A UK government financial injection for large businesses is helping lift London blue chips this morning, as is a detailed plan provided by the White House yesterday to reopen US businesses.
The plan comes in phases that will see the most vulnerable population remain at home while the less vulnerable workers return to work. Companies will be allowed to restart initially at 25%-40% of their capacity and then gradually increase the level of their operations. Trump’s advisors did not provide a clear time line on the reopening but said that the schedule will be left to each individual governor who will base it on the stage of the pandemic in each state.
In London some of the companies that have been worst hit by the pandemic came bouncing back such as cruise operator Carnival, betting chain Flutter, hotels and airlines with rallies of between 7% and 10%.
Rio update lifts miners
Mining companies also traded higher, helped by global miner Rio Tinto announcing that orders from China not only returned to normal but were also showing an 5% increase compared to a year ago. Rio’s data and the subsequent share move also explains why markets shrugged off news that China’s economy contracted by almost 7% in the first quarter, news that would have normally sent the market into a tail spin.
If after only two to three months after the worst of the pandemic in China, the relatively quick recovery in Chinese industrial production after the coronavirus indicates that the demand for Western goods in China is unlikely to be more sustained and closer to normal levels in 2H.