LONDON, April 28 — London’s FTSE 100 reversed early losses today as investors looked past dismal quarterly earnings reports from oil major BP and lender HSBC and bet on a gradual reopening of the economy amid signs that the coronavirus outbreak is easing.
The blue-chip index added 0.5 per cent, while the domestically focused mid-cap index rose 0.8 per cent as broader European markets also rallied on indications that more countries looked set to relax the strict curbs imposed to contain the pandemic.
BP Plc fell 1.4 per cent after its first-quarter profit tumbled by two-thirds and debt rose sharply, but declines were limited as it declared a quarterly dividend at a time when major British firms have suspended payouts to conserve cash and ride out the economic slump.
“A lot of the bad news is already factored in,” said David Madden, an analyst at CMC Markets in London.
“Someone like BP, they’re going to be severely impacted by the downturn, but they won’t go out of business,” Madden said, adding that traders were looking for signs the British economy would soon start to reopen “slowly, but surely”.
Prime Minister Boris Johnson warned yesterday it was still too dangerous to lift the lockdown for fear of a second outbreak, but said the government would outline plans for an easing in coming days.
A raft of global stimulus measures have helped the FTSE 100 recover about 20 per cent from its March lows, but the index is still 30 per cent away from reclaiming its all-time high as economists forecast the deepest recession for the UK in three centuries.
“In the current market environment, it would not take much to send markets back into panic mode,” said Milan Cutkovic, market analyst at AxiCorp.
“It is no longer the negative headlines that dominate daily life (but) the uncertainties surrounding the Covid-19 pandemic remain intact.”
All eyes this week will be on first-quarter GDP figures for Europe and the United States and on central bank meetings, with expectations running high for more stimulus from the European Central Bank.
Asia-focused lender HSBC Holdings Plc reported a plunge in quarterly profit and boosted provisions against potential bad loans as the stay-at-home orders crushed production and put entire sectors at the risk of collapse. Its shares fell one per cent.
However, Britain’s largest distributor of building materials, Travis Perkins, rose 3.1 per cent even as it said its total revenue in the first three weeks of April was down two-thirds from the same period last year due to the health crisis. — Reuters