(Alliance News) - The UK unemployment rate was stable in April, even as coronavirus lockdown measures hit the domestic economy, according to figures from the Office for National Statistics on Tuesday.
The UK unemployment rate held steady at 3.9% in the three months to April, the ONS said. The figure beat the market consensus forecast, cited by FXStreet, for a rise to 4.5%.
"Whilst the government's furlough scheme offers an unprecedented amount of support to the UK labour market, we can expect to see this start to unravel in the coming months as the scheme is gradually withdrawn," commented City Index analyst Fiona Cincotta.
A truer picture emerges from other figures included in Tuesday's jobs report.
UK workers on company payrolls slumped by more than 600,000 between March and May, and unemployment claims soared by 1.6 million as the coronavirus lockdown hammered Britain's labour market, the official figures revealed.
The ONS said early estimates showed the number of paid employees dropped by 2.1% or 612,000 in May compared with March, while job vacancies also slumped to a record low last month.
Jobless claims under Universal Credit jumped 23% month-on-month in May to 2.8 million and have rocketed 126% or 1.6 million since March, when the UK was placed in lockdown.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 2.5% at 6,217.17
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Hang Seng: up 2.5% at 24,376.15
Nikkei 225: closed up 4.9% at 22,582.21
DJIA: closed up 157.62 points, 0.6%, at 25,763.16
S&P 500: closed up 0.8% at 3,066.59
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GBP: up at USD1.2651 (USD1.2554)
EUR: up at USD1.1344 (USD1.1266)
Gold: up at USD1,726.01 per ounce (USD1,720.80)
Oil (Brent): up at USD39.78 a barrel (USD39.04)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
0930 BST UK Finance monthly card spending
1100 CEST EU labour cost index
1100 CEST Germany ZEW indicator of economic sentiment
0830 EDT US advance monthly sales for retail & food services
0915 EDT US industrial production & capacity utilization
1000 EDT US manufacturing & trade: inventories & sales
1000 EDT US Fed Chair Powell presents to Senate committee
1630 EDT US API weekly statistical bulletin
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The US Federal Reserve will start purchasing individual corporate debt instruments, in a bid to ensure liquidity for loans to the private sector, in the latest market intervention by the central bank since the coronavirus pandemic shook the country. The Fed said it "will begin buying a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers." The central bank has been buying up private sector bond index funds since March, but the latest announcement means it will move to buying individual bonds if company's meet certain criteria, including on ratings and maturities. US stocks moved higher on the announcement Monday, with the S&P 500 crossing the line into positive territory, after spending the morning in the red.
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The UK government is facing further pressure to cut lockdown restrictions, PA reports. Tory grandees have called on Prime Minister Boris Johnson to ease the extent of the restrictions currently in place. Writing in the Daily Telegraph, former Conservative Party leader William Hague said the latest batch of figures were likely to "represent a personal catastrophe for hundreds of thousands of people" and that the lockdown was a "disaster [that] cannot under any circumstances be repeated". The prime minister has promised a review into the two-metre distancing rule but Downing Street said it could not guarantee the results would be published before July 4, when the hospitality industry is due to reopen. The British Beer & Pub Association, a trade body representing brewers and pubs, has demanded Number 10 give a clear date for when pubs can open their doors, including what social distancing guidance businesses can expect to have to follow.
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Japan's central bank ramped up aid for businesses struggling with the fallout from the coronavirus pandemic, as it attempts to ease the recession in the world's third-largest economy. The Bank of Japan expanded its zero-interest loan programme to firms to JPY90 trillion from JPY55 trillion. Its total war-chest for companies amounts to JPY110 trillion when corporate bond purchases are taken into account. "Japan's economy is likely to remain in a severe situation for the time being due to the impact of Covid-19 at home and abroad, although economic activity is expected to resume gradually," the bank said following a two-day policy meeting. The BoJ made no change to its ultra-loose monetary policy framework, which involves unlimited purchases of government bonds and a negative interest rate.
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The National Reserve Bank of Australia reaffirmed the main elements of the policy package announced back in March and said it intends to continue to support Australia on its way to recovery from the economic damage caused by coronavirus. The NRBA's policy-setting board decided on March 19 to cut Australia's cash rate to a record low 0.25% and also said that it would intervene in the bond market - a move designed to ensure that the Australian government and businesses can borrow cheaply to counteract the cost of the crisis. In addition, at least AUD90 billion, about USD50 billion, was set aside to support credit to small and medium-sized businesses. The bank also said it would maintain its target of 0.25% for the yield on three-year Australian government bonds, and was confident that inflation would be within the 2% to 3% target band.
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BROKER RATING CHANGES
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BERENBERG CUTS BIG YELLOW GROUP TO 'HOLD' ('BUY') - TARGET 1050 PENCE
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JEFFERIES RAISES TEAM17 TO 'HOLD' ('UNDERPERFORM') - TARGET 537 (452) PENCE
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COMPANIES - FTSE 100
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Ashtead said it delivered a resilient performance in light of the coronavirus outbreak and is confident in its prospects going forward. For the financial year ended April 30, revenue rose 9% to GBP5.05 billion from GBP4.50 billion in financial 2019. The figure was in line with consensus estimates for GBP5.1 billion in revenue. However, pretax profit fell 7% to GBP983 million from GBP1.06 billion. Pretax profit before amortisation and exceptional items was GBP1.06 billion, down from GBP1.11 billion. The adjusted pretax profit figure was just shy of the GBP1.07 billion consensus estimate. Ashtead attributed the decline in profit to a sudden fall in activity levels seen in the fourth quarter due to the coronavirus outbreak. Ashtead proposed a final dividend of 33.5 pence per share, bringing the total payout to 40.65p. Consensus expected a total dividend of 38.6p. "Looking forward, we believe that the impact of the Covid-19 pandemic will continue to give rise to market uncertainties over the coming months. However, with strong market positions in all our markets, supported by good quality fleets and a strong financial position, we believe that we are well-positioned to respond to this market uncertainty and continue to support our customers and team members," said Ashtead Chief Executive Brendan Horgan.
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Tesla has agreed to source cobalt from miner Glencore to use in its new car factories in Shanghai, China, and Berlin, Germany, the Financial Times reported. The newspaper said the carmaker will use the Swiss miner's metal from its Democratic Republic of Congo mine for use in Tesla's new Gigafactories to make lithium-ion batteries. The deal will increase Tesla's reliance on the DRC but shows an increased effort to secure its own raw materials. The deal, according to the FT, could involve up to 6,000 tonnes of cobalt a year.
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COMPANIES - FTSE 250
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Cineworld said it plans to reopen cinemas across some territories during the last week of June, with all theatres expected to be open over the course of July. The cinema chain said it has modified booking systems to ensure social distancing within and throughout its auditoriums. It also has altered its daily movie schedules to manage queues and avoid the build-up of crowds in lobbies.
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Greggs announced it plans to reopen around 800 stores to customers for takeaways from Thursday with the aim of welcoming sausage roll seekers to the remaining 1,000 sites by early July. Bosses unveiled the new-look stores, with floor markings, protective clothes for staff and screens at counters among several measures to protect against coronavirus spreading. There will also be a reduced menu to ensure social distancing in kitchens and workspaces. Greggs warned sales are likely to remain subdued as the chain copes with fewer customers allowed in stores at any one time, following a series of small-scale trials near its offices.
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Tuesday's Shareholder Meetings
Marshall Motor
Clearstar
Epwin Group
Coca-Cola HBC
Science Group
Altus Strategies
Arbuthnot Banking
Evraz
Andrews Sykes Group
FDM Group
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
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