April 23, 2020 / 7:32 AM / a month ago

FTSE recovers as oil majors, homebuilders surge

(Reuters) - Britain’s FTSE 100 rebounded from early losses on Thursday, as surging oil prices and signs that major UK homebuilders were planning to resume work boosted sentiment, with investors shrugging off some shockingly weak economic data.

FILE PHOTO: Traders looks at financial information on computer screens on the IG Index trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson

After falling as much as 0.6% in the morning session, the blue-chip FTSE 100 .FTSE ended 1% higher, boosted by oil majors Royal Dutch Shell (RDSa.L) and BP (BP.L) as crude prices recovered from a collapse earlier this week.

Shares in Taylor Wimpey (TW.L) surged 9.4% and smaller peer Vistry (VTYV.L), formerly known as Bovis Homes, jumped 11.5% after signalling plans to restart construction work in the next two weeks.

Taylor Wimpey also said it continued to sell houses online during the lockdown and posted solid year-on-year growth in orders, sparking a rally in shares of fellow homebuilders Barratt Development (BDEV.L) and Persimmon (PSN.L).

That added to hopes of a rebound in economic activity, with stock markets even looking past data showing a historic collapse in demand for UK businesses in April as the coronavirus pandemic forced a nationwide lockdown.

The IHS Markit/CIPS Flash UK Composite Purchasing Managers’ Index (PMI) fell to a record low of 12.9 from 36.0 in March - miles below even the weakest forecast of 31.4 in a Reuters poll of economists.

“While the absolute numbers may have been a surprise, the sharp contraction is no surprise,” said Chris Bailey, European strategist at Raymond James. “But if you see numbers like this in May and June, that is not in market price today.”

The FTSE 100 has recovered nearly 19% since mid-March lows, buoyed by the trillions of dollars injected by major central banks and governments to soften the economic blow of the pandemic.

Britain’s government plans to sell 180 billion pounds of bonds in the next three months, more than it had recently pencilled for the entire fiscal year.

Several European countries including Germany and Spain have moved to relax restrictions, but hopes of an immediate lifting of lockdown in Britain looked bleak as the death toll rose past 18,000.

“We do expect a partial rebound in economic growth in the third quarter assuming the harsher elements of lockdown are eased over the next couple of months,” ING’s developed markets economist James Smith said.

“But more importantly, we don’t expect the UK economy to recover to its pre-virus size until 2022 at the earliest.”

Consumer giant Unilever Plc (ULVR.L) UNc.AS slipped 1.8% after the company withdrew its full-year forecast and warned that its performance could deteriorate in the current quarter as it adjusts to a world in which people consume more at home.

Online food ordering service Just Eat Takeaway.com (TKWY.AS) (JETJ.L) fell 2.2% after it announced share and convertible bond issue to shore up its finances as Britain’s competition watchdog gave the company’s merger final approval.

Engineering company Meggitt (MGGT.L) jumped 6.7% after it recorded a 15% rise in its quarterly defence revenue, and said it would cut 1,800 jobs to save cash in the face of the health crisis.

Aston Martin (AML.L) surged 12% after saying it plans to restart its St Athan factory in south Wales on May 5 and resume operations at Gaydon, after shutdowns forced the luxury car maker to suspend production at both sites.

Reporting by Devik Jain and Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty, Sriraj Kalluvila and Hugh Lawson

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