London stocks gain as ‘careful’ UK easing begins

0

London’s FTSE 100 rose for a fourth straight session on Monday, as investors pinned their hopes on a revival in business activity with Prime Minister Boris Johnson outlining plans to gradually ease some coronavirus-induced lockdown measures.

While Johnson said on Sunday the lockdown will not end yet, he announced a limited easing of restrictions, including allowing people to exercise outside more often and encouraging some people to return to work.

The FTSE 100 .FTSE climbed 0.4% and the mid-cap FTSE 250 .FTMC added 0.8%, as traders returning from a long weekend also caught up with strong gains in Europe on Friday, driven by an easing in U.S.-China tensions.

“The recovery of the past few weeks is impressive, especially given the dire economic data and earnings figures,” said Milan Cutkovic, market analyst at AxiCorp.

“There are still plenty of investors who are keeping their powder dry and waiting for another larger decline to buy the dip, (while) some are chasing the momentum as the fear of missing out kicks in.”

The blue-chip FTSE 100 has now recovered about 22% from a March low on a raft of global stimulus, but it remains more than 20% down on the year as the outbreak halts supply chains, crushes consumer spending and puts entire sectors on the verge of collapse.

British retailers warned the government on Sunday that a business bailout package of relief, grants and loans will not be sufficient to stop the “imminent collapse of many businesses”.

UK first-quarter GDP figures due Wednesday are likely to underline the economic havoc wreaked by the COVID-19 pandemic, with economists fearing the worst slump this year in three centuries.

“While we all hope that we swiftly return to pre-COVID-19 economic activity, the facts will most likely prove us wrong,” said Hussein Sayed, chief market strategist at FXTM.

“It seems a lot of the good news is already priced in and the best-case scenario is to see some sort of consolidation around current levels. Until confidence returns to the real economy, the rally in risk assets will not be sustainable.”

On a slow company news day, early gains were driven by battered life insurers .FTNMX8570, banks .FTNMX8350 and miners .FTNMX1770.

But airline stocks tumbled again as Johnson said the UK would soon need to quarantine people coming into the country by air to prevent a second wave of coronavirus infections. British Airways-owner IAG (ICAG.L) fell 2.5%, while EazyJet Plc (EZJ.L), shed 7.3%.

British bicycles and car parts retailer Halfords (HFD.L) soared 18% to a ten-month high, boosted by the government’s announcement that people should consider cycling to work when the lockdown is eased.

Share.