full-year gaming revenue and adjusted earnings were set to be ahead of its previous expectations.

On the downside, precious metals miners Fresnillo, Polymetal, Centamin and Hochschild were down, by 6.69%, 4.05%, 7.38% and 9.66%, respectively, as gold prices fell amid a firmer US dollar.

Market Movers

FTSE 100 (UKX) 6,154.34 1.71%
FTSE 250 (MCX) 17,997.18 1.54%
techMARK (TASX) 3,905.01 1.45%

FTSE 100 - Risers

GVC Holdings (GVC) 785.00p 9.64%
International Consolidated Airlines Group SA (CDI) (IAG) 218.70p 8.43%
ITV (ITV) 65.64p 5.84%
Evraz (EVR) 344.50p 5.82%
Informa (INF) 423.50p 5.74%
Compass Group (CPG) 1,233.50p 5.31%
Standard Chartered (STAN) 428.10p 5.29%
Whitbread (WTB) 2,573.00p 5.15%
Barclays (BARC) 111.76p 4.80%
InterContinental Hotels Group (IHG) 4,193.00p 4.80%

FTSE 100 - Fallers

Fresnillo (FRES) 1,200.50p -6.69%
Polymetal International (POLY) 1,931.50p -4.05%
Rentokil Initial (RTO) 527.20p -2.26%
Hikma Pharmaceuticals (HIK) 2,247.00p -2.18%
SEGRO (SGRO) 955.00p -1.93%
Pennon Group (PNN) 1,048.50p -1.73%
National Grid (NG.) 887.80p -1.55%
United Utilities Group (UU.) 891.20p -1.48%
Reckitt Benckiser Group (RB.) 7,408.00p -1.20%
Unilever (ULVR) 4,485.00p -0.77%

FTSE 250 - Risers

Cineworld Group (CINE) 52.94p 28.96%
Plus500 Ltd (DI) (PLUS) 1,387.00p 10.69%
TUI AG Reg Shs (DI) (TUI) 382.60p 9.66%
Petrofac Ltd. (PFC) 181.10p 9.59%
Calisen (CLSN) 185.00p 8.82%
Virgin Money UK (VMUK) 96.76p 8.82%
Gamesys Group (GYS) 1,112.00p 8.38%
Hammerson (HMSO) 55.48p 8.06%
Signature Aviation (SIG) 275.10p 7.71%
FirstGroup (FGP) 44.04p 7.41%

FTSE 250 - Fallers

Hochschild Mining (HOC) 271.20p -9.66%
Petropavlovsk (POG) 30.70p -8.08%
Centamin (DI) (CEY) 203.20p -7.38%
Bellway (BWY) 2,456.00p -4.25%
Kainos Group (KNOS) 1,132.00p -2.92%
ICG Enterprise Trust (ICGT) 816.00p -2.86%
Caledonia Investments (CLDN) 2,660.00p -2.03%
QinetiQ Group (QQ.) 308.60p -1.91%
Sabre Insurance Group (SBRE) 269.50p -1.82%
Helios Towers (HTWS) 167.00p -1.76%

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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