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(Alliance News) - In a pandemic lockdown, it is clearly better to offer spread betting than air travel and to sell tonic water than luxury sports cars, as UK company updates made clear on Thursday.
Shares in IG Group and Fevertree Drinks were up 3.0% and 1.3%, respectively, after positive pre-market updates, while Wizz Air was down 1.9% and Aston Martin down 4.8%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.4% at 6,360.01
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Hang Seng: down 0.2% at 24,276.87
Nikkei 225: closed up 0.4% at 22,695.74
DJIA: closed up 527.24 points, 2.1%, at 26,269.89
S&P 500: closed up 1.4% at 3,122.87
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GBP: down at USD1.2529 (USD1.2604)
EUR: down at USD1.1204 (USD1.1223)
Gold: up at USD1,699.40 per ounce (USD1,697.55)
Oil (Brent): soft at USD39.21 a barrel (USD39.52)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
0930 BST UK CIPS-Markit construction purchasing managers' index
1100 CEST EU retail trade
1345 CEST EU European Central Bank interest rate decision
1430 CEST EU ECB press conference with President Christine Lagarde
0730 EDT US Challenger job-cut report
0830 EDT US international trade in goods & services
0830 EDT US revised productivity & costs
0830 EDT US initial jobless claims
1030 EDT US EIA weekly natural gas storage report
1200 EDT US monthly US retail chain store sales index
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Demand for new cars fell by around 90% last month as the coronavirus lockdown hit sales, PA reports. Only approximately 20,000 new cars were registered in May compared with more than 180,000 during the same month in 2019, according to preliminary figures released by the Society of Motor Manufacturers & Traders. The SMMT recently forecast that around 1.68 million new cars will be registered in 2020, which would represent a 27% decline on last year. Car showrooms across the UK were closed for the whole of May, but limited deliveries of new vehicles could take place. They have been able to reopen in England since Monday as long as they meet the UK government's coronavirus guidelines to protect customers and workers.
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Brazil and Mexico reported record daily coronavirus death tolls as governments in Latin America battled to fortify defences against the accelerating pandemic with fresh lockdown orders and curfews, AFP reports. European nations are emerging from months of devastation with some borders re-opening, but South and Central America have become the new hotspots in a crisis that has claimed at least 385,000 lives worldwide. Mexico on Wednesday announced more than 1,000 coronavirus deaths in a day for the first time, while Brazil reported a record 1,349 daily deaths. Brazilian President Jair Bolsonaro has staunchly opposed lockdowns but many local authorities have defied him and, with the crisis deepening, a vast section of Bahia state was on Wednesday placed under curfew. There was more cause for concern in Chile, where the government said it was extending a three-week shutdown of the capital Santiago after a new record for daily deaths.
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BROKER RATING CHANGES
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PEEL HUNT CUTS BRITISH LAND CO TO 'ADD' ('BUY') - TARGET 500 (470) PENCE
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RBC CUTS IWG TO 'SECTOR PERFORM' ('OUTPERFORM') - TARGET 325 (275) PENCE
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JPMORGAN CUTS ELECTROCOMPONENTS TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 746 (811) PENCE
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COMPANIES - FTSE 100
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Standard Life Aberdeen said it has further sold down its stake in HDFC Life Insurance Co. The sale of 40.0 million shares, representing just under a 2% stake, was conducted via subsidiary Standard Life (Mauritius Holdings) 2006 and sold at an average price of INR496.40, which will result in Standard Life Aberdeen receiving GBP207 million from the sale. SLMH06's remaining shareholding in HDFC Life is 10.27%, which is worth GBP1.1 billion. "It is also noted that a shareholding above 10% continues to provide SLMH06 with the right to nominate one director to the board of HDFC Life and 8.89% of SLMH06's remaining shareholding in HDFC Life is locked in until end March 2021," Standard Life said.
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Water firm Pennon lifted its dividend, "pleased" with its performance in the recently ended financial year. Revenue edged up 0.6% to GBP636.7 million for the year to March 31 from GBP632.6 million the year before, but pretax profit declined 4.1% to GBP193.1 million from GBP201.4 million. Lower earnings reflected the mix of margin on retail and wholesale revenue, with South West Water's wholesale margin reducing as a result of lower customer consumption. In addition, the utility recorded increased depreciation on asset growth and higher absolute interest. For the continuing group and waste business Viridor, which Pennon agreed to sell in March, profit was up 16% to GBP301.5 million. Pennon raised its dividend by 6.6% to 43.77 pence.
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HSBC Holdings and Standard Chartered openly expressed their support for the national security law China will impose on Hong Kong, in spite of opposition from the UK government, the Financial Times reported. The FT reported that in a post on Chinese social media platform WeChat, HSBC said that Peter Wong, chief executive of its Asian unit had signed a petition supporting the legislation. "We reiterate that we respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of 'one country two systems'," the post stated. HSBC confirmed the post and its content, the FT said. In addition, Standard Chartered said, in a statement made to the FT: "We believe the national security law can help maintain the long-term economic and social stability of Hong Kong".
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COMPANIES - FTSE 250
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Online trading firm IG said it continued to see high levels of client activity in the final quarter of its financial year. IG released a trading update in April which noted that quarter to date net trading revenue was estimated to be around GBP173 million. Financial market volatility has remained elevated, and high levels of client trading activity has continued, it said, with net trading revenue for the fourth quarter to May 31 now estimated to be GBP259 million - more than double to GBP117.9 million achieved a year ago. Full-year net trading revenue is expected at GBP649 million, sharply higher than GBP476.9 million the year before.
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Aston Martin said it plans to cut up to 500 jobs as part of a "fundamental reset" of the business. The luxury car maker said it is planning a reduction in front-engined sports car production to rebalance supply to demand, but noted that its first sports utility vehicle, the DBX, remains on track for deliveries in the summer and has a strong order book. Aston Martin will launch a consultation process of proposals to reduce the workforce by up to 500, reflecting lower than originally planned production volumes and improved productivity across the business. Its restructuring is expected to deliver, on an annualised basis, operating costs savings of GBP10 million and reduced directed manufacturing costs in line with volumes of around GBP8 million. Capital expenditure is expected to be reduced by GBP10 million. The associated cash restructuring costs are expected to be GBP12 million in 2020.
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Central and eastern Europe-focused airline Wizz Air reported a slump in passenger numbers for May amid Covid-19 travel restrictions. Passenger numbers collapsed 96% to 126,549 in May against 3.5 million carried a year ago. Capacity was cut by 94% to 207,025 passengers, but load factor still fell by 32.8 percentage points to 61.1% from 93.9%.
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COMPANIES - MAIN MARKET AND AIM
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Fevertree Drinks said Covid-19 is hitting its on-trade segment, but its performance across off-trade is "very encouraging". On-trade sales typically represent half of UK revenue, the premium tonic water maker said, and have been "severely impacted" by the lockdown. However, off-trade performance has been strong. Sales in the first full month of lockdown were up 24% year-on-year and positive momentum has been seen since, reflecting increased consumption at home. US off-trade sales have grown "extremely strongly". "As highlighted at the group's preliminary results in April, Covid-19 will have a material impact on FY20 trading, with headwinds on gross margin due to changes in channel and territory mix. However, we remain committed to continuing to invest through this period of uncertainty as opportunities arise, particularly in marketing, enabled by the group's strong balance sheet and conviction in our ability to deliver long-term sustainable growth," Fevertree said.
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COMPANIES - GLOBAL
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Snapchat became the latest social network moving to curb the reach of US President Donald Trump, claiming the president has been inciting "racial violence". The youth-focused social network said it would no longer promote Trump on its Discover platform for recommended content. "We will not amplify voices who incite racial violence and injustice by giving them free promotion on Discover," a statement from Snapchat said. The move came days after Twitter took an unprecedented stand by hiding a Trump post it said promoted violence, heating up the White House war with Silicon Valley and social media. Snapchat parent SnapChief Executive Evan Spiegel over the weekend sent a lengthy memo to employees condemning what he saw as a legacy of racial injustice and violence in the US. Snapchat will not promote accounts in the US that are linked to people who incite racial violence on or off the messaging platform, according Spiegel.
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Warner Music Group, one of the "big three" recording companies, jumped in its market debut Wednesday after raising more than USD1.9 billion in an initial public offering that underscores how streaming has reinvigorated the industry. Trading under the "WMG" ticker on the Nasdaq exchange in New York, Warner Music finished with a gain 21% at USD30.12, up from its USD25 IPO price. The company increased the offering to 77 million shares from the 70 million initially envisioned, making it the biggest IPO of 2020.
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Thursday's Shareholder Meetings
Panther Metals
Georgia Healthcare
Georgia Capital
PageGroup
Calisen
Arix Bioscience
Personal Group
Fevertree Drinks
Cluff Natural Resources (re name change to Deltic Energy)
Luceco
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
