On Tuesday, UK stock markets headed higher as investors counted on a revival in economic activity with several countries lifting coronavirus-induced restrictions, while energy stocks tracked a jump in oil prices.
The blue-chip FTSE 100 was up 1.7%, with BP Plc and Royal Dutch Shell Plc providing the biggest boost, while the domestically focussed FTSE 250 added 1.4%.
Both benchmark indexes were set to snap a three-day losing streak, supported by broad-based gains for miners, banks, and travel and leisure stocks, as hard-hit countries including the United States and Italy relaxed stay-at-home orders.
UK Prime Minister Boris Johnson is anticipated to review a nationwide shutdown this week, with a report saying the government will recommend sweeping changes to workplaces to avoid a second wave of infections.
“If things continue to improve – the number of cases fall and governments reopen economies to some extent – then, while this might be a very deep recession, it might also be a very short one, so there is reason to think that stock prices will look past a short period of very bad economic growth,” said Simona Gambarini, markets economist at Capital Economics.
The FTSE 100 has now recovered about 19% from an eight-year low hit in March, partly on historic global fiscal and monetary stimulus, and has also shrugged off mounting evidence of the COVID-19 pandemic’s economic damage.
Data on Tuesday showed British new car sales slumped by around 97% in April to the lowest level of any month since February 1946, while another survey said small British manufacturers were bracing for the biggest fall in output in more than 30 years over the next three months.
After a disappointing European Central Bank meeting last week, focus turns to a Bank of England policy meeting on Thursday, although expectations are low for further stimulus after the central bank cut interest rates twice in March.
With the spotlight also returning to Brexit, the United States and Britain are set to launch trade negotiations by videoconference on Tuesday as both allies aim to shore up domestic supply chains.
In a slow news day for UK firms, low-cost airlines Ryanair and Wizz Air reported a near total wipeout in passenger numbers in April, but their shares rose 2.8% and 0.9%, respectively, after Wizz Air said it expected its figures to improve in May.
Reported by Sagarika Jaisinghani