Weaker pound lifts FTSE 100 as Britons brace for extended lockdown
Reuters
Published Apr 16, 2020 10:29
Updated Apr 16, 2020 18:05
By Devik Jain and Sruthi Shankar
(Reuters) - Britain's exporter-heavy FTSE 100 rose on Thursday, boosted by a weaker pound as Britons braced for a longer lockdown to curb the spread of the new coronavirus pandemic.
In a widely expected move, UK's foreign minister Dominic Raab said the country will extend its lockdown for at least three more weeks as a relaxation of the measures would damage both public health and the economy.
The FTSE 100 closed up 0.6% in a volatile session, with drug companies GlaxoSmithKline (L:GSK) and AstraZeneca (L:AZN) surging 5.3% and 2.7%, respectively, and other big dollar earners rising as sterling dropped.
The midcap index (FTMC) rose 0.2% after a 6.5% drop in the past two sessions.
UK equities have lagged a broader European rally as countries including Germany, Austria and Spain looked to restart their economies amid signs the pandemic was plateauing. The broader pan-European STOXX 600 (STOXX) has gained in six of the past seven sessions.
"We expect markets to remain volatile as the real economic impact of the ongoing crisis begins to come through in company earnings updates," noted Ingrid Kukuljan, head of impact investing, international at Federated Hermes.
"We are wary that current market expectations for earnings revisions and capex reductions could be too optimistic."
Latest data showed British retail spending slumped 27% in the first two weeks of the lockdown and one in four firms stopped trading temporarily, supporting dire predictions of an economic downturn this year.
Shares in EasyJet (L:EZJ), which had earlier surged on news that it could survive a nine-month shutdown, closed down 2.5% as its founder and biggest shareholder, Stelios Haji-Ioannou, escalated his row with management.
Oil majors BP (L:BP) and Royal Dutch Shell (L:RDSa) dropped more than 3% as crude prices struggled after the OPEC lowered its global oil demand forecast.
Lending support to markets, however, UK's biggest housebuilder Barratt Development (L:BDEV) said it sold more homes so far this year and its finances remain strong.
Its shares jumped 6.3%, while peers Persimmon (L:PSN), Berkeley Group (L:BKGH) and Taylor Wimpey (L:TW) added more than 3%.
Pest control company Rentokil Initial (L:RTO) rose 4.4% after saying it was pushing ahead with staff layoffs and a 35% cut in board members' pay as it braces for a bigger hit to operations in the second quarter.
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Cybersecurity firm Avast (L:AVST) jumped 9.9% after it stuck to its 2020 revenue outlook.
Meanwhile, oilfield services provider Petrofac (L:PFC) plunged 14.7% as Abu Dhabi National Oil Company terminated $1.65-billion worth of contracts it had awarded to its Emirati unit.
Written By: Reuters
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