Barclays Share News (BARC)

(Alliance News) - The week's risk-on mood persisted in Europe on Wednesday as France and Spain unveiled plans to slowly lift their Covid-19 lockdowns over the coming weeks.

Leading the FTSE 100 higher were banks Standard Chartered and Barclays following their respective first-quarter results. International Consolidated Airlines was bringing up the rear of the blue-chips after late Tuesday saying it turned to loss in the first quarter of the year and will lay off a huge number of staff.

The FTSE 100 index was up 12.64 points, or 0.2%, at 5,971.14 early Wednesday. The mid-cap FTSE 250 index was up 73.85 points, or 0.5%, at 16,365.43. The AIM All-Share index was down 0.1% at 804.25.

The Cboe UK 100 index was up 0.3% at 10,103.19. The Cboe 250 was up 0.7% at 14,130.94, and the Cboe UK Small Companies down 0.1% at 8,952.46.

In mainland Europe, the CAC 40 in Paris was up 0.4%, while the DAX 30 in Frankfurt was up 0.5% early Wednesday.

The US on Tuesday recorded its one-millionth coronavirus case as countries including Spain, Russia and Nigeria took tentative steps back towards normal life by preparing to reopen some businesses.

France said Tuesday that shops, markets and selected schools could reopen next month, with face masks required on public transport and work-from-home orders staying in place for several more weeks. Spain said restrictions would be slowly lifted over the next two months, while Italians will be able to exercise outdoors and visit relatives from next week – but only if they wear masks and refrain from hugs and handshakes.

Italy, Spain and France have been the worst affected countries in Europe, with each reporting more than 23,000 deaths.

The US – where millions of jobs have gone – reached another grim milestone as it registered 58,351 deaths.

Sterling was quoted at USD1.2471 early Wednesday, higher than USD1.2436 at the London equities close on Tuesday.

The euro traded at USD1.0863 early Wednesday, up against USD1.0834 late Tuesday. Against the yen, the dollar was quoted at JPY106.52, soft on JPY106.89.

Gold was quoted at USD1,708.70 an ounce early Wednesday, higher than USD1,701.40 on Tuesday. Brent oil rose to USD21.32 a barrel early Wednesday from USD19.98.

In China, the Shanghai Composite index closed up 0.3%, while the Hang Seng index in Hong Kong is up 0.1% in late trade. Markets in Japan are closed for Showa Day.

At the top of the FTSE 100 was Standard Chartered, up 5.8%. The lender reported a sharp drop in first quarter profit - due to rising credit impairments - but has vowed to come through the Covid-19 pandemic "with strength".

In the three months to March 31, the Asia-focused bank's pretax profit plunged 29% to USD886 million from USD1.24 billion in the same period a year before. Credit impairments in the first quarter jumped to USD956 million from just USD78 million in the first quarter of 2019.

StanChart expects a "gradual recovery" from Covid-19 - with a "major" contraction in economic growth rates across most of the world in the second quarter, before the global economy moves out of recession in the latter part of 2020.

Barclays was in second place among FTSE 100 gainers, up 5.5% after a sharp drop in first quarter profit as the UK bank was forced to dramatically increase its credit impairments to handle the Covid-19 pandemic.

Barclays also noted it will decide on future dividends and its capital returns policy at the end 2020, following the cancellation of its shareholder payouts following guidance from regulators in the UK.

In the three months to March 31, Barclays recorded pretax profit of GBP913 million, 38% lower than the GBP1.48 billion seen in the first quarter of 2019. Credit impairments in the quarter jumped to GBP2.12 billion from GBP448 million the year before.

WPP was up 1.4% after the advertising and marketing firm had a good performance to February, with the impact of Covid-19 in March as expected.

First-quarter revenue from continuing operations was down 4.9% to GBP2.8 billion, with like-for-like sales down 3.8%. Like-for-like revenue less pass-through costs was down 3.3% with the impact of Covid-19 "felt more strongly in March" with a fall of 7.9%, as expected.

Encouragingly, the advertising firm said it won USD1 billion in net new business in the first quarter, and there has been a "rapid" recovery in Chinese economic activity, with offices back to 90% occupancy.

"We expect the impact of Covid-19 on our business to increase in the short term, but it is not possible to quantify the depth or duration of the impact. We are nonetheless confident that, through our scenario planning, we are well positioned to take further action if the downturn is prolonged and to respond positively when the market picks up," said WPP.

Towards the other end of the index was Next, down 1.4% after the clothing retailer said its finances remain secure, though the drop off in sales to date has been "faster and steeper" than anticipated in its March stress test.

In the year to April 25, full price retail sales slumped 52% while online sales were down 32%, with total full price sales, including interest income, down 38%.

Even with full year full price sales down 40%, Next said it can operate "comfortably" within its cash resources, achieve positive Ebitda and end the year with less net financial debt than at the end of last year.

The fashion chain is now modelling lower sales for both the first and second half of the year, though it thinks it can achieve higher cost savings and stock cancellations than originally planned.

Next said it has increased cash resources through asset sales and the suspension of its share buyback and dividend. It has also agreed with banks to waive financial covenants on its revolving credit facility for the coming year, and has secured additional borrowing facilities through the UK government's Covid Corporate Financing Facility. Next thinks it is unlikely it will needed to draw on these additional funds, it added.

The worst performer in the FTSE 100 was International Consolidated Airlines, down 7.4% after late Tuesday saying it expects to swing to a first-quarter loss and may cut up to 12,000 jobs at British Airways.

IAG, which owns BA alongside airlines in Ireland and Spain, warned it will take several years for passenger demand to return to pre-virus crisis levels, and in turn, the UK flag carrier is "formally notifying its trade unions about a proposed restructuring and redundancy programme".

In a brief update ahead of a larger first-quarter statement in May, IAG said revenue in the period to March 31 fell 13% to EUR4.6 billion from EUR5.3 billion a year ago.

IAG said it swung to a loss. Its operating result before exceptional items was a EUR535 million loss from a profit of EUR135 million.

In the FTSE 250, Hiscox was down 5.0%. The insurer, noting press reports, confirmed it is mulling a possible equity raise.

Hiscox said it believes it has sufficient capital to meet expected liabilities as a result of exposures related to the pandemic and it expects "hardening" rates across the US wholesale and reinsurance markets.

While its liquidity position remains "robust," it is evaluating "possible sources of capital to respond in an appropriate way to these market dynamics", including raising new equity.

"No decision has been made on whether to proceed with a capital raise or with regards to the timing or size of any such capital raise," said Hiscox.

To come on Wednesday are GlaxoSmithKline's first quarter results at midday.

The economic calendar on Wednesday has eurozone consumer confidence at 1000 BST, German inflation at 1300 BST and US gross domestic product at 1330 BST.

Commenting on the upcoming US GDP reading, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "A consensus of analyst expectations pencil in a 4% contraction, but even this figure could fall short of expectations. More importantly, the next quarter will likely print an uglier number."

At 1900 BST is an interest rate decision from the US Federal Reserve, followed by a press conference with Fed Chair Jerome Powell at 1930 BST.

From a policy standpoint, no change is expected given the Fed has already slashed the federal funds rate to a range of 0.00% to 0.25% while also launching a number of initiatives to support credit to businesses as well as local governments.

"The chances are we won't see fireworks from the FOMC meeting today; the Fed will likely sit on its hands, as it has already slashed interest rates to near zero levels, and done all it could to maintain a smooth liquidity in the short-term money markets. And it seems like it has been working smoothly so far," said Ozkardeskaya.

By Lucy Heming; lucyheming@alliancenews.com

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