Property & Mortgages

Shares in Scottish Mortgage jump over 4 per cent as FTSE rebounds on China virus measures

Mortgage

Scottish Mortgage Trust shares jumped over 4 per cent as the FTSE 100 rebounded 1.6% on efforts by China to shore up its economy following a global coronavirus sell-off

Scottish Mortgage Trust (SMT) joined the stock market races today, with its shares jumping over 4% as the FTSE 100 rebounded 1.6% on efforts by China to shore up its economy after a global coronavirus sell-off.

Shares in the £8.7bn listed global fund, the UK’s biggest equity investment trust, gained 25p or 4.2% to 623p as it responded to the relief rally, prompted by China injecting 1.7 trillion yuan  (£187 billion) into its troubled markets, and a 15% surge in key holding Tesla.

Shares in the electric car company, which accounted for 6% of SMT, soared to $900 for the first time on Tuesday, having surged 21% yesterday.

A 40p rally in SMT shares this week has put the trust in positive territory for the year so far, though it has motored 15% in the past three months on the back of good results from its other top holdings, including Amazon.

Other investment trusts joined the equity charge too. JPMorgan Chinese (JMC) jumped nearly 7% or 23p to 357p and private equity fund ICG Enterprise (ICGT) leaped 6% or 56p to 980p.

However, there was bad news for Intu Properties (INTU). Shares in the shopping centre operator slumped 12% on completion of a disposal in Spain that has not reassured investors about its finances.

The FTSE 100 advanced 113.5 points to close at 7,440, its gain matched overseas by Wall Street where the S&P 500 traded 1.7% up at 3m304 and the tech-heavy Nasdaq spiked 2% to 9,458.

In Europe, France’s CAC 40 gained 1.8% to 5,935 and Germany’s Dax 30 hiked 1.8% to 13,281.

The revival in global markets came despite the death toll from the flu-like disease reaching 420 and Hong Kong registering the first confirmed death from the virus outside of mainland China. Sentiment was helped by the World Health Organisation stating that ‘currently we are not in a pandemic’

Neil Wilson, analyst at Markets.com, said there was a ‘broad return to risk-on across Asia as fears… eased back a touch and investors hunted on the bargain shelf’ as support from the central bank had ‘stabilised things’.

There are also ‘tentative signs of a plateauing in new cases that will be supportive of risk’, said Wilson.

BP (BP) edged ahead of SMT, rising 4.2%, or 19p, to 471p as outgoing chief executive Bob Dudley treated investors to a 2.4% rise in the dividend despite a 26% slide in fourth quarter profits.

Ferguson (FERG), previously known as Wolseley, rose 6.9% to £73.78 as the plumbing parts specialist announced a $500m buyback programme and plans to list in the US.

Liberum analyst Charlie Campbell said the buyback plan was ‘no surprise, but suggests a thin acquisition pipeline’.

Mid-cap stocks also rallied. The FTSE 250 was up 1.3% but shares in Micro Focus (MCRO) tumbled 22% to 766p as the software firm reported revenue and earnings below expectations.

The impact of macro-economic uncertainty is one thing, but potentially more worrying for the company is the reference to customers changing their buying behaviour, said Russ Mould, analyst at AJ Bell.

The price of oil lifted 0.6% to $55 a barrel, after an extended slide over the last two weeks, on hopes of agreement of a supply cut from the Opec cartel of oil-producing nations.

Oil demand in China has dropped significantly since the coronavirus outbreak, with BP stating demand from China had dropped by 1m barrels a day so far.

What initially was thought to be a temporary hit to the market now looks demand destruction proper, said Wilson.

‘This kind of oil demand shock has not been seen for over a decade. The longer the lockdown in China and travel restrictions globally the greater the impact. Opec and allies are worried.’

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