UPDATE: U.K. stocks close higher as gold miners surge and William Hill's U.S. expansion impresses
By Callum Keown
U.K. stocks climbed on Wednesday, as the gold price rally boosted London-listed precious-metals miners and gambling group William Hill impressed investors with its U.S. growth.
Mounting global risks, including rising coronavirus cases and escalating tensions between the U.S. and China (https://www.marketwatch.com/story/us-chinese-officials-to-meet-aug-15-to-assess-trade-deal-compliance-2020-08-04?mod=article_inline), helped gold futures rally above $2,050 per ounce to fresh record highs.
Despite investors rushing to the safe haven asset amid uncertainty, global equities also made gains on Wednesday as positive corporate earnings and encouraging signs of an economic recovery offered hope.
The FTSE 100 closed 1.1% higher, while the FTSE 250 index was 1.9% higher, outperforming other major European indexes.
The U.K. services sector returned to growth in July as activity grew at its fastest pace since 2015. Economic data in Europe (https://www.marketwatch.com/story/european-stocks-rise-on-strong-earnings-but-mounting-risks-keep-gold-climbing-above-2-000-11596619904) also buoyed investors, adding to the upbeat mood. Eurozone retail sales returned to precrisis levels in June, while business activity in the bloc returned to growth in July, but slightly below economists' expectations.
Despite the tentatively positive data, rising coronavirus cases around the world and escalating tensions between the U.S. and China over video-sharing app TikTok created enough uncertainty for gold prices to surge. Gold futures reached $2,056 per ounce, while spot gold was trading around $2,038 at the European close. The gold price rally (https://www.marketwatch.com/story/gold-prices-edge-higher-but-march-to-2000-hamstrung-by-rising-dollar-2020-08-04) boosted mining stocks, including precious-metals miners Fresnillo and Polymetal International , which were among the FTSE 100's biggest risers. Gold miners Centamin and Hochschild Mining also helped the FTSE 250 higher.
William Hill stock climbed 9%, despite the betting and gambling group reporting a GBP14.2 million pretax loss (https://www.marketwatch.com/story/william-hill-to-close-119-shops-as-profit-falls-2020-08-05?mod=mw_latestnews) in the first half of the year as COVID-19 canceled sporting events and forced stores to close. It said 119 of its shops wouldn't reopen.
However, international online revenue surged 17%, and the company's market share in the U.S. rose to 29% after its partner Eldorado completed the acquisition of Caesars. The U.K.-listed company has looked to capitalize on a boom in the U.S (https://www.marketwatch.com/story/the-5-stocks-set-to-soar-from-the-us-sports-betting-boom-2019-07-19). ever since the Supreme Court relaxed a federal law banning sports betting in May 2018.
Metro Bank shares dropped 6.7%, as the British challenger bank swung to a GBP241 million ($314 million) loss in the first half of the year when it took a GBP109 million hit from the COVID-19 pandemic.
Airlines gained substantial ground as renewed optimism swept through the sector. Budget carrier easyJet said on Tuesday it was adding more flights to reflect the increased demand for summer holidays (https://www.marketwatch.com/story/easyjet-expects-september-quarter-loss-to-narrow-2020-08-04). The upbeat mood continued into Wednesday, with British Airways owner IAG rising 10%
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(END) Dow Jones Newswires
August 05, 2020 12:17 ET (16:17 GMT)
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