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(Alliance News) - The UK economy shrank in November, as new restrictions were imposed on much of the country to slow the spread of Covid-19, the Office for National Statistics said on Friday.
On a monthly basis, the UK gross domestic product shrank 2.6% in November after posting 0.6% growth in October, as restrictions were in place to varying degrees across all four nations of the UK during November.
Still, the latest GDP reading was better than the market expectation, cited by FXStreet, for a 5.7% contraction.
UK industrial production fell 4.7% on an annual basis in November, following a 5.5% decline in October. The reading missed market consensus, cited by FXStreet, for a 4.2% drop.
UK manufacturing production decreased 3.8% year-on-year in November, while the October decline was revised to 6.1% from 7.1%. The November print beat market consensus for 4.8% fall.
"The economy has built up a fair bit of immunity to lockdowns, as November’s second lockdown was much less painful for the economy than the first," commented Paul Dales, chief UK economist at Capital Economics, adding: "This means a double-dip recession will probably now be avoided and although the third lockdown in January will take GDP a bit lower, the COVID-19 economic hole is much smaller than we had feared. And vaccines should allow the economy to start climbing out of it rapidly in the second half of the year."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 0.4% at 6,775.20
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Hang Seng: up 0.4% at 28,614.75
Nikkei 225: closed down 0.6% at 28,519.18
DJIA: closed down 68.95 points, or 0.2%, at 30,991.52
S&P 500: closed down 0.4% at 3,795.54
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GBP: down at USD1.3668 (USD1.3681)
EUR: unchanged at USD1.2145
Gold: up at USD1,851.45 per ounce (USD1,847.36)
Oil (Brent): steady at USD55.70 a barrel (USD55.69)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1100 GMT Ireland goods exports and imports
1100 CET EU foreign trade
0830 EST US producer price index
0915 EST US industrial production & capacity utilization
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Travellers from across South America have been banned from entering the UK amid growing concerns about a mutant coronavirus strain which has emerged in Brazil. The ban which, also covers the Central American state of Panama and Portugal – due to its strong travel links with Brazil – and the former Portuguese colony of Cape Verde, comes into force at 4am on Friday. Scientists analysing the Brazilian variant believe the mutations it shares with the new South African strain seem to be associated with a rapid increase in cases in locations where there have already been large outbreaks of the disease. Transport Secretary Grant Shapps described the ban as a "precautionary" move to ensure the vaccination programme rolling out across the UK was not disrupted by new variants of the virus.
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Pub, restaurant and bar sales plummeted by almost three quarters in December as escalating restrictions made it a "dreadful" Christmas for hospitality firms. The Coffer Peach business tracker of sales across hospitality groups revealed that total sales dived by 73% over the festive period, typically the sector's busiest time of the year. The figures – which are compiled by consultancy CGA, industry advisers The Coffer Group and finance firm RSM – showed that bars were particularly hard hit by restrictions which thwarted Christmas parties and large gatherings. Sales in bars dived by 87% against the same period last year. Drink-led pubs were also heavily impacted by restrictions, with sales plunging by 84%. Food-led pubs reported a 78% sales slump for the period, while restaurant groups were the most resilient as sales fell by 58%.
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BROKER RATING CHANGES
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DEUTSCHE BANK REINITIATES ASTRAZENECA WITH 'BUY' - PRICE TARGET 10,000 PENCE
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DEUTSCHE BANK REINITIATES GLAXOSMITHKLINE WITH 'HOLD' - PRICE TARGET 1,400 PENCE
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JPMORGAN RESUMES TESCO WITH 'OVERWEIGHT' - TARGET 300 PENCE
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COMPANIES - FTSE 100
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Aveva Group said it saw a positive performance in for the three months ended December 31. The industrial software company said organic constant currency revenue growth in the period was over 26%. This was driven by a significant number of scheduled subscription renewals, including a large three-year contract renewal in the Food sector, it noted. Aveva said contract renewals helped improve revenue growth to 1.5% in the nine months to December 31 on an organic constant currency basis. On the same basis, recurring revenue grew by 10%, taking it to 68% of overall revenue in the period. "The board remains confident in the full year outlook for AVEVA. Notwithstanding the disruption seen to the trading environment in 2020, the trend towards the digitalisation of the industrial world is strong and the board remains excited about the significant growth opportunities ahead," the company said.
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British American Tobacco said it has been informed by the UK Serious Fraud Office that the UK regulator has discontinued the investigation of suspicions of corruption by the company. The SFO had opened a formal investigation in 2017 into possible misconduct by the Dunhill cigarette maker in Africa. BAT said it was is pleased that the SFO has closed its investigation, and that the SFO is taking no further action on the matter.
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The UK's highest court will rule on a landmark GBP1.2 billion legal battle over businesses' ability to claim on insurance for coronavirus-related disruption. The Financial Conduct Authority last year brought a test case, which could affect around 370,000 businesses, over the wording of business interruption insurance policies, which some insurers - including London-listed Hiscox and RSA Insurance Group - argued did not cover the Covid-19 pandemic. In September, the High Court ruled on several "lead" insurance policies issued by eight separate insurers largely in favour of the FCA, which welcomed the judgment as "a significant step in resolving the uncertainty being faced by policyholders". The regulator, however, argued the judgment "paved the way for many insurance policies to pay indemnities on Covid-19 business interruption claims", but also "took something away with one hand after giving more substantially and in detail with the other". Six of the insurers – Arch, Argenta, Hiscox, MS Amlin, QBE and RSA – also appealed against aspects of the High Court's ruling, as did the Hiscox Action Group, which represents around 400 businesses insured by Hiscox.
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Lidl has narrowly beaten Aldi to be named the cheapest supermarket of 2020, according to Which? analysis. The consumer group tracked the price of 45 popular products in eight major supermarkets for at least 100 days between January and December 2020. Which? said this is the first time it has included Lidl and Aldi in its annual study – which now includes own-label items as well as branded ones. Lidl was the cheapest supermarket in the study, with the basket costing GBP42.67 on average. Just 34p put Lidl ahead of its discount chain rival Aldi, with the latter's basket of items costing GBP43.01 on average. Asda was the third-cheapest supermarket with the same basket of items costing GBP48.71 on average – a difference of more than GBP5 when compared with Aldi or Lidl. Waitrose was the most expensive supermarket in the study. Ocado Group was the second most expensive supermarket in the study, with its basket costing GBP66.83, while J Sainsbury was the third-priciest retailer.
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COMPANIES - FTSE 250
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Indivior raised its 2020 revenue guidance to a range between USD645 million and GBP650 million from a previous guided range of USD595 million to GBP620 million. In addition, Indivior lifted its 2020 net revenue guidance for Sublocade to USD128 million to GBP130 million from USD120 million to GBP125 million. Sublocade, a treatment for opioid addiction, has seen benefits from modest stocking activity in the US in the fourth quarter, the company said. As such, Indivior expects to deliver adjusted pretax profit ahead of its previous expectations.
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COMPANIES - GLOBAL
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Shares in Xiaomi fell 11% in Hong Kong on Friday after the US blacklisted the smartphone giant and a host of other Chinese firms as the Trump administration aims to cement its trade war legacy against Beijing. With just six days to go before Trump leaves office, US officials made a series of announcements targeting Chinese firms including state oil giant CNOOC, Xiaomi and social media favourite TikTok. Xiaomi – which overtook Apple last year to become the world's third-largest smartphone manufacturer – was one of nine new firms classified by the Pentagon as "Communist Chinese military companies". The action means US investors will be unable to purchase Xiaomi securities and will ultimately have to divest down the line unless the order is overturned by the incoming presidency of Joe Biden. US chip maker Qualcomm is a major investor in Xiaomi.
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Goldman Sachs is considering making acquisition to enlarge its Marcus consumer banking unit, Reuters reported. Citing "three bank sources", Reuters said Goldman is mulling bulking up the unit after the Covid-19 pandemic restricted loan and deposit growth in 2020. Goldman is most attracted to the digital banking market, Reuters added, with executives ruling out any buys that will require it to acquire new high-street branches. Goldman reports on its fourth-quarter results on Monday. Before that, Citigroup, JPMorgan Chase, and Wells Fargo kick off the Wall Street banking earnings season on Friday.
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Friday's Shareholder Meetings
Marwyn Value Investors Ltd - EGM re distribution policy
Zenith Energy Ltd - AGM
Summerway Capital PLC - GM re new investing policy, authority to allot shares
Katoro Gold PLC - GM re approval to issue placing shares
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By Tom Waite; thomaslwaite@alliancenews.com
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