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(Alliance News) - Rising Covid-19 cases remained the focus for markets on Wednesday, as hopes for a US economic stimulus package before next week's presidential election evaporated.
"A national lockdown, as we have seen in Q2, ravages an economy and would add significant complications to the ongoing economic recovery," commented Gain Capital analyst Fiona Cincotta. "Whilst Germany and France are considering a lighter version than the lockdown seen in March, tighter lockdown restrictions have already resulted in business activity in the eurozone contracting. Tougher measures would deepen this contraction further, particularly in the service sector."
Still ahead this week are earnings from Royal Dutch Shell and UK banks Lloyds and Standard Chartered on Thursday, together with a policy announcement by the European Central Bank. NatWest follows with third-quarter earnings on Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.4% at 24,650.65
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Hang Seng: closed down 0.3% at 24,712.08
Nikkei 225: closed down 0.3% at 23,418.51
DJIA: closed down 222.19 points, 0.8%, at 27,463.19
S&P 500: closed down 0.3% at 3,390.68
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GBP: down at USD1.3047 (USD1.3067)
EUR: down at USD1.1774 (USD1.1830)
Gold: soft at USD1,907.18 per ounce (USD1,908.04)
Oil (Brent): down at USD40.26 a barrel (USD41.20)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
1100 GMT Ireland retail sales index
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US advance US international trade in goods
1030 EDT US EIA weekly petroleum status report
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Champagne corks popped in Australia's second-biggest city as a months-long coronavirus lockdown ended on Wednesday, contrasting with deepening gloom in Europe where France and Germany were set to reintroduce curbs, AFP reports. The pandemic has unleashed vast devastation across the global economy and in the absence of a vaccine or effective treatment, countries are being forced to impose widely unpopular Covid-19 restrictions that have sparked violent clashes in Italy. Much of the US – the worst-hit nation in the world – is also bracing for a tough winter, but there was exhilaration and relief in Melbourne as its five million people were able to return to shops and restaurants after months at home. Australia's control of its outbreak stood in stark contrast to the surging virus in Europe, with Germany regularly reporting 10,000 new infections every day, daily cases in France topping 50,000, and hospitals in Belgium nearing capacity.
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German Chancellor Angela Merkel is expected to push for lockdown measures in crisis talks with the country's regional leaders Wednesday. The proposed new restrictions include closing restaurants and bars and putting strict limits on private and public gatherings while keeping schools, daycares and shops open, according to the Bild daily.
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Media reports in France said President Emmanuel Macron may extend the hours of an existing curfew, with possibly a full lockdown on weekends, or order targeted lockdowns in the hardest-hit regions.
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South African President Cyril Ramaphosa has begun a period of self-quarantine following the positive Covid-19 diagnosis of a guest at a dinner on Saturday last week, the government said on Wednesday. The president attended a fundraising dinner of the Adopt-a-School Foundation, which is a partner entity of the Cyril Ramaphosa Foundation. The event for 35 guests was held at a Johannesburg hotel. The event adhered stringently to Covid-19 protocols and directives on screening, social distancing and the wearing of masks, the government highlighted. The president is showing no symptoms at this time and will, in line with Covid-19 health advice, be tested should symptoms manifest, it said.
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US President Donald Trump said Tuesday that Republicans will approve a pandemic rescue package for the US economy after the November 3 election, seeming to concede defeat on efforts to reach a deal this week. He also improbably predicted Republicans would regain control of the lower house of Congress, and blamed House Speaker Nancy Pelosi for the impasse in talks over steps to help counteract the devastating impact that the health crisis has had on households and businesses. "She's not interested in helping the people," Trump told reporters at the White House. "But after the election we will get the best stimulus package you've ever seen because I think we're going to take back the House," said Trump, who is trailing well behind former vice president Joe Biden in the polls. After months of negotiations between Pelosi and US Treasury Secretary Steven Mnuchin, and despite signs of recent progress, there appears to be no time left to get the deal approved before Trump and Biden go before voters next Tuesday.
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BROKER RATING CHANGES
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DZ BANK RAISES BP TO 'BUY' (HOLD) - FAIR VALUE 280 PENCE
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CREDIT SUISSE CUTS AVEVA TO 'NEUTRAL' ('OUTPERFORM') - TARGET 4800 (4700) PENCE
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RBC RAISES DCC TO 'OUTPERFORM' ('SECTOR PERFORM') - TARGET 7400 PENCE
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COMPANIES - FTSE 100
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Next said full price sales in the third quarter were better than it had anticipated and were up 2.8% against the same time last year. Total sales, including markdown sales, were up 1.4%. The retailer said sales performance by product category remains "very similar to the second quarter", with Home and Childrenswear over-performing while demand for men's and women's formal and occasion clothing remains weak. Further, Next said online sales remain strong, both in the UK and overseas. In the Retail unit, out of town retail parks continue to perform better than high streets and shopping centres, due to the pandemic. As such, Next forecasts annual pretax profit to come in at GBP365 million, higher than the GBP300 million guided with its interim results in September. In financial 2020, Next posted pretax profit of GBP748.5 million.
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Land Securities said it has appointed Vanessa Simms as its new chief financial officer to replace Martin Greenslade who announced his departure last month. Simms is currently CFO at FTSE 250-listed residential landlord Grainger and is expected to join LandSec by no later than June 1 next year. She has previously held senior positions at student accommodation provider Unite Group and warehouse investor SEGRO. Grainger said the search for Simms's replacement is underway.
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French pharmaceutical company Sanofi and UK peer GlaxoSmithKline have agreed to make available 200 million doses of their Covid-19 vaccine to the Covax facility, the companies announced. The Covax facility is a global risk-sharing mechanism for pooled procurement and equitable distribution of eventual Covid-19 vaccines. Sanofi and GSK intend to make available their adjuvanted recombinant protein-based Covid-19 vaccine, if approved by regulatory authorities and subject to contract. Sanofi and Glaxo had initiated a phase 1/2 study for the Covid vaccine in September with a total of 440 subjects enrolled. First results from the study are expected in early December, to support the initiation of a phase 3 study before the end of the year.
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COMPANIES - FTSE 250
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Aston Martin Lagonda confirmed it raised gross proceeds of GBP125 million from its capital raise, issuing 250 million shares at 50 pence each. Aston Martin shares closed 4.5% higher at 54.50p each in London on Tuesday. The luxury carmaker late Tuesday unveiled plans for a bumper fundraising and an expanded technical pact with trade investor Mercedes-AMG. The expected lower start for equities comes as European leaders are being forced to revert to strict, economically damaging measures to control the spread of Covid-19 amid a spike in deaths and new cases.
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COMPANIES - OTHER
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Almost half of John Lewis's flagship store on London's Oxford Street could be turned into office space as the retailer tries to stem its coronavirus losses and return to profit. The John Lewis Partnership, which runs the department store chain and the Waitrose grocery arm, secured conditional planning permission from Westminster City Council on Tuesday evening. The unanimous decision by the council's planning sub-committee, made on the basis of exceptional circumstances, could see up to 28,135 square metres of the shop floor converted to offices – or 45%. The company – already struggling in a rapidly evolving retail environment – has been hard hit by the pandemic and announced earlier this month it wants to save GBP300 million each year by 2022. It saw a GBP635 million pre-tax loss for the first six months to July following a GBP470 million write down on its stores.
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COMPANIES - GLOBAL
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Deutsche Bank boasted of the effectiveness of its turnaround plan, as the lender surged to a profit in the third quarter. In the three months to September 30, the German bank improved to a EUR482 million pretax profit from a EUR687 million loss a year before. Deutsche's total net revenue grew 13% year on year to EUR5.94 billion from EUR5.26 billion. The firm's Corporate Bank saw revenue slip 5% to EUR1.25 billion, while Private Bank revenue was flat at EUR2.03 billion. This was offset by Investment Bank revenue surging 43% to EUR2.37 billion, with the Asset Management unit seeing 4% growth to EUR563 million. Chief Executive Christian Sewing said the bank's third quarter was "well ahead" of internal plans.
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Wednesday's Shareholder Meetings
Petra Diamonds Ltd - AGM
Zoetic International PLC - AGM
Ideagen PLC - AGM
Redde Northgate PLC - AGM
Watchstone Group PLC - GM re Ingenie disposal
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
