London pre-open: Stocks seen higher amid optimism over lockdown easing

Wed 27 May 2020

LONDON (SHARECAST) - (Sharecast News) - London stocks were set to rise at the open on Wednesday, with optimism over lockdown easing expected to offset worries about growing tensions between the US and Hong Kong.
The FTSE 100 was called to open 30 points higher at 6,097.

CMC Markets analyst Michael Hewson said: "The increasing prospect that a slowing infection rate and falling death count will see economies start to slowly reopen next month has seen equity markets across the globe get off to a flying start this week, building on the gains we saw last week.

"After weeks of lockdown markets appear to be betting that consumers may well go off on a summer spending splurge, as pent up demand gets unlocked, as we head into the summer months.

"Big gains in travel and leisure stocks, as well as retailers yesterday appear to be predicated on the assumption that after weeks of lockdown people will head off to sunnier climes, as the southern European economies of Spain, Italy and Greece look to roll out the red carpet in an attempt to salvage what is left of their holiday season, and industry.

"The prospect of non-essential retailers opening in mid-June also gave that sector a boost as preparations start to be made for UK retail, as well as travel and leisure look at a phased return to some semblance of normal."

The positive call came despite growing tensions between the US and Hong, after US President Trump said late on Tuesday that he is preparing to take action against China over its plan to impose national security laws on HK.

In corporate news, Britvic deferred its interim dividend as it weighed the impact of the coronavirus pandemic, which it said was hitting profits at around 12m - 18m a month.

The maker of Robinsons fruit juice said the largest impacts had been seen in Great Britain and Ireland due to government lockdowns, but added that stress testing of debt covenants did not indicate any potential breaches up to March next year.

The value of British Land's property portfolio fell 10% in the last financial year pushing the real estate company to a 1.1bn annual net loss as the value of its retail sites plunged.

The FTSE 100 company said the value of its properties fell to 11.16bn from 12.32bn in the year to the end of March. Its IFRS loss after tax widened to 1.11bn from 320m a year earlier.

The value of British Land's retail sites fell 26.1% to 3.87bn as Covid-19 factors added to existing pressures on the retail sector. The value of British Land's offices rose 2.3% to 6.77bn.

Auto Trader announced fresh support for its customers following new guidance from the UK government around vehicle retail amid the ongoing Covid-19 coronavirus crisis.

The company noted that on Monday, the government confirmed that vehicle retailers in England would be permitted to reopen from 1 June.

It said that for those retailers in England resuming trading, it would extend its recent discount scheme, providing a 25% discount for the month of June.
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