(Alliance News) - The UK economy shrank by a fifth in the month of April, according to the latest figures from the Office for National Statistics on Friday.
Gross domestic product slumped 20% month-on-month in April, the biggest monthly fall since the series began - far steeper than the falls of 5.8% and 0.2% seen in March and February respectively. In the three months to April, the economy contracted an "unprecedented" 10% on a sequential basis.
The latest release captures the direct effects of the Covid-19 pandemic and UK government measures taken to stem its spread.
The ONS noted in a separate release that April's GDP decline was three times greater than the fall experienced during the 2008 to 2009 economic downturn. Throughout the 2008 recession, GDP shrunk by no more than 2.1% in a single quarter.
"April's fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-Covid-19 fall. In April the economy was around 25% smaller than in February," said Jonathan Athow, deputy national statistician for Economic Statistics at the ONS.
"Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall. Manufacturing and construction also saw significant falls, with manufacture of cars and housebuilding particularly badly affected," he said.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 51.20 points, 0.8%, at 6,025.50
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Hang Seng: down 1.4% at 24,141.40
Nikkei 225: closed down 0.8% at 22,305.48
DJIA: closed down 1,861.82 points, 6.9%, at 25,128.17
S&P 500: closed down 5.9% at 3,002.10
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GBP: down at USD1.2589 (USD1.2642)
EUR: down at USD1.1307 (USD1.1377)
Gold: down at USD1,730.30 per ounce (USD1,742.15)
Oil (Brent): down at USD37.70 a barrel (USD38.70)
(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
0930 BST UK Bank of England quarterly inflation attitudes survey
1230 BST UK NIESR monthly GDP tracker
0830 EDT US import & export price indices
1000 EDT US University of Michigan survey of consumers
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The jobs market in the UK is slowly improving, but sectors including hospitality are continuing to be hit by the coronavirus crisis, a new study suggests. The number of jobs on offer increased by 13,000 to 963,000 in the past month, said the Recruitment & Employment Confederation. In the first week of June there were 112,000 job adverts, up by 64% from the last week of May, suggesting more companies are starting to hire again, said the report. Scotland and Wales are leading the recovery, with job postings rising by 3.6% and 2.3% respectively in recent weeks, although they fell in parts of Northern Ireland, South Norfolk and Kent, said the report.
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Worries about catching coronavirus are staying low despite the relaxation of lockdown restrictions, new data suggests. Researchers say there has been a steady decline across the UK in concerns about Covid-19 during the lockdown. The figures suggest that at the beginning of the restrictions half of adults were worried about catching the virus and becoming seriously ill. But now just 35% are worried and only 15% are seriously worried, according to the ongoing study of more than 90,000 adults carried out by University College London since the start of the pandemic. The study shows that worries about catching the virus and becoming seriously ill are similar across age groups, even though younger adults are at lower risk of serious complications from the virus.
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Crowds of up 10,000 people will be allowed into Australian sports stadiums from next month, Prime Minister Scott Morrison said, as COVID-19 restrictions are further relaxed. The announcement comes a day before New Zealand prepares to welcome back fans at its Super Rugby Aotearoa tournament, which kicks off on Saturday. Morrison said it would only apply to stadiums with a capacity of 40,000 or under, ruling out the likes of the Melbourne Cricket Ground and Adelaide Oval for now.
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Japanese industrial production slumped even more than first thought in April, according to data from the Ministry of Economy, Trade & Industry. Annually, industrial output was down 15% in April and month-on-month, fell 9.8%. This had first been reported as falls of 14% and 9.1% respectively.
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BROKER RATING CHANGES
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DEUTSCHE BANK CUTS JOHNSON MATTHEY TO 'HOLD' ('BUY') - TARGET 2200 (2700) PENCE
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GOLDMAN CUTS TI FLUID SYSTEMS TO 'NEUTRAL' ('BUY') - TARGET 206 (179) PENCE
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JEFFERIES CUTS ON THE BEACH GROUP TO 'HOLD' ('BUY') - TARGET 330 (490) PENCE
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COMPANIES - FTSE 100
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Business publisher and events organiser Informa said its Subscriptions unit - which makes up 35% of revenue - continues to perform "resiliently" but its Events unit - 65% of revenue - is focusing on providing alternative digital services. Informa noted the Events unit is focusing on "long-term relationships ahead of short-term revenue", but added the return of events in China is now "real" possibility. "We expect the pace and shape of recovery to be gradual and phased by market. Despite continued near-term unpredictability, our strengthened balance sheet, continuing cost controls and strong liquidity is enabling us to focus on the other side of Covid-19," Chief Executive Stephen Carter said.
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Cruise line operator Carnival said its Holland America Line is extending its pause of cruise operations in Canada and Hawaii into early 2021. Carnival is cancelling additional departures from the port of Vancouver, British Columbia, Canada, in the autumn of 2020, as well as select Hawaii itineraries for early 2021.
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COMPANIES - FTSE 250
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Sandwich maker Bakkavor said its China operations suffered towards the end of January following the coronavirus outbreak, which then resulted in a "sharp reduction" in the UK and US in sales volumes in the last week of March and into April. Bakkavor added: "Since that time, sales volumes in all three regions have stabilised and are showing early signs of recovery, with group like-for-like revenue for the five months to the end of May down around 5% compared to the same period last year." The company noted it continues to operate with significant headroom against available lending facilities of GBP562.5 million - so has not required any government supported debt funding.
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Hipgnosis Songs Fund said it is contemplating an equity raise to help support its GBP1 billion acquisition pipeline. The song and musical intellectual property rights investor said it "continues to see attractive pricing on Catalogues of the finest quality" and is in active discussions to acquire over GBP1 billion of music rights. "The company is exploring the most appropriate way of funding further investments, with a view to delivering further value for its shareholders, including the use of borrowings as described in the company's amended borrowing policy, or an equity fundraise," Hipgnosis added.
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Pub manager Mitchells & Butlers said it has agreed "a number of new arrangements" with its main creditors, in order to "meet the challenge" of the coronavirus pandemic. The full impact of the pandemic, Mitchells & Butlers said, is still uncertain due to still not knowing when it can reopen its pubs and restaurants. As a result, Mitchells & Butlers has agreed to a committed unsecured liquidity facilities totalling GBP250 million through to December 31, 2021. This involves extending to the term of its existing GBP150 million facilities plus the provision of additional facilities totalling GBP100 million. Mitchells & Butlers currently has cash balances of GBP130 million, having fully drawn down the existing facilities of GBP150 million. During this period of pub closure, the Ebitda loss in a four-week period is about GBP15 million, including rent, Mitchells & Butlers said.
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Biffa said it has placed 50.0 million shares at 200 pence each, raising GBP100 million. The placing price is a 5% discount to its closing price of 210.5p in London on Thursday. Biffa said the proceeds will put the balance sheet in a position of strength, providing the flexibility to continue to pursue "highly attractive identified organic and inorganic growth opportunities in line with its strategy". Last week, Biffa decided against making a final payout to save cash amid "unprecedented challenges" arising from the Covid-19 pandemic.
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COMPANIES - GLOBAL
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Chinese e-commerce giant JD.com said it raised HKD30.1 billion, about USD3.9 billion, in its Hong Kong initial public offering, making it the world's second-biggest so far this year. The bumper sale comes as Chinese companies eschew Wall Street because of rising tensions between Washington and Beijing. Fellow Chinese tech giant NetEase raised USD2.7 billion in the city earlier this month, capping a frenetic few weeks on the stock exchange despite swirling fears over Beijing's plan to impose a national security law on the finance hub. JD.com, which listed on the Nasdaq in New York in 2014, priced its 133 million new shares at HKD226 each, the company said in a statement on Friday. Trading in Hong Kong is expected to start on June 18.
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Friday's Shareholder Meetings
Informa
Katoro Gold
Bakkavor
Capital Drilling
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By Tom Waite; thomaslwaite@alliancenews.com
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