UK shares made gains in early trade on Tuesday as stable oil prices, on track GDP and positive factory data out of China were encouraging even though the blue-chip FTSE 100 was set for its worst quarter since 1987.

The UK’s GDP rose 1.1% in the quarter to March, bang on target with forecasts.

China's manufacturing purchasing managers index jumped to 52.0 in March, up from 35.7 in February.

The benchmark FTSE 100 index was up 1.8% at 9am, with turnaround specialist Melrose Industries (MRO) surging 18% to 103.25p after saying it was reducing costs. That will involve senior staff across many of its businesses taking a temporary 20% pay cut in an effort to ride out the health scare, a move that saw the shares head the FTSE leader board.

The domestically focused mid cap 250 index rose 1.9%, but was on course to log its worst quarterly loss ever.

OIL STEADIES

Oil prices steadied after hitting 18-year lows as US President Donald Trump and Russian President Vladimir Putin agreed to talks to stabilise energy markets, helping oil companies Royal Dutch Shell (RDSB) and BP (BP.) gain more than 6% and 4% respectively to £13.42 and 335.2p.

Supermarkets will also be in focus after record UK grocery sales in the four weeks to 22 March as shoppers stocked up before the country went into lockdown.

Industry data shows grocery sales soaring 20.6% during the period, helping lift Sainsbury (SBRY) 4.5% to 218.9p, although Tesco (TSCO) failed to respond, its share price drifting modestly to 233p.

Luxury sports car maker Aston Martin (AML) fell 9% after saying it is furloughing some employees as it handles the fallout from the coronavirus outbreak, which has closed its car factories.

ADS FIRM AXES PAYOUT

Advertising company WPP (WPP) climbed 5.3% to 543p, even as it suspended its final dividend and a share buyback, citing a recent deterioration in demand that had blighted an otherwise good start to 2020.

Engineering company Smiths (SMIN) jumped 4.5% to £11.66, having delayed a demerger of its medical division indefinitely until markets stabilized.

Smiths also ruled out paying an interim dividend.

Tobacco giant Imperial Brands (IMB) rallied more than 10% higher to £14.65 after it secured a new €3.5bn credit facility and said it had experienced no material impact on its performance from Covid-19 to date.

Pizza delivery chain Domino's Pizza (DOM) rose 4% to 278.8p on the back of news that it had hired former Costa Coffee head Dominic Paul as its new chief executive.

MORE AXED DIVIDENDS

Flow control and instrumentation group Rotork (ROR) shed 1.6% to 219.1p as it cancelled its final dividend, having shuttered factories in Italy, India and Malaysia due to government lockdown measures.

Specialist brick manufacturer Michelmersh Brick (MBH) gained 7% to 92p after it reported a 61% rise in annual profit, indicating its business was traveling well before the Covid-19 crisis hit.

Michelmersh Brick last week deferred all dividend payments, having suspended deliveries at all of its plants due to the pandemic.

Banknote printer De La Rue (DLAR) rallied 10% to 59.1p, having maintained its guidance and confirming continued progress with its turnaround plan.

Specialist product manufacturer Morgan Advanced Materials (MGAM) firmed 2.4% to 193.6p, despite it too joining the dividend cancellation club.

Cybersecurity company Falanx (FLX:AIM) jumped 30% to 0.74p, on announcing that it had received about £1m of new orders in its cybersecurity division between December and mid-February.

Falanx said it now expected to deliver 13% growth in revenue to about £5.9m for the year through March 2019.

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Issue Date: 31 Mar 2020