Monday 6 April 2020 12:05 pm

FTSE 100 rises with Europe set to ease coronavirus lockdowns

The FTSE 100 has risen as investors are cheered by signs that the spread of coronavirus is slowing and as Europe prepares to ease lockdowns.

London’s blue-chip index had risen 2.2 per cent to 5,532 points by midday. Last week, the FTSE 100 fell as data releases laid bare the damage coronavirus is causing to the economy.

Read more: FTSE 100 falls as oil prices slip and coronavirus spreads

European markets rose in tandem with the FTSE 100 today. Germany’s Dax surged 4.5 per cent and France’s Cac jumped 3.7 per cent. The European-wide Euro Stoxx 600 rose three per cent.

The number of daily coronavirus fatalities slipped in Italy and Spain, Germany and France over the weekend. Those countries also saw daily coronavirus infection rates fall.

And the UK also saw a fall, from 708 deaths between Friday and Saturday to 619 deaths between Saturday and Sunday.

“Another argument for a later date of restrictions being lifted is the fact that while those most advanced through the cycle, namely Italy and Spain, are seeing their new case and fatality growth rate slow encouragingly,” Deutsche Bank’s Jim Reid said.

Germany’s roaring Dax benefited from better than expected factory output data. Orders fell 1.4 per cent, much better than analyst predictions of 2.4 per cent.

The FTSE 100 rose despite the UK’s construction sector suffering its worst month since 2009, according to survey data released today.

Coronavirus lockdowns set to ease

Europe was preparing to ease coronavirus lockdowns over the weekend.

Belgium, Finland, Spain and France were all working on measures to soften their coronavirus shutdowns yesterday.

That could see them lift stay-at-home orders for millions of households on a staggered timeline and reopen schools.

Spain – one of Europe’s worst-hit countries in the coronavirus crisis – yesterday extended its lockdown to 15 April.

Read more: Europe starts preparations for easing of coronavirus lockdown

But Prime Minister Pedro Sanchez said some economic restrictions would ease after Easter.

Italy has signalled a so-called phase two in which its coronavirus lockdown will grow more relaxed.

But Deutsche’s Reid said: “I suspect to successfully reopen economies without fear of subsequent mini shutdowns or holding back significant amounts of activity we will need the antibody test rolled out.”

FTSE 100 rises despite dire data 

The UK’s blue-chip index was not deterred by survey data that showed the country’s construction industry contracted sharply in March.

Tim Moore, economics director at IHS Markit, which compiled the survey data, said things are set to get even worse for the construction industry and the economy. 

“The closure of construction sites and lockdown measures will clearly have an even more severe impact on business activity in the coming months,” he said.

Yet investors chose to focus on the spread of coronavirus today, having already largely priced in a huge economic contraction.

Spreadex market analyst Connor Campbell said: “While the FTSE 100 index has been seeing rather large swings on a daily basis, over the last week or so it has been trading in a fairly narrow band.”

Read more: Oil prices slip on delayed talks but stocks rise as coronavirus cases slow

This is “a big improvement on the freefall that defined much of March” Campbell said. He added it may be “a sign, perhaps, that investors are in something of a wait-and-see phase”.

Oil woes hold back FTSE 100

The FTSE 100 had risen by less than its European counterparts, however, as oil prices fell.

The UK’s main index is dominated by energy firms that were trading lower this morning with prices down. Brent crude was 3.5 per cent lower at $32.90. US crude was down 3.5 per cent at $27.40. 

Oil major BP was down one per cent at midday at 334.1p. Shell was 0.3 per cent lower at 1,466.8p.

A meeting of the oil cartel Opec+ is scheduled for later this week. But Joshua Mahony, market analyst at trading platform IG, said he is not optimistic that a deal can materially boost prices.

“Any production deal would fall short of the huge slump in demand expected in the months ahead,’ Mahony said. He said Goldman Sachs predicts “a decline of 26m barrels per day being struck off global demand”.

FTSE 100 investors may also be concerned that Prime Minister Boris Johnson remained in hospital this morning with coronavirus. He entered hospital yesterday after a high temperature following his positive test 10 days ago.

Read more: UK coronavirus: Prime Minister Boris Johnson remains in hospital

Housing minister Robert Jenrick told the BBC Johnson would return to work “shortly”.

“He’ll stay in hospital as long as he needs to do that,” Jenrick added. “But I’ve heard that he’s doing well and I very much look forward to him being back in Number 10 as soon as possible.”

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