FTSE 100 to build on gains as coronavirus optimism grows
The FTSE 100 is predicted to continue climbing on Tuesday as traders are optimistic about a potential recovery from the coronavirus pandemic.
London’s blue chip benchmark was called 22 points higher by spread-betters, after a stinking 249-point, 4.3% gain the day before to finish at 6,048.59.
Positivity in Europe extended to Wall Street, with the Dow Jones adding 912 points or 3.9% to close at 24,597.4, while the S&P 500 rose 3.2% and the Nasdaq Composite finished 2.4% higher.
Asian stock indices are all in the green on Tuesday, with the Nikkei 225 up 2%, the Hang Seng up 1.9% and the Shanghai Composite up 0.6%.
“A mixture of optimism in relation to economies being opened up again, upbeat commentary from Fed Chair Jerome Powell, and positive results in relation to progress on a potential Covid-19 vaccine [is all helping],” said market analyst David Madden at CMC Markets.
Tuesday will bring more comments from Powell as he provides more congressional testimony, having expressed his confidence that the US economy will see a solid recovery in the second half of 2020 and declared there is “no limit” to what the US central bank is willing to do in terms of lending.
UK unemployment figures will be published at 7am this morning, covering the three months to the end of March, so they will only catch a small effect of the coronavirus lockdown.
There will be more timely data in the form of the claimant count rate for April, showing the shape of joblessness during the pandemic.
It has not been a smooth-smoking time for the maker of Lambert & Butler and Gauloises, having over the past year stubbed out its target of 10% dividend growth and changed both its chief executive and chairman in the wake of a big profit warning last September related to its vaping business.
In its latest updates, the FTSE 100 group maintained that there had been no material impact from the coronavirus pandemic on its business so far, guiding to first-half adjusted earnings per share down 10% due to around £85mln of writedowns and provisions in vaping.
With Imperial being one of the few dividend-payers among London’s blue chips, any changes in the payout would be a surprise, though an unchanged dividend for this year would imply a dividend yield of nearly 13%, the third-highest level in the FTSE 100.
Interim results from Greencore Group PLC (LON:GNC) come with analysts at Jefferies pointing to industry data for the three weeks to 30 April that showed sandwich sales via supermarkets, Greencore’s main market, dropped 60% – way worse than the 30% drop expected.
“[In March] we expected a short, sharp, shock that the balance sheet would be big enough to take,” analysts commented.
“Now, with more insight post-lockdown, we anticipate a deeper and longer shock — one that the balance sheet is still big enough to take, but which is likely to require a more fundamental re-positioning and adjustment of expectations.”
Around the markets
Pound up 0.1% to US$1.2204
Oil flat, with Brent at US$32.50
Gold still rising, up 1.3% to US$1756.90
Major announcements expected on Tuesday 19 May:
Interims: Imperial Brands PLC (LON:IMB), Greencore Group PLC (LON:GNC), Shoe Zone PLC (LON:SHOE), Topps Tiles PLC (LON:TPT), UDG Healthcare PLC (LON:UDG), Avon Rubber PLC (LON:AVON), Hardide Plc (LON:HDD), Renew Holdings PLC (LON:RNWH), Tritax Eurobox PLC (LON:EBOX)
Economic data: UK unemployment