(Alliance News) - The UK economy grew less than expected in August despite the government's 'Eat Out to Help Out' scheme lifting the services sector, according to figures from the National Office for Statistics on Friday.
Gross domestic product grew 2.1% month-on-month in August, slower than the 6.4% seen in July. The economy remains 9.2% below the levels seen in February, before the Covid-19 pandemic battered activity.
Consensus, according to FXStreet, had seen growth of 4.6% in August.
In August, the index of services grew 2.4% month-on-month, production rose 0.3% and manufacturing increased 0.7%. Construction advanced 3.0%.
"The accommodation and food services sub-sector contributed 1.25 percentage points to the 2.1% growth in GDP for August 2020, as the combined impact of easing lockdown restrictions, Eat Out to Help Out Scheme and "stay-cations" boosted consumer demand," the ONS noted.
In the three months to August, the economy grew 8.0% on a sequential basis.
Separately, the ONS showed that the UK's trade surplus - excluding non-monetary gold and other precious metals - was GBP7.7 billion in the three months to August, up from GBP3.9 billion in the three months to May, as exports grew by GBP21.4 billion and imports grew by a lesser GBP17.5 billion.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 0.3% at 5,995.60
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Hang Seng: down 0.5% at 24,070.10
Nikkei 225: closed down 0.1% at 23,619.69
DJIA: closed up 122.05 points, 0.4%, at 28,425.51
S&P 500: closed up 0.8% at 3,446.83
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GBP: up at USD1.2945 (USD1.2932)
EUR: up at USD1.1769 (USD1.1753)
Gold: up at USD1,907.12 per ounce (USD1,889.10)
Oil (Brent): up at USD43.20 a barrel (USD42.80)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1230 BST UK NIESR monthly GDP tracker
0830 EDT Canada Labour force survey
0845 CEST France Industrial production index
1000 CEST Italy Industrial production
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The decline in UK retail footfall eased slightly in September, according to numbers on Friday, but rising virus cases and the additional restrictions which came with led to many shoppers staying at home. Year-on-year, footfall was down 30%, numbers from the British Retail Consortium-ShopperTrak monitor showed. It was a 4.7 percentage point improvement from August and the 30% decline was fractionally below the average fall over the past 12 months. High streets were worst hit again in September, footfall there was down 37%. In shopping centres, footfall dropped 36%. Retail parks benefitted from wider open spaces which make social distancing easier. Footfall in retail parks fell 6.9% annually in September.
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US President Donald Trump wants two face-to-face debates with challenger Joe Biden, his campaign said Thursday, nixing a proposed virtual encounter but calling for a final showdown just five days before election day. The second debate, scheduled as a town hall-styled event, was set for October 15 but that timeline is now likely to be scrapped after Trump, who is recovering from Covid-19, rejected the change to a virtual format. An in-person town hall debate, with questions from voters, "should happen on October 22, and accordingly, the third debate should then be shifted back one week to October 29," just days from the November 3 vote, Trump 2020 campaign manager Bill Stepien said in a statement.
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Hurricane Delta gained strength Thursday as it churned across the western Gulf of Mexico towards the US, threatening to batter part of the Louisiana coast still recovering from a separate storm just weeks ago. After lashing Mexico's Caribbean coastline, Delta, now a Category 3 storm, is located 345 miles, or 555 kilometers, south of Louisiana and packing winds of 115 miles an hour, the US National Hurricane Center said in its 2100 GMT bulletin. The NHC warned that "life-threatening storm surge" was expected along portions of the northern Gulf Coast on Friday, where the storm is predicted to make landfall in the afternoon or evening. Delta had earlier slammed into the Yucatan Peninsula in southeast Mexico as a Category 2 storm, toppling trees and ripping down power lines. It weakened as it crossed the land, but gained strength again in the open waters of the Gulf. Mexico's Yucatan region appeared to have escaped major destruction and there were no reports of deaths.
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Data from IHS Markit and Caixin on Friday showed that China's services sector rose in September as new business rose on higher demand, marking a continued recovery from the Covid-19 pandemic. The headline seasonally adjusted business activity index inched higher to 54.8 in September from 54.0 in August. Any number above 50.0 denotes growth. The rise in overall business activity was a rise in new business, as well as an acceleration in the rate of new order growth. Panel members frequently attributed the boost of sales to a recovery in client demand following the pandemic and an increase in new project developments. Due to sustained increases in activity and new work, companies were led to increase their workforce numbers for the second month in a row in September, although the rate of job creation remained marginal. Looking ahead, business confidence for the next 12 months remained positive in September, in fact being firmer than the figure recorded in August and broadly in line with the historical average.
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BROKER RATING CHANGES
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MS RAISES STANDARD LIFE ABERDEEN TO 'EQUAL-WEIGHT' ('UNDERWEIGHT') - PRICE TARGET 262 (247) PENCE
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BARCLAYS INITIATES TAYLOR WIMPEY WITH 'EQUAL WEIGHT' - TARGET 125 PENCE
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BARCLAYS INITIATES PERSIMMON WITH 'EQUAL WEIGHT' - TARGET 2750 PENCE
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BARCLAYS INITIATES BERKELEY GROUP WITH 'UNDERWEIGHT' - TARGET 4180 PENCE
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BARCLAYS INITIATES BARRATT DEVELOPMENTS WITH 'OVERWEIGHT' - TARGET 580 PENCE
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COMPANIES - FTSE 100
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London Stock Exchange Group confirmed it has agreed to sell the parent company of Borsa Italiana to Euronext for an equity value of EUR4.33 billion. LSEG back in September said it had entered into exclusive discussions with peer Euronext over the sale of Borsa Italiana, the operator of the Milan stock exchange. The two signed a share purchase agreement on Friday. The London Stock Exchange operator said it thinks a sale of Borsa Italiana or a material part of it will be a condition to any European clearance for its Refinitiv acquisition. "Whilst the principal benefit of the transaction is to facilitate the completion of the Refinitiv Transaction, the divestment, which represents an enterprise valuation multiple of 16.7x 2019 adjusted Ebitda, allows LSEG to achieve an attractive valuation for Borsa Italiana," said LSEG. The FTSE 100 constituent expects to receive the EUR4.33 billion in cash on closing, plus an additional amount reflecting cash generation to completion. LSEG plans to use the funds from the deal to repay debt related to its Refinitiv buy. LSEG agreed to buy financial markets data and trading platform provider Refinitiv a year ago for USD27 billion.
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British Land said it will resume dividends after suspending payouts back in March. Dividends will be paid semi-annually, as opposed to quarterly, and will be announced alongside its interim and full-year results. Future dividends will be paid at 80% of underlying earnings per share. British Land intends to declare an interim dividend at its results in November. The property company noted that rent collection for the June quarter stands at 74% versus 67% for the March quarter. British Land said it has seen "encouraging" rent collection progress for September, standing at 69% thus far.
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COMPANIES - FTSE 250
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TP ICAP said it has agreed definitive terms to acquire Liquidnet for a total consideration between USD575 million and USD700 million. The interdealer broker first communicated that it was in advanced talks for New York-based electronic trading network Liquidnet in late September. "Combined, TP ICAP and Liquidnet will be able to offer our clients compelling electronic trading and analytics solutions, driving sustained growth and shareholder value creation over the medium and long-term," said Chief Executive Nicolas Breteau. The deal is expected to complete in the first quarter of 2021.
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COMPANIES - GLOBAL
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Gilead Sciences Inc said Thursday a trial published in the New England Journal of Medicine showed its Covid-19 treatment offered "clinically meaningful improvements" versus a placebo. The New England Journal of Medicine published the final results from the National Institute of Allergy & Infectious Diseases' double-blind, placebo-controlled, Phase 3 ACTT-1 trial of Gilead's investigational antiviral Veklury - better known as Remdesivir - for the treatment of adults hospitalised with mild-moderate or severe Covid-19. "The final ACTT-1 study results build on the preliminary results published in New England Journal of Medicine in May 2020, showing that treatment with Veklury resulted in consistent, clinically meaningful improvements across multiple outcome assessments compared with placebo in Covid-19 patients," Gilead said. It added: "The final results demonstrate that treatment with Veklury resulted in a faster time to recovery than previously reported."
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Friday's Shareholder Meetings
Baillie Gifford US Growth Trust PLC AGM
Premier Global Infrastructure Trust PLC GM re name change to Premier Miton Global Renewables
RWS Holdings PLC GM re all-share merger with SDL
SDL PLC GM re all-share merger with RWS
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By Tapan Panchal; tapanpanchal@alliancenews.com
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