(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Associated British Foods said it estimates a GBP375 million loss of sales as a result of Primark stores being forced to close again in England and the rest of Europe. All Primark stores are temporarily closed in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia - accounting for 19% of the company's total retail selling space. On top of this, the UK government now intends to close non-essential stores in England for one month starting Thursday this week and ending December 2. Should this plan obtain parliamentary approval, it would mean that 57% of the company's total selling space would be temporarily closed from Thursday, with 156 Primark stores trading and 231 stores not trading.
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Ocado Group raised its earnings guidance for its current financial year, driven by strong trading from its joint venture with Marks & Spencer in the fourth quarter. The online grocer also announced the acquisition of two companies, Kindred Systems and Haddington Dynamics, for USD287 million in total. For the financial year to the end of November, Ocado has raised its Ebitda guidance and expects the figure to be over GBP60 million, compared to previous guidance of GBP40 million. This means a minimum of a 39% rise from GBP43.3 million the year before.
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Ryanair Holdings reported a swing to loss in the first half of its financial year as traffic fell 80% with almost its entire fleet grounded for months during the period as a result of Covid-19 travel bans and lockdowns. The Swords, Ireland-based budget airline reported a swing to a EUR432.3 million pretax loss for the six months ended September 30, from the prior year's EUR1.26 billion profit. Total operating revenue plunged 78% to EUR1.18 billion from EUR5.39 billion as traffic dropped 80% to 17.1 million.
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GVC Holdings guided for a hit to earnings as a result of renewed lockdown restrictions in the UK and Europe. The betting shop operator said the hit to group earnings before interest, tax, depreciation and amortisation would be GBP37 million, based on the restrictions and guidelines currently in place. Of this figure, GBP27 million would be in its UK retail unit, and GBP10 million in its European business. The current restrictions include stores being closed in England from Thursday to the start of December, Scotland and Northern Ireland stores remaining open, Welsh stores reopening on Monday next week, and all stores remaining closed in the Republic of Ireland until December 9. In Europe, stores are closed in Italy and Belgium until November 24 and December 13 respectively. Should all of GVC's retail outlets be closed for a whole month, it would inflict a GBP43 million hit to the group's Ebitda.
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Lloyd's of London underwriter Hiscox said its gross written premiums edged upwards for the first nine months of 2020, driven by strong growth from nearly all of its businesses. As at September 30, Hiscox reported gross written premiums at USD3.26 billion in the year to date, a 2% increase from USD3.21 billion as of the same date a year before. The insurer's Retail business remained the largest contributor, with a 4% year-on-year rise in gross written premiums to USD1.73 billion, driven by the easing of government restrictions and a steady increase in economic activity, together with a shift toward digital. There has been no change to the group's previous estimate for Covid-19 related claims, which total USD387 million net of reinsurance. However, should travel restrictions continue into 2021, Hiscox has an additional USD30 million to USD40 million in potential exposure relating to event cancellations.
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MARKETS
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The FTSE 100 posted gains by late Monday morning, though airlines and non-essential retailers were hurt by UK Prime Minister Boris Johnson announcing a one-month lockdown in England. AB Foods and GVC, who warned of earnings hits, were down 0.1% and 1.7%, respectively.
"European markets have started the week on a positive footing, with pre-market declines failing to come to fruition despite the implementation of a four-week lockdown in the UK. With the US heading to the polls tomorrow, there in plenty of volatility to come," IG Senior Market Analyst Joshua Mahony commented.
US futures indicate Wall Street is set to bounce back from Friday's losses. The Nasdaq Composite is called up 1.1%, the S&P 500 1.3% higher, and the Dow Jones Industrial Average up 1.4%.
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FTSE 100: up 1.1% at 5,638.01
FTSE 250: down marginally at 17,212.26
AIM ALL-SHARE: down 0.3% at 945.46
GBP: down at USD1.2923 (USD1.2952)
EUR: flat at USD1.650 (USD1.1649)
Gold: up at USD1,888.62 per ounce (USD1,879.42)
Oil (Brent): down at USD37.16 a barrel (USD37.68)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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England's four-week national lockdown could be extended beyond December 2 if coronavirus infection rates do not significantly fall, a UK Cabinet minister has admitted. Michael Gove said he believed the restrictions announced by UK Prime Minister Boris Johnson would bring down the R value, but warned that people may have to stay at home for longer if not. Pubs, bars, restaurants and non-essential retail will close from Thursday for four weeks across England, with furlough payments at 80% extended for the duration of the new measures. People will be allowed to exercise and socialise in public spaces outside with their household or one other person, but not indoors or in private gardens, and will be able to travel to work if they cannot work from home. Yet unlike in the lockdown during the first wave of the pandemic, schools, colleges and nurseries will remain open.
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The UK's manufacturing growth slowed somewhat in October, data showed, though it did outperform flash estimates despite signs that pent-up demand after the Spring lockdown is losing steam. The seasonally adjusted IHS Markit/CIPS purchasing managers' index slipped to 53.7 in October, down from 54.1 in September. The reading was above the 50.0 figure which separates growth from decline and also above the 53.3 flash estimate issued on October 23, IHS Markit noted. "The recovery in the UK manufacturing sector continued at the start of the final quarter, as output and new orders rose again supported by improved demand from both domestic and overseas sources. That said, the upturn showed further signs of losing impetus, as the initial boost to growth from the economy reopening faded and job losses accelerated," IHS Markit commented.
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The eurozone's manufacturing sector notched up its fourth successive month of growth, with Germany leading the way and only Greece showing a decline. The IHS Markit eurozone manufacturing purchasing managers' index came in at 54.8 in October, improved from 53.7 in September. "October's number was also the best recorded by the survey for 27 months and maintained the current run of continuous growth that began in July," IHS Markit said. IHS Markit noted that Germany was the best performing nation, with its PMI climbing to a 31-month high of 58.2. Italy also climbed to a 31-month high, registering 53.8.
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China's manufacturing activity expanded for the sixth straight month in October, reaching its highest level since January 2011. The Caixin China general manufacturing purchasing managers' index reading for last month was 53.6 points, up from 53.0 points in September. Survey data showed business conditions across the sector improved, with firms recording rises in both output and total new work. However, growth in new export sales softened notably amid a resurgence of the novel coronavirus across a number of export markets. Despite this, stronger overall market conditions led to an improvement in business confidence, which was the highest since August 2014. On Saturday, official data showed a slightly less positive PMI reading of 51.4 points, slightly down from 51.5 in September, but also still showing expansion.
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More than 1.2 million people have died of coronavirus around the globe, according to an AFP tally from official sources at 0745 GMT on Monday. The over 1.2 million deaths had been recorded from 46.5 million cases, with nearly one death in every five in the US, the world's worst-hit country. The US has seen 230,996 deaths from 9.2 million infections with Brazil registering 160,074 fatalities from 5.5 million cases, India 122,607 deaths and 8.2 million cases, Mexico 91,895 deaths and 929,392 cases and Britain 46,717 deaths from 1.0 million cases.
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