LONDON MARKET PRE-OPEN: BT Hurt By No Sport And NatWest Swings To Loss

(Alliance News) - Stock prices in London are called higher on Friday, recovering somewhat from Thursday's heavy fall and following a spate of earnings reports from blue-chip firms.

Both NatWest Group and British Airways-parent International Consolidated Airlines Group swung to hefty losses, while BT Group's revenue dipped in its first quarter, as Covid-19's devastation of the sporting calendar hurt it sports broadcasting unit.

IG futures indicate the FTSE 100 index is to open 36.2 points higher at 6,018.0. The blue-chip index shed 141.47 points, or 2.3%, to 5,989.99 on Thursday.

The pound was quoted at USD1.3132, improved from USD1.3036 at the London equities close. Sterling is trading at around its highest levels versus the greenback since March.

"European bourses are pointing to a mildly higher start as investors continue digesting data and earnings from the previous session. The US dollar is on track for its worst monthly performance in a decade," City Index's Fiona Cincotta said.

Natwest, fresh from its name change from Royal Bank of Scotland Group, posted a first half operating loss of GBP770 million, swinging from a GBP2.69 million profit a year ago. Its loss attributable to shareholders came in at GBP705 million, swinging wildly from a GBP2.05 billion profit a year ago.

"NatWest has thousands of small companies as customers, making the bank particularly vulnerable to souring loans as the coronavirus crisis continues," City Index's Cincotta commented.

NatWest's impairment provision on June 30 totalled GBP6.1 billion, ratcheted up from GBP4.2 billion in March and GBP3.7 billion at the end of December.

"Our performance in the first half of the year has been significantly impacted by the challenges and uncertainty our economy continues to face as a result of Covid-19," Chief Executive Alison Rose said.

In a stacked update from IAG, the airline company reported an unsurprising second quarter loss, announced its chair succession plans, and confirmed a proposed EUR2.75 billion fundraise.

Before exceptional items, IAG swung to a pretax loss of EUR4.21 billion during the six months to June 30, a period when Covid-19 emptied skies and killed demand for travel. Revenue dropped 61% annually to EUR4.15 billion.

The BA-owner booked an exceptional charge of EUR2.14 billion during the half, related to "de-recognition of fuel", foreign currency hedges and a fleet impairment.

Earlier in July, IAG had said it was considering a capital raise and on Friday it confirmed it plans to secure EUR2.75 billion from a pre-emptive subscription. Largest shareholder Qatar Airways, with a 25% stake, has backed IAG's plans to bolster its coffers.

In January 2021, Chair Antonio Vazquez will make way for Javier Ferran, currently an independent director at IAG. Vazquez reached nine years in office last January.

BT's first quarter revenue fell 7% to GBP5.26 billion, with pretax profit slumping 13% to GBP561 million.

The revenue fall was "primarily due to the impact of Covid-19, including reduced BT Sport revenue and a reduction in business activity in our enterprise units," BT said.

Covid-19 wreaked havoc on the sporting calendar, but in recent weeks and months, football both in the UK and elsewhere, has returned.

The telecommunications firm also offered annual guidance, expecting adjusted revenue to fall between 5% and 6% in financial 2021 and for adjusted earnings before interest, tax, depreciation and amortisation to be between GBP7.2 billion and GBP7.5 billion.

BT also said it has hired Rob Shuter, currently CEO of South Africa's MTN Group, as the new CEO of BT Enterprise, replacing Gerry McQuade.

Elsewhere, London Stock Exchange Group reported the US Department of Justice closed its antitrust probe of its Refinitiv takeover. The stock exchange operator also said it has "commenced exploratory discussions" which could result in it selling its interest in government bond exchange platform MTS or even the Borsa Italiana Group as a whole.

The news comes following the European Commission's Phase II review of the Refinitiv takeover.

"There can be no certainty that LSEG will decide to proceed with a transaction relating to either of these businesses," LSEG noted.

"We are making good progress on the proposed transaction with Refinitiv, securing a number of regulatory approvals and engaging constructively with authorities on remaining approvals," said Chief Executive David Schwimmer.

The company's first half results, also out on Friday, showed revenue rose 4% annually to GBP1.06 billion, with pretax profit edging lower to GBP362 million from GBP363 million.

The euro stood at USD1.1889 early Friday in London, up from USD1.1781 on Thursday's equities close in Europe.

The economic events calendar on Friday has eurozone inflation and gross domestic product readings at 1000 BST.

"The eurozone aggregate GDP data should confirm a 11.2% contraction in the second quarter and the inflation in July is expected to print 0.2% year-on-year," said Swissquote analyst Ipek Ozkardeskaya.

Against the yen, the dollar was trading at JPY104.37, down from JPY105.08.

In New York on Thursday, the Dow Jones Industrial Average closed down 0.9% and the S&P 500 lost 0.4%. The US economy contracted a massive 33% on an annual basis in the second quarter due to lockdowns imposed to stop the spread of the coronavirus, data from the Bureau of Economic Analysis showed.

The tech-heavy Nasdaq Composite closed up 0.4%, in expectation of strong earnings from tech behemoths Apple, Amazon.com, Facebook, and Google-owner Alphabet.

E-commerce firm Amazon posted a 26% hike in net income, Facebook's net income came in at USD5.18 billion, almost doubled annually but Alphabet posted its first revenue decline ever, on tumbling advertising income. Revenue fell 1.6% to USD38.30 billion.

Apple reported a rise in net income for the third quarter of its financial year, for the three months ended June 27, the iPhone maker posted net income of USD11.25 billion, a 12% year-on-year increase.

But it was Apple's plans for a four-for-one share split which also got tongues wagging overnight. The firm said its board has approved the split to make the stock "more accessible to a broader base of investors".

The corporate calendar in the US has second-quarter earnings from oil majors Chevron and Exxon Mobil.

Brent oil fetched USD43.36 early Friday, improved from USD42.72 at the London equities close on Thursday.

In Asia, the Nikkei 225 in Japan shed 2.8% on Friday. In China, the Shanghai Composite was up 0.5%, despite briefly sitting in the red. The Hang Seng index in Hong Kong was 0.1% lower.

Factory activity in China edged upwards in July as the country's manufacturing sector gathered pace after a sharp coronavirus hit and demand gradually rebounded, according to official data.

The PMI of the world's second-largest economy came in at 51.1 points in July, up from 50.9 the month before.

Gold changed hands at USD1,972.91, up from USD1,941.55 an ounce at the London equities close on Thursday.

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