- FTSE 100 index adds 37 points
- Wall Street opens higher
- US payrolls plunge by 20.2mln in April
2.45pm: Wall Street opens higher
The Footsie was on the rise just as Wall Street opened higher.
Londons leading index bagged 37 points to 5,880, while the Dow Jones added 79 points to 23,962 and the S&P500 gained 15 points to 2,884.
Staying on the other side of the pond, ADP reported that private payrolls plunged 20.2mln in April, very close to the consensus drop of 20mln.
Job losses were mostly in the services sector, with leisure and hospitality losing 8.6mln jobs, while the health care sector was down by 1mln.
Analysts pointed out that ADP counts anyone on the active payroll rather than just people who were paid during the month, so there may have been a discrepancy considering all the workers temporarily laid off.
“The upshot is that the collapse in employment could look even worse in the official Employment Report, due this Friday,” said Paul Ashworth, chief US economist at Capital Economics.
“We still estimate that non-farm payrolls fell by 22,500,000, with the unemployment rate rising to somewhere between 15% and 20%.”
1.40pm: Heathrow to trial passenger temperature screening
FTSE 100 added 28 points to 5,879 after lunch, with the pound firmly in the red, 0.4% lower at US$1.2379.
Heathrow Airports boss announced trials to check passengers body temperature.
John Holland-Kaye told the Transport Select Committee that the industry could not afford to wait 12-18 months for a vaccine for coronavirus and that thousands of jobs might be lost if the only advice to passengers and airlines remains to socially distance.
Earlier this week, Holland-Kaye said airports simply do not have enough space to allow it, as just one jumbo jet would require a queue a kilometre long.
Trade body International Air Transport Association (IATA) said passengers and crew should wear face masks, but does not support social distancing measures that would leave middle seats empty.
“Evidence suggests that the risk of transmission on board aircraft is low,” IATA said on Tuesday.
“Mask-wearing by passengers and crew will reduce the already low risk, while avoiding the dramatic cost increases to air travel that onboard social distancing measures would bring.”
Temperature screening and deeper cabin cleaning were some of the advised solutions.
British Airways, Virgin Atlantic and Ryanair on their own have announced 18,000 job cuts in the past week, with fears growing for the health of Gatwick Airport after BA and Virgin also said they would stop using it for flights.
Qatar Airways warned its workforce of “substantial” job losses, the BBC reported today.
12.15pm: Wall Street to open higher but analysts say optimism may be premature
The Footsie inched up at noon, bagging 31 points to 5,880, while sterling pared its losses but was still down 0.4% to US$1.2386.
Analysts expect Wall Street to open higher, lifted by countries in Europe and US states easing restrictions, markets turning a blind eye to earnings results as well as the exceptional financial stimulus injected by the governments.
According to Craig Erlam, analyst at OANDA Europe, the current optimism may be premature.
“As we enter the back end of earnings season, attention will fall almost entirely on the grand economic reopening, although the next couple of months will be more like a soft reopening as we feel our way through the next phase of the crisis,” he explained.
“Balancing preserving lives and livelihoods is no easy task when we're still operating without a cure or vaccine.”
11.30am: ITV plans return to studios
FTSE 100 was steady in the late morning, adding 30 points to 5,879.
The TV network has been implementing remote working since the start of the lockdown, continuing to broadcast from its six channels.
Demand for advertising slumped 42% last month, but the public has been watching more TV, driving views up.
“As the economy moves out of hibernation, businesses will want to re-engage with consumers and the apparent resurgence of television in the crisis makes it an obvious way of doing so,” said Russ Mould, investment director at AJ Bell.
“Creating new ads might be more complicated in a world of social distancing but ITV is preparing the ground by working with agencies and potential advertisers.”
10.30am: markets await eased restrictions
The Footsie was steady, up 28 points to 5,878 as markets took a breather from yesterdays gains.
Investors are eager to learn plans to ease lockdown restrictions in the UK, with Prime Minister Boris Johnson scheduled for a speech on Sunday.
Further to the UK construction PMI, analysts said that the reading may not return to its pre-virus high before 2022.
“Its encouraging that the government remains committed to higher levels of investment and that banks are in a better position than after the 2008/09 crash to finance commercial construction projects and mortgages that underpin housebuilding,” commented Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
“But demand for office space likely will remain extremely weak, now that firms have adapted to their employees working from home and are looking to cut costs.”
9.45am: UK construction PMI books record low
The FTSE 100 was on the rise in mid-morning despite the UK construction PMI revealing the fastest decline since the survey began 23 years ago.
Londons big caps gained 32 points to 5,881, while sterling was 0.5% lower at US$1.2375.
The PMI reading fell to 8.2 in April from 39.3 in March, as 86% of survey respondents reported a reduction in business activity, reflecting shutdowns across the supply chain due to the coronavirus pandemic.
The previous record low was 27.8 in February 2009.
Experts say that the gradual reopenings scheduled for the upcoming weeks will be hampered by severe disruption across the supply chain that is set to persist in the long term.
“Looking ahead, construction companies widely commented on worries about cash flow, rising operating costs and severely reduced productivity, as well as a slump in demand for new construction projects,” said Tim Moore, economics director at IHS Markit, which compiles the survey.
8.35am: Footsie nudges higher
The FTSE 100 made a quiet start to proceedings on Wednesday with traders keeping their powder dry ahead of what is likely to be another batch of depressing economic updates.
The UK blue-chip index nudged just 6 points higher to 5,855.08.
Later this morning, we get UK data on construction, which should add to the picture of devastation provided by the services numbers on Tuesday.
Then, in the US we have the US ADP unemployment reading, providing the warm-up for Fridays non-farm payrolls, which are expected to be a horror show.
“For now, markets appear to be pricing in the prospect that economic activity can improve from here on in, and while that may well be true, we still dont know the extent of the economic damage that has been done already,” said Michael Hewson of the almost sanguine reaction to the increasingly dire economic stats being released daily.
“This is important given that some of the damage could well be very difficult to repair and bounce back from, meaning that instead of a “V” or “U” shaped recovery we could well see more of a gradual, and very long 'U'.
“This means there is a real risk that markets may well be underestimating the longer-term consequences of the changes that are taking place, and looking past the continued dire data.”
The FTSE 100 risers list was dominated by defensive stocks with online grocer Ocado (LON:OCDO) leading the way with a 3.6% gain after reporting a more than 40% rise in revenues.
Cruise operator Carnival (LON:CCL) was off 3.1% after its rival warned over its survival chances.
Proactive news headlines:
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