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(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Sanofi and GlaxoSmithKline have reached an agreement, subject to final contract, with the UK government for the supply of up to 60 million doses of a Covid-19 vaccine. The vaccine candidate - developed by Paris-based pharmaceutical company Sanofi in partnership with Brentford, England-based drugmaker GSK - is based on the recombinant protein-based technology used by Sanofi to produce an influenza vaccine, and GSK's pandemic adjuvant technology. Roger Connor, president of GSK Vaccines, said: "We believe that this adjuvanted vaccine candidate has the potential to play a significant role in overcoming the Covid-19 pandemic, both in the UK and around the world." Sanofi said it is leading the clinical development and registration of the Covid-19 vaccine and expects a phase 1/2 study to start in September, followed by a phase 3 study by the end of 2020. If the data are positive, regulatory approval could be achieved by the first half of 2021.
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Barclays reported a sharp drop in interim profit, as the lender was forced to up its credit impairment charges dramatically to deal the fallout of the Covid-19 pandemic. For the six months to June 30, Barclays pretax profit dropped 58% year on year to GBP1.27 billion from GBP3.01 billion. Total income improved 8% to GBP11.62 billion from GBP10.79 billion, but Barclays was forced to up its credit impairment charges to GBP3.74 billion from GBP928 million the year before. Barclays said the provision increase was largely due to "revised IFRS 9 scenarios" driven by Covid-19. The scenarios reflect "forecast deterioration in macroeconomic variables including a prolonged period of heightened UK and US unemployment, partially offset by the estimated impact of central bank, government and other support measures". As a result, net operating income sunk 20% to GBP7.88 billion from GBP9.86 billion.
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Next announced its second-quarter sales were "much better than expected" but still a far cry from last year's second quarter results. The FTSE 100-listed clothing retailer said its online warehouse picking and dispatch capacity returned to normal levels quicker than expected and UK and Ireland stores are now open for business. As a result, full price sales including interest income for the second quarter ended July 25 were were "significantly" ahead of expectations, down 28% compared to the year prior. Online sales were up 9%, while retail store sales were down 32% on a like-for-like basis. In the first half as a whole, sales were down 33% on a year before, with online sales down 11% and retail store sales down 62%. Next has modelled three new scenarios based on full price sales for the full year being down 18%, 26% and 33%. The company said the middle scenario is what is expected at this time assuming sales are down 19% in the second half. Next expects full year pretax profit to be GBP195 million, following the central scenario. This is a stark contrast to the GBP734 million expected in pretax profit in January earlier this year and the GBP748.5 million recorded in financial 2020.
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Anglo-Australian miner Rio Tinto said it put in a "resilient" performance in the first half of 2020 with revenue down marginally, and it increased its interim dividend. The FTSE 100 mining group with operations in 36 countries recorded a small drop in its revenue for the first six months to June 30 which was at USD19.36 billion, 6.6% from USD20.72 billion a year before. This was mainly due to lower prices and volumes for copper and lower aluminium prices, the company said. Pretax profit was up 1.7% at USD5.28 billion compared to last year's first half of USD5.19 billion. Rio Tinto's underlying earnings before interest, tax, depreciation and amortisation was down 5.6% at USD9.64 billion, from USD10.25 billion the year prior. Despite the marginal drop in revenue, Rio Tinto announced an interim dividend of 155 US cents per share, costing USD2.5 billion, and up 2.6% from last year's interim dividend of 151 US cents per share.
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MARKETS
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European stock markets "continued their consolidation on Wednesday, following an Asian trading session without clear direction", said Pierre Veyret, technical analyst at ActivTrades. "The current lack of market directionality is of course related to some profit taking moves but that's not the only factor. Between today's Fed statement, the recent resurgence of the coronavirus, national data and corporate earnings, market operators have a lot to digest this week," he said. The US Federal Reserve releases its latest policy decision at 1900 BST, and ahead of the central bank's announcement the dollar was softer. Wall Street was called for a higher, albeit cautious, start, with the Dow Jones seen teetering into the green and the S&P 500 up 0.1%, while the Nasdaq is set to rise 0.4%.
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FTSE 100: up 0.3% at 6,147.57
FTSE 250: down 0.3% at 17,235.66
AIM ALL-SHARE: up 0.1% at 892.24
GBP: higher at USD1.2968 (USD1.2930)
EUR: higher at USD1.1745 (USD1.1731)
GOLD: firm at USD1,955.73 per ounce (USD1,953.15)
OIL (Brent): higher at USD43.81 a barrel (USD43.09)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Heathrow has urged the UK government to stop imposing "quarantine roulette" on travellers as it announced a pretax loss of GBP1.1 billion in the first six months of the year. Chief Executive John Holland-Kaye said the financial results "should serve as a clarion call" to ministers to introduce a scheme for coronavirus testing of arriving passengers. He wants the 14-day self-isolation requirement to be eased for people arriving from countries not on the government's exemption list if they test negative for the virus. It comes after UK Prime Minister Boris Johnson warned that further European nations could lose their exempted status amid signs of a "second wave" of Covid-19. Johnson triggered a diplomatic row with Spain by reimposing a warning against all but essential travel to the country and insisting that travellers arriving in the UK from there spend 14 days in quarantine. Heathrow's passenger numbers were down 96% year on year between April and June. It posted a pretax loss of GBP1.1 billion in the first six months of 2020, down from a GBP7 million profit in the same period a year ago. This came on revenue of GBP712 million, around half of 2019's levels.
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China reported 101 new coronavirus cases, its highest single-day figure in three months, as gyms, bars and museums closed in infection hotspots. Of the new cases, 98 were domestic infections, mostly in the northwestern region of Xinjiang, where a growing cluster first discovered earlier this month has prompted mass testing and restrictions. China – where the global outbreak first emerged – had largely brought domestic transmission under control through targeted lockdowns, travel restrictions and testing. But sporadic regional outbreaks have illustrated the difficulty of keeping the virus at bay. The last time it recorded so many new cases was April 13, when 108 infections were confirmed – mostly imported. Authorities have concentrated their attention on a cluster which emerged last week at a food processing plant in Dalian, in the northeastern province of Liaoning. Officials said workers there handled contaminated packaging of imported seafood.
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Democrats and Republicans in the US Congress were far from reaching an agreement on a new package to support the world's leading economy, brought to its knees by the virus pandemic. "Very sadly, after months of deadly delay, the Republicans have unveiled a proposal that would only prolong the suffering for millions of workers and families across America," House Speaker Nancy Pelosi wrote in letter to her fellow Democrats, following two rounds of negotiations with the White House and Republican lawmakers. In the Senate, Republican majority leader Mitch McConnell defended his party's proposal, unveiled on Monday, that calls for USD1 trillion in stimulus aid. Back in May, the House Democrats unveiled a USD3 trillion coronavirus response package, the largest yet, to fund efforts to fight the pandemic and provide emergency payments to millions of Americans. With only 100 days to go before the US presidential election, talks are tense between the parties – but also among Republicans, some of whom are refusing to spend much and are even criticizing the White House.
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With speculation rife on who will be Joe Biden's running mate in the November US presidential election, the Democratic presumptive nominee said he would make a choice next week. "I'm going to have a choice in the first week of August and I promise I'll let you know when I do," Biden said during a campaign event on Tuesday. Biden, himself a former vice president to Barack Obama, pledged during the Democratic primary he will select a woman as his running mate. There are a number of people the campaign has been vetting to run as vice president alongside Biden, including Kamala Harris and Elizabeth Warren, both sitting senators who ran against him in the primary. Tammy Duckworth, another senator and a war veteran, is also on the list. Also high up in the vetting process is Susan Rice, a former national security adviser and ambassador to the UN under Obama. There are a number of congresswomen also being considered, along with governors and a mayor.
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