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(Alliance News) - Stocks in London are set to open slightly higher on Thursday though with markets remaining cautious in a week that has seen the IMF warn of the worst economic downturn in a century and major US bank earnings hit by Covid-19.
Focus lies on US initial jobless claims later in the day, with around 16.8 million Americans having claimed for unemployment in the last three weeks alone.
In early UK company news, easyJet said it anticipated a narrowed interim loss amid a good performance prior to the intensification of the virus pandemic across Europe, while Informa announced a share placing, and Dunelm said it has seen healthy demand for online orders.
IG says futures indicate the FTSE 100 index of large-caps to open 41.8 points higher at 5,634.00 on Thursday. The FTSE 100 index closed down 193.66 points, or 3.3%, at 5,597.65 on Wednesday.
"It was a painful day for equities yesterday as traders started to contemplate the potential economic fallout of the pandemic...The souring of sentiment comes at a time when some European countries are taking baby steps towards easing the restrictions," observed David Madden at CMC Markets.
"A tiny percentage of businesses in Italy, Spain and Austria have reopened, and it is possible that some might reopen in Germany as early as next week," Madden continued. "Even though the actions are positive, they failed to stem the selling pressure. In recent weeks dealers have been preoccupied with rescue packages and health stats, but now it seems they are bracing themselves for a rough economic ride ahead of them."
Around the world, the total number of Covid-19 cases soared past two million, according to an AFP tally, and the death toll topped 134,000, according to Johns Hopkins University.
US President Donald Trump said he will announce Thursday the first plans for lifting coronavirus lockdowns across the US after the country passed the pandemic's "peak", mirroring a gradual easing in Europe.
His comments came shortly before the number of US fatalities – already the world's highest – reached a new daily record and became the heaviest one-day death toll of any nation.
Earlier, Germany also unveiled its plans for cautious reopening, becoming the first major European nation to take on the delicate task of restarting its economy without triggering a new wave of infections before a vaccine can be developed. However, Spanish Prime Minister Pedro Sanchez, who has allowed work to restart in some factories and building sites, warned that "nothing will be the same until a vaccine is found".
In the UK, the coronavirus lockdown will be extended for another three weeks, the government is expected to announce, amid renewed warnings that it is still too soon to start easing the restrictions.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average ending down 1.9%, the S&P 500 down 2.2% and Nasdaq Composite down 1.4%.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.3%. In China, the Shanghai Composite is up 0.3%, while the Hang Seng index in Hong Kong is down 0.6%. ÂÂ
In early UK company news, easyJet said its first-half performance was strong prior to Covid-19 disruption, with the airline anticipating a narrowed interim loss.
The low-cost airline said it expects to post a headline pretax loss between GBP185 million to GBP205 million for the six months to March 31, which would be improved on a loss of GBP275 million a year ago.
easyJet's fleet was fully grounded on March 30.
Revenue for the period was up 1.6% to GBP2.38 billion, with seat capacity down 7.6%. Airline revenue per seat at constant currency is expected to have increased by 10%, continuing the strong momentum seen in the first quarter.
"Decisive cost actions, deferring the purchase of 24 new aircraft and the raising of significant new finance ensure that easyJet has sufficient liquidity to endure a lengthy fleet grounding," easyJet highlighted.
There can be no certainty as to when commercial flights will restart. easyJet said it is working through different demand scenarios for re-starting flying, which could be done with as little as two weeks' notice.
Amid a tussle with easyJet's founder and biggest shareholder Stelios Haji-Ioannou regarding a multiple plane purchase from Airbus, easyJet noted that it has no ability to terminate its contract by force majeure and the level of direct OEM support for the operation of its existing fleet would "increase in cost significantly" if it did attempt to cancel the deal.
Given continued uncertainty, easyJet said it is not possible to provide guidance for the remainder of its financial year.
"However we continue to take every step necessary to reduce cost, conserve cash burn, enhance liquidity, protect the business and ensure it is best positioned for a return to flying," said easyJet.
Events and publishing firm Informa noted the Covid-19 pandemic has become "progressively deeper and more far-reaching" than first predicted.
The impact on its events-related business has "intensified significantly" since the initial disruption early in the first quarter in mainland China, with no events of any scale scheduled to take place in April.
This reduced level of activity is now expected to stretch through the second quarter and much of the third quarter, with a gradual and phased recovery from the third quarter into the final three months of the year.
"As the scale and reach of the Covid-19 pandemic started to become clear, the group moved quickly on the first stage of the postponement programme, using its strong relationships with customers and venues to secure commercially relevant dates later in the year. Over GBP460 million of revenue has now been rescheduled, with a deliberately heavy weighting to the last four months of the year," said Informa.
The "anchor" of the group remains "the resilient and predictable" subscriptions-related businesses, which has continued to grow well.
In order to help Informa weather Covid-19, it has decided to temporarily suspend dividend payments, has completed its application for eligibility to issue commercial paper under the Bank of England's Covid Corporate Finance Facility, and is launching a share placing of up to 19.9% of new equity.
"Today's actions, including an equity placing with full participation from the group's PLC board and executive management team, provide stability and strength, ensuring the focus remains on our customers and building further long-term value for shareholders," said Chief Executive Stephen Carter.
Barratt Developments reiterated that all financial guidance has been suspended due to Covid-19.
Between March 23 and April 12, the housebuilder delivered 1,349 home completions. Its total forward sales are 12,376 homes, worth GBP2.89 billion.
"Our experienced board remains focused on taking the right actions and planning for the future, so that when appropriate to do so, we can re-start our sales centres, construction sites and offices safely and are well-placed to continue to deliver the high quality homes the country needs," said Barratt.
Ashmore said assets under management declined in the third quarter.
The emerging markets-focused asset manager said assets under management fell 22% to USD76.8 billion at the end of March from USD98.4 billion at the end of 2019. This reflected a negative investment performance of USD18.0 billion and net outflows of USD3.6 billion.
"Investment performance was negative in all investment themes as a result of the sharp, severe fall in global markets from mid-February. As investors sought to raise dollar liquidity by the widespread selling of risk assets, including in Emerging Markets, Ashmore's value-based strategies underperformed their benchmarks," Ashmore explained.
Homewares and soft furnishings retailer Dunelm said its online business is now fully operational, and it has received confirmation from the Bank of England that it is eligible to access funding under the Covid Corporate Financing Facility.
After a phased restart of its online business, it is now fully operational and Dunelm said it has been able to serve a "high level" of customer demand. Recent online order levels have been "significantly higher" than those seen prior to Covid-19.
Its physical stores remain closed, in line with government guidance. In preparation for re-opening, Dunelm is working on changes to store operations that will help ensure employee and customer safety.
On its financial position, Dunelm said it is eligible to access funding under the Covid Corporate Financing Facility.
"The board is confident that the group has access to sufficient liquidity, even in the event of a prolonged store closure period. Currently, we would only anticipate the need to issue paper under the CCFF scheme in the event that our stores remain closed for a period greater than six months," Dunelm said.
The economic events calendar on Thursday has US jobless claims at 1330 BST.
"Talking of fantastical jobs numbers, today's major focus will be on how many millions of US positions were lost when we see the latest round of initial claims. The consensus is another 5.5 million, another shocker, but so far each such consensus has been out by millions. If it is again today it will only underline the damage being wrought, which even a partial re-opening of the economy will not reverse," commented Rabobank.
Ahead of the data, sterling was quoted at USD1.2483 early Thursday, soft against USD1.2493 at the London equities close on Wednesday.
The euro traded at USD1.0882 early Thursday, lower than USD1.0903 late Wednesday. Against the yen, the dollar was quoted at JPY107.89 versus JPY107.51.
Gold was quoted at USD1,715.08 an ounce early Thursday, lower than USD1,720.22 on Wednesday. Brent oil was trading at USD27.84 a barrel early Thursday, flat on USD27.68 late Wednesday.
Oil prices have crashed as the coronavirus pandemic saps global demand, with the situation compounded by a supply glut resulting from a price war between OPEC cartel kingpin Saudi Arabia and non-OPEC rival Russia.
Adding to traders' worries, the International Energy Agency said Wednesday that 2020 was likely to be "the worst year in the history" of the sector.
By Lucy Heming; lucyheming@alliancenews.com
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