These stocks are behind market’s surge to an 11-week high

Stocks hit hardest by the recession are back in favour on hopes that businesses will reopen again soon.

Cineworld (LSE:CINE) and pub chains Marston's (LSE:MARS) and Mitchells & Butlers (LSE:MAB) powered the FTSE 250 index higher today amid growing optimism over when they will be able to resume trading.

The cinema operator told investors it expects all its locations in Europe and the US to be open in July, while an earlier-than-expected reopening of pubs, restaurants and clubs in the UK now looks possible if current advice for people to keep two metres apart is reduced.

The FTSE 250 index surged 1% to its highest level since 11 March, with Marston's up 11%, Mitchells 4% higher and JD Wetherspoon (LSE:JDW) 6% stronger to continue the recovery seen in the pubs and leisure sector since the middle of May.

The continued focus on the easing of Covid-19 lockdown restrictions also benefited retailers, with Greggs (LSE:GRG) up 7%, Sports Direct owner Frasers Group (LSE:FRAS) ahead 9% and WH Smith (LSE:SMWH) 4% higher. Struggling fashion brand Ted Baker (LSE:TED) joined in the rally, up 9%.

There was also a 15% jump for shares in workspace provider IWG (LSE:IWG) after it tapped investors for £320 million in a share placing priced at 239p and accounting for 15% of existing share capital. It plans to use the proceeds to take advantage of growth opportunities in its sector, particularly given that organisations are likely to seek greater office flexibility in the wake of Covid-19.

Founder Mark Dixon, who is CEO and the company's largest shareholder, participated in a fundraising that has also seen some of the new shares offered to retail investors.

IWG, which used to be known as Regus, added that occupancy rates held up well during April due to its contracted revenue model. However, the overall performance for the first four months of the year was still impacted by reduced ancillary services and lower new sales activity. 

Having bought shares at an 8% discount, investors were further rewarded today when the FTSE 250 stock surged as high as 320p. They had been as cheap as 114p in mid-March.

Source: TradingView. Past performance is not a guide to future performance.

Infrastructure group Costain (LSE:COST) has also been buoyed by the support of shareholders after it completed a £100 million equity raise last night. The move will give the company a stronger balance sheet to take advantage of opportunities in its target markets.

The company, which employs more than 3,000 people in sectors including rail, highways and energy, issued the new shares at a price of 60p. The stock was 17% higher today at 80.4p.

Cineworld was also looking to the future today after disclosing that it anticipates government restrictions related to cinemas will be lifted in each of its territories by July. Its film line-up for returning cinema-goers includes the new Chris Nolan movie Tenet and will be followed by Mulan, a new Disney adventure movie.

Its lenders remain supportive after agreeing to amend covenant terms, while the group has secured $110 million (£89.6 million) of additional liquidity through its revolving credit facility.

Shares briefly broke through the 100p barrier for the first time since mid-March before later settling 25% higher at 96p. They had been trading at more than 300p last year.

The UK's only quoted cinema business is the second-largest operator in the world by number of screens, with outlets in 10 countries including the United States.

Among other FTSE 250 index stocks showing signs of recovery, Bodycote (LSE:BOY) rose 8% to 637p after the heat treatment specialist said ongoing restructuring and cost reduction actions should mean it trades profitably through the current industrial downturn.

The company, which reported a 30% drop in constant currency revenues for April, added that it will “emerge stronger” as end markets recover. Bodycote shares ended 2019 strongly, only to be undone by the global lockdowns affecting key aerospace and automotive industries.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.