By Barbara Kollmeyer, MarketWatch
AFP via Getty Images
Hopes for more stimulus were a big driver behind gains for London stocks on Friday, allowing investors to ignore a record number of COVID-19 outbreaks across several U.S. states. Shares of Tesco shook off earlier losses to trade higher after results.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -2.51% jumped 1.5% to 6,230. For the week, the index is down 1%. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2054% dropped 0.4% to $1.2730.
London stocks added to a stronger opening after Chancellor of the Exchequer Rishi Sunak was interviewed on Bloomberg Television earlier on Friday.
“When pressed on stimulus, Rishi Sunak said that he ‘will be outlining further things in the coming weeks.’ If hardly a rousing statement of intent, it was still enough of a hint to allow the FTSE to double down on its early growth,” said Connor Campbell, financial analyst at Spreadex, in a note to clients.
Several major sectors were leading the gains, with consumer products, drug groups and tobacco companies. Shares of GlaxoSmithKline /zigman2/quotes/209463850/composite GSK +0.47% rose 1%, shares of Unilever /zigman2/quotes/205449809/delayed UK:ULVR -1.80% /zigman2/quotes/204685760/composite UL +1.19% rose 1% and Reckett Benckiser Group rose 1.7%.
Shares of Tesco /zigman2/quotes/203761082/delayed UK:TSCO -1.80% rose 1% after the grocer said like-for-like sales growth expanded 7.9% in the first quarter of fiscal 2021, and warned of a significant operating loss from its Tesco Bank unit, due to a rise in provisions for potential bad debts.
Away from the main index, shares of Intu Properties plunged 54% and shares were halted.
“With the expiry on a debt covenant waiver expiring at midnight and little sign of an agreement being reached with its lenders, calling in the administrators looks an inevitable next step,” said AJ Bell investment director Russ Mould, in a note clients. “A shift to online shopping has hit rental income and valuations at its out-of-town shopping malls and COVID-19 has clearly had a devastating impact.”
Bell said the business went into too much debt buying assets at the wrong time, and was unlikely to see a white knight rescue.
Related real estate shares were also hit, with shares of Hammerson /zigman2/quotes/206876822/delayed UK:HMSO -0.44% down 14% and LXI Reit /zigman2/quotes/203623278/delayed UK:LXI -1.47% dropping 2.5%.