London close: Stocks finish higher even after US GDP plunges

London stocks finished higher on Wednesday, with the top-flight index keeping its head above the 6,000 mark, as investors digested the worst GDP figures out of the United States in 12 years, alongside some more promising results from a potential treatment for Covid-19.

The FTSE 100 ended the session up 2.63% at 6,115.25, and the FTSE 250 was 3.34% firmer at 16,835.34.

Sterling was mixed against its major trading pairs, gaining 0.05% on the dollar to $1.2432, but weakening 0.29% against the euro to €1.1451.

“European markets are on the rise once again, with traders looking ahead to a potential further bout of easing from the FOMC later today,” noted analysts at IG earlier.

“The recent upside seen in European and US stocks appears to be a combination of optimism over easing lockdown restrictions, coupled with the ever-present influence of huge global stimulus packages.”

IG said that with debt seemingly an issue not worth worrying about in the US, there appeared to be few limits to the amount of stimulus employed in the name of avoiding a huge economic collapse.

“If markets reflected economic health, this would look like a textbook V-shaped recovery.

“However, huge economic questions remain until we find a vaccine, with easing lockdown measures unlikely to bring back complete normality thanks to the virus that continues to influence decisions on both the business and consumer level.”

In fresh data out during the afternoon, the US economy shrank sharply and more quickly than expected at the start of the year, even before being hit by the full force of the Covid-19 pandemic.

According to the Department of Commerce, gross domestic product plummeted at an annualised pace of 4.8% over the three months ending in March, against consensus expectations for a 4% weakening.

Business investment was especially weak, dropping by 8.6%, although the biggest drag on GDP growth was the 7.6% plunge in household consumption.

"Grim, but much grimmer is coming," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

At the same time, shares of US biotechnology outfit Gilead Sciences were halted after the company notified markets that "positive data" were emerging from a clinical trial being conducted by the US government's National Institute of Allergy and Infectious Diseases for the use of its Remdesivir treatment against the Covid-19 coronavirus.

The company said it "understood" that the trial had met its so-called 'primary endpoint' with detailed information set to follow at a soon to scheduled briefing.

Analysts from Makor Securities labelled the news out of the biotech giant "encouraging" given recent news coverage.

Still, they said they believed financial markets were already discounting that Remdesivir would show some degree of efficacy and obtain approval from the Food and Drug Administration.

In London equity markets, cruise operator Carnival surged 16.47%, while Barclays added 12.7% even after it said that profit fell by more than a third in the first quarter.

The bank had set aside £2.1bn for bad debts during the Covid-19 crisis, and said pre-tax profit for the three months to the end of March dropped 38% to £913m as revenue rose 20% to £6.3bn.

Its reported charge for impaired loans increased to £2.1bn from £448m a year earlier.

Standard Chartered was up 11.57% after reporting a 29% drop in first-quarter profit, as the Asia-focussed bank set aside more than $900m for bad debts and warned of further credit losses ahead.

Pre-tax profit for the three months to the end of March fell to $886m from $1.2bn a year earlier as income rose 13% to $4.3bn.

It took a charge of $962m for credit losses, up from $78m a year earlier, while pre-tax profit also included a $249m goodwill impairment in India based on a GDP growth revision.

Advertising giant WPP was 8.54% higher even as it posted a decline in first-quarter revenues.

Electrical retailer Dixons Carphone rallied 18.18% as it scrapped its dividend amid the ongoing coronavirus crisis but said UK and Ireland electrical online sales had soared 166% since the government ordered store closures in late March, offsetting a 16% fall in store sales.

British Airways owner IAG reversed earlier losses to close up 5.69%, after it said late on Tuesday that it could cut up to 12,000 jobs at the Heathrow-based carrier.

Fashion retailer Next also turned around in afternoon trading, rising 3.95% after pulling its dividend and saying it did not anticipate paying one in January 2021 in response to the coronavirus pandemic, as full price sales fell 41% in the three months to April 25.

On the downside, Hiscox fell 3.63% after the insurer said it is "evaluating possible sources of capital" which could include raising new equity, amid expectations that rates in the US wholesale and reinsurance market will rise due to the pandemic.

Market Movers

FTSE 100 (UKX) 6,115.25 2.63%
FTSE 250 (MCX) 16,835.34 3.34%
techMARK (TASX) 3,636.22 2.04%

FTSE 100 - Risers

Carnival (CCL) 1,160.50p 16.47%
Centrica (CNA) 41.45p 15.40%
Barclays (BARC) 110.18p 12.70%
Evraz (EVR) 278.00p 12.60%
easyJet (EZJ) 643.40p 12.44%
Rolls-Royce Holdings (RR.) 357.60p 11.92%
Standard Chartered (STAN) 435.00p 11.57%
Meggitt (MGGT) 299.00p 10.29%
InterContinental Hotels Group (IHG) 3,967.00p 9.37%
Melrose Industries (MRO) 103.20p 9.30%

FTSE 100 - Fallers

Polymetal International (POLY) 1,646.00p -1.67%
Ocado Group (OCDO) 1,625.00p -1.60%
Croda International (CRDA) 4,947.00p -0.84%
Reckitt Benckiser Group (RB.) 6,402.00p -0.81%
GlaxoSmithKline (GSK) 1,677.00p -0.63%
BT Group (BT.A) 119.85p -0.42%
Morrison (Wm) Supermarkets (MRW) 188.15p -0.40%
National Grid (NG.) 944.40p -0.30%
Auto Trader Group (AUTO) 474.30p -0.27%
RSA Insurance Group (RSA) 369.80p -0.22%

FTSE 250 - Risers

Provident Financial (PFG) 207.80p 18.74%
Dixons Carphone (DC.) 80.95p 18.18%
Premier Oil (PMO) 30.48p 17.01%
Wood Group (John) (WG.) 199.00p 13.71%
Aggreko (AGK) 479.20p 13.55%
Virgin Money UK (VMUK) 89.78p 13.16%
Ascential (ASCL) 261.00p 12.89%
Petrofac Ltd. (PFC) 188.55p 11.87%
Hammerson (HMSO) 71.48p 11.06%
TUI AG Reg Shs (DI) (TUI) 344.40p 10.99%

FTSE 250 - Fallers

HGCapital Trust (HGT) 223.50p -4.89%
Petropavlovsk (POG) 25.30p -4.21%
Hiscox Limited (DI) (HSX) 706.00p -3.63%
Telecom Plus (TEP) 1,338.00p -2.34%
Spirent Communications (SPT) 248.00p -2.17%
Cranswick (CWK) 3,798.00p -2.11%
Grafton Group Units (GFTU) 663.50p -2.07%
C&C Group (CCR) 199.00p -1.99%
Hilton Food Group (HFG) 1,122.00p -1.94%
Hastings Group Holdings (HSTG) 190.00p -1.55%