London stocks climb as global monetary stimulus hopes intensify
Reuters
Published Mar 03, 2020 09:38
London stocks climb as global monetary stimulus hopes intensify
By Devik Jain and Shivani Kumaresan
(Reuters) - London's FTSE 100 index rose for a second straight day on Tuesday, as traders bet on a clear sign from Group of Seven central bankers on further monetary stimulus to shield the global economy from the fallout of the coronavirus epidemic.
A source close to the G7 told Reuters they would not detail any fiscal or monetary steps on a conference call on Tuesday, but world stocks gained on expectations that the group would indicate it was ready to act if needed.
Britain's blue-chip index (FTSE) added 2.1%, while the domestically focussed mid-cap index (FTMC) rose 2.4%.
All but three stocks on the FTSE 100 were trading higher, with miners (FTNMX1770) and airlines (FTNMX5750) up between 2.2% and 2.8%, after a dramatic rout last week that erased over $5 trillion from global equity markets.
"Global central banks, while not equipped to deal with a pandemic directly, have the tools to short-circuit the brutal sell-off," said Vishnu Varathan, head of economics at Mizuho Bank.
Australia's central bank cut interest rates to a record low on Tuesday, while those in Japan, Britain, France and the United States have signalled willingness to inject more cash into the system.
But analysts have expressed doubt about the efficacy of interest rate cuts amid severe disruptions to the supply chain. Several multinational companies including Rio Tinto (L:RIO) and Diageo (L:DGE) have flagged a hit to profits this year.
"(A rate cut) maybe just helps put a floor under equity markets but it doesn't do anything for the real economy; it doesn't actually support earnings because it doesn't make people go out more or spend more money in restaurants," said Neil Wilson, chief analyst at Markets.com.
British Prime Minister Boris Johnson is set to unveil an action plan on Tuesday as the number of virus infections in the country rose to 39 and factories reported a big jump in delays in their supply chains.
Marketing firm 4imprint Group (L:FOUR) jumped 9.2% and was on course for its best day in over a year after saying it had so far seen minimal impact from the health crisis.
Oil majors BP Plc (L:BP) and Royal Dutch Shell Plc (L:RDSa) gained 1.9% and 2.6%, tracking oil prices. [O/R]
Aggreko (L:AGGK), the world's largest temporary power provider, surged 7.4% and was eyeing its best day in over seven months as it kept its 2020 targets and said preparations for the Tokyo Summer Olympics were "progressing well".
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But precious metals miner Fresnillo (L:FRES) slid 4.9% after posting disappointing annual results as low-grade ore hit production and it curtailed operations at its Noche Buena mine in Mexico.
Written By: Reuters
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