UK stocks inched higher on Tuesday, helped by gains in Asian markets and growing optimism that more countries would allow businesses to re-open in a phased relaxation of the global lockdown.

The FTSE 100 index of leading stocks rose 0.2% to 5,856, with gains in industrial stocks and insurers helping to offset losses in heavyweight banks, oils and retailers.

Shares in global bank HSBC (HSBA) gave up 1.2% to 411p after first quarter results showed a 48% drop in pre-tax profits to $3.2bn due to an increase of $2.4bn in provisions for expected credit losses.

Provisions for the quarter totalled $3bn due to ‘the impact of Covid-19, weakening oil prices on the forward economic outlook and a significant charge related to a corporate exposure in Singapore.’ HSBC is a major lender to oil trading firm Hin Leong which lost billions of dollars due to the recent collapse in crude prices.

Oil major BP (BP.) dipped 2.2% to 307p after it reported a first quarter loss on an historic cost basis of $4.4bn as it wrote down the value of its inventories by $3.7bn due to the collapse in crude prices. On an underlying basis, profit for the quarter was $0.8bn, down from $2.4bn the previous year.

The firm has responded to the crisis by strengthening its balance sheet with another $10bn of loan facilities, reducing its capital spending by 25% and introducing cost cuts of $2.5bn over this year and next year.

High street stalwart Marks & Spencer (MKS) revealed that it had also strengthened its liquidity with the relaxation or removal of certain banking covenants and that it was eligible to borrow money under the Covid Corporate Finance Facility. Shares eased 0.7% to 94p.

The retailer said it was planning for its Clothing & Home business ‘to be severely constrained during lockdown’ and for ‘highly uncertain trading conditions in a prolonged exit period.’ Its Food business has held up better but has been negatively affected by the lockdown as fewer people shop for food-on-the-go.

Brick-maker Forterra (FORT) slipped 1.6% to 235p after it responded to news that housebuilders are to begin a phased re-opening of building sites by announcing it would relight the kiln at one of its brick manufacturing facilities this week ready to restart production.

The firm said it expected to recommence production at two further facilities in May although due to high inventory levels the majority of Forterra facilities wouldn’t resume manufacturing before the summer unless demand increased at a faster rate than expected.

On a more positive tone, shares in contracts-for-difference trading platform Plus500 (PLUS) gained 6% to £13.11 after the firm said the first quarter’s ‘heightened trading activity’ had continued into the second quarter, with ‘strong gains from customer trading performance.’

It added that revenue from customer income for the first half to date was at record levels and that full year revenues and profits would be ‘substantially ahead of current consensus expectations, as revised following the first-quarter trading update on 7 April.’

Specialist retailer Games Workshop (GAW) was another big gainer, up 9.6% to £58.30 as it announced that it would re-commence trade sales in Europe and North America this week and would re-open its website for online orders from this Friday.

Shares in litigation finance specialist Burford Capital (BUR:AIM) leapt 28% to 522p after it posted in-line results for the year to December and an upbeat report on progress year-to-date.

For 2019, new commitments to litigation finance and asset recovery increased 29% to $955m, taking total commitments to a record $1.9bn, while deployments exceeded $1bn for the third year running.

For the year to date, Burford has obtained court results or arbitral awards which, if paid in full, would generate ‘substantial income and cash receipts’ of almost $800m.



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Issue Date: 28 Apr 2020