UK markets regathered momentum to accelerate gains in afternoon trading after a firm start on Wall Street. Both the Dow Jones and S&P 500 rose more than 1.5% early in the Thursday session, although the tech heavy Nasdaq made more modest progress.
Earlier in the day the UK government extended its Bank of England overdraft so it can borrow billions of pounds and bypass the bond market.
The government has extended what’s known as its ‘Ways and Means’ facility at the central bank, which allows it to immediately raise funds and smooth out cash flow as it tries to support the economy amid the coronavirus pandemic.
Politician s felt this would not happen quickly enough via gilt markets, according to reports.
The UK’s benchmark FTSE 100 index closed roughly 2.8% higher at
5,837.09. The more domestic FTSE 250 was also up, rallying around 2.9% to a month high 16,325.64.
Asian markets were up overnight, with the Hang Seng in Hong Kong rising 1.4% and China’s Shanghai Composite nudging 0.4% to the good. Japan’s Nikkei 225 was trading broadly flat at the close.
In commodities, oil rallied on hopes that a deal will be reached at the upcoming OPEC meeting to reduce the glut of supply flooding the market and stabilise near-term prices. Brent crude futures were up 1.5% to $33.33 a barrel, while West Texas Intermediate (WTI) futures, another oil price benchmark, gained 1.9% to $25.57 a barrel.
DIAGEO PULLS GUIDANCE AND BUYBACK
In company news, Guinness maker Diageo (DGE) gained 4% to £26.33 after it pulled its guidance and said it would halt its share buyback programme, as government measures worldwide to contain the virus had impacted performance across its markets, including in the US, Europe, India and Africa.
Diageo said it would withdraw its guidance on group organic net sales growth and organic operating profit growth for 2020, citing a lack of visibility over the duration and severity of the coronavirus pandemic. The company also said it would not initiate the next phase of the three-year £4.5bn buyback programme for the remainder of 2020 after completing the first phase of £1.25bn.
Topping the FTSE 100 leader board on Thursday was food delivery app Just Eat Takeaway (JET) after its European Takeaway.com business posted a sharp bounce in orders after a sharp March coronavirus dip.
Shares in the UK-listed busines, which is trying to merge with Dutch firm Takeaway.com, jumped nearly 14% to £75.58.
REDROW TAPS £300M CORONAVIRUS CREDIT
Housebuilder Redrow (RDW) jumped 10% to 443.6p as it secured a £300m Covid Corporate Financing Facility (CCFF) and confirmed it had furloughed 80% of its workforce under the government’s job retention scheme.
Redrow announced it has been confirmed as an eligible issuer for the CCFF, with an issuer limit under the facility of £300m, which remains undrawn. The company also said that negotiations for an additional £100m of headroom under its existing revolving facility (RCF) with its six relationship banks were ‘progressing well’, with documentation to be concluded by the end of April, which will result in the existing RCF increasing from £250m to £350m.
Packaging company Mondi (MNDI) managed a 0.1% rise to £13.50 after it scrapped its final dividend for 2019 on coronavirus uncertainty, as first quarter underlying earnings declined.
In a trading update for the period since the end of last year, the group reported underlying EBITDA of €385m, 18% below the comparable prior year period of €471m, driven mainly by lower pricing across its key paper grades.
Mondi confirmed most of its facilities have been in operation throughout the period but said the potential impacts of coronavirus remained ‘very unclear and the pace of change means any effect on operations and the group’s financial performance for the year are difficult to predict.’
WAGAMAMA OWNER RAISES £57M
Wagamama and Frankie & Benny’s owner The Restaurant Group (RTN) lost all of its earlier hefty gains to remain largely flat at 60p after it raised £57m through a share placing to help see it through the coronavirus pandemic.
The placing price of 58p represented a 3.2% discount to yesterday’s closing price of 59.9p. In a statement the company said that the placing is expected to provide ‘sufficient liquidity for the company to deal with this challenging environment and enable it to continue to operate, where possible, through this extraordinary period whilst ensuring that it is well positioned for the eventual normalisation.’
The stock initially rallied around 10% but investors appeared to have become more cautious as the morning wore on.
OTHER COMPANY NEWS
Oil company Enquest (ENQ) jumped 18.5% to 13.24p after it reported a pre-tax loss of $729.1m, compared with a profit of $94.0m on-year for 2019, while revenue rose to $1,711.8m from $1,201.0m.
It said that year-to-date production performance remained good with the group's day-to-day operations continuing without being materially affected by Covid-19.
Asset manager Polar Capital (POLR) has been boosted 2.5% to 410p as it announced that recent equity market volatility has hit assets under management, which fell 12% over the year to £12.2bn at the end of March 2020.
Smith & Nephew (SN.) rallied 4% higher to £15.64 as it confirmed the appointment of a new chief financial officer to replace outgoing Graham Baker.
Anne-Francoise Nesmes will join the company as chief financial officer by 3 August 2020, from Merlin Entertainments.
Online wines seller Naked Wines (WINE) jumped 7% to 292p as orders jumped as locked-down consumers reach for the bottle.
The company said that it had seen higher levels of demand from both new and repeat customers ‘in all of our markets’, but ‘particularly in the US’, and has ‘good momentum’ at its heels.
