March 17, 2020 / 8:28 AM / 12 days ago

FTSE 100 claws back some ground as liquidity aids lift confidence

(Reuters) - London’s main share index rose on Tuesday as the U.S. Federal Reserve’s move to purchase short-term corporate debt and Britain’s expected rescue package to help coronavirus-hit businesses brought back some confidence among investors.

A street cleaning operative walks past the London Stock Exchange Group building in the City of London financial district, in London, Britain, March 9, 2020. REUTERS/Toby Melville

The blue-chip FTSE 100 .FTSE rose 2.8%, led by healthcare .FTUB4500 and consumer stocks .FTNMX3760.

Chilean copper producer Antofagasta (ANTO.L) jumped 16.0% after posting higher annual profit aided by rising sales and falling costs, though it also flagged a review of its spending plans due to the tough global economy.

U.S. stocks reversed early losses to trade higher on Tuesday as the Federal Reserve said it would relaunch financial crisis-era purchases of short-term corporate debt to thaw credit markets strained by the coronavirus pandemic.

Shares in the world’s biggest catering firm Compass Group (CPG.L) slumped 4.2% to their lowest since June 2013 after it said half-yearly operating profit would miss expectations due to steps taken in Europe and North America to limit the spread of the virus.

Prime Minister Boris Johnson on Monday ordered the most vulnerable to isolate for 12 weeks and asked people to avoid pubs, clubs, restaurants, cinemas and theatres, though he stopped short of ordering them to close.

Foreign Minister Dominic Raab also advised Britons to stop all non-essential travel globally for the next 30 days.

“As the UK becomes the latest country to announce stringent self-isolation measures to suppress the coronavirus, markets are attempting to put on a brave face about the outbreak,” AJ Bell investment director Russ Mould, said.

The domestically focussed FTSE 250 index .FTMC shed early gains to fall 3.0% in its ninth straight session of losses, with Cineworld (CINE.L) plunging 43.0% to a record low as it closed theatres in light of the coronavirus outbreak.

Through Monday, the number of confirmed coronavirus cases in Britain rose to 1,543, up from 1,372 the day before, while the UK death toll rose to 55.

British Finance Minister Rishi Sunak said lenders will offer a three-month mortgage holiday to those in difficulty, adding that he will set out the next stage of help in the coming days.

That follows a 30 billion pound ($37 billion) stimulus package he unveiled last week.

There was no respite for travel stocks, with British Airways parent IAG (ICAG.L) and easyJet (EZJ.L) falling 6.5% and 6.1% as airlines made unprecedented cuts to flights, costs and staffing and stepped up calls for emergency aid.

“No monetary and fiscal policy unfortunately can alter the spread of the virus,” Simona Gambarini, markets economist at Capital Economics, said. “It’s unlikely that the stock market and other risky assets will rebound on a sustained basis.”

Electricals retailer Dixons Carphone (DC.L) rose 10.8% after saying it would axe 2,900 jobs as it closes all 531 UK standalone Carphone Warehouse stores.

Supermarket group Morrisons (MRW.L) shares jumped 9.8% after it said it plans to create 3,500 new jobs and expand its home delivery operation to help get through the coronavirus crisis.

Reporting by Shivani Kumaresan and Devik Jain in Bengaluru; Additional reporting by Sruthi Shankar; Editing by Jan Harvey

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