(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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BP reported a sharp year-on-year drop in third-quarter earnings but an improvement on the previous second quarter in the absence of exploration write-offs and recovering demand. The London-based oil major said the gradual recovery in oil demand is set to continue; however, the shape and pace of recovery from the Covid-19 pandemic remains uncertain as it depends on the further spread of the virus. Underlying replacement cost profit, the company's preferred measure, was USD86 million for the three months to September 30, compared with a loss of USD6.68 billion in the second quarter, and USD2.25 billion profit for the third quarter of 2019. Total revenue for the third quarter amounted to USD44.20 billion, up from USD31.19 billion in the previous quarters, but down from USD69.29 billion a year ago. BP declared a third-quarter dividend of 5.25 US cents, halved from 10.25 cents in the third quarter last year.
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HSBC Holdings reported a sharp drop in third-quarter profit, but was "pleased" with significantly reducing its credit losses and is considering a "conservative" shareholder payout in 2020. In the three months to September 30, the Asia-focused lender's pretax profit dropped 37% year on year to USD3.07 billion from USD4.84 billion. Revenue fell 11% to USD11.93 billion from USD13.36 billion. Looking ahead, HSBC expects lower global interest rates wil continue to put pressure on its net interest income. Based on current interest rates, its expects further net interest income headwinds in the fourth quarter, with some stabilisation as it moves into 2021. "The group's capital and liquidity ratios strengthened further in the quarter despite the challenging economic conditions. A decision on whether to pay a dividend for the 2020 financial year will depend on economic conditions in early 2021, and be subject to regulatory consultation. We will seek to pay a conservative dividend if circumstances allow," CEO Noel Quinn said.
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Banco Santander reported a sharp drop in profit in the third quarter but said it is recovering "well" from the second quarter, and has proposed paying a dividend. In the three months to September 30, the Spanish lender's underlying pretax profit slipped 17% to EUR3.18 billion from EUR3.84 billion a year before. Total income dropped 11% annually in the third quarter to EUR11.09 billion from EUR12.47 billion, with net interest income down to EUR7.77 billion from EUR8.81 billion.
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St James's Place reported a rise in closing funds under management for the third quarter of 2020; however net inflows were much lower year-on-year. As at September 30, the wealth manager had GBP118.70 billion in funds under management, 5.2% higher from GBP112.82 billion on the same date a year before. Over the first nine months of 2020, the figure reflected a 1.5% increase. Gross inflows however dropped by 18% to GBP3.05 billion in the recent quarter from GBP3.74 billion in the prior-year quarter. As a result, net inflows dropped by 31% to GBP1.44 billion from GBP2.11 billion. The total net investment return for the quarter was GBP1.58 billion, led by a GBP0.86 billion return for the Pension class and GBP0.41 billion for the Unit Trust, ISA & Discretionary Fund Management class.
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Whitbread said it will focus on long-term returns following the expected slump in performance in the first half of its financial year due to closures in the hospitality sector brought on by Covid-19 restrictions. Dunstable, England-based Whitbread swung to a pretax loss in the six months to August 27 of GBP724.7 million from a profit of GBP219.9 million in the prior year's six months to August 29. Revenue was down 77% to GBP250.8 million from GBP1.08 billion a year before. The Premier Inn hotel chain owner said its performance in the first half was in-line with expectations and reflects the closure of the vast majority of its businesses during the lockdown period from the end of March. Whitbread did not declare an interim dividend, down from 32.7 pence each a year prior. The company said it hopes to return to paying dividends again following the normalisation of the group's financial position and performance.
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Novartis said income slipped in the third quarter of 2020 despite moderate revenue growth. The Basel, Switzerland-based pharmaceutical company reported net sales growth of 1% in the third quarter of 2020 to USD12.26 billion. On a constant currency basis, Novartis said sales were in line with the prior year, noting that Covid-19 hurt demand, particularly in dermatology, ophthalmology and Sandoz retail. Net income came in 5% lower year-on-year at USD1.93 billion, mainly due to legal provisions, the company noted. Core net income, meanwhile, grew by 8% to USD3.47 billion from USD3.21 billion in the third quarter of 2019, due to lower spending and improved gross margin.
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MARKETS
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London shares were mixed with the FTSE 100 turning higher following a lower open. HSBC was the best blue-chip performer, up 6.5%. BP was up 0.9%. US stock market futures were pointed to a higher open following sharp losses on Monday. Ahead, software firm Microsoft is set to report earnings after the market close in New York on Tuesday.
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FTSE 100: up 0.1% at 5,794.00
FTSE 250: down 0.5% at 17,770.71
AIM ALL-SHARE: down 0.2% at 974.32
GBP: flat at USD1.3020 (USD1.3017)
EUR: flat at USD1.1814 (USD1.1818)
GOLD: soft at USD1,900.40 per ounce (USD1,903.80)
OIL (Brent): up at USD40.84 a barrel (USD40.38)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Prime Minister Boris Johnson is under pressure from scores of Conservative members of Parliament to detail a "road-map out of lockdown" as more people in England come under the toughest coronavirus restrictions. More than eight million people in England – predominantly in the North – will be under the most stringent Covid-19 restrictions by the end of the week, with Warrington the latest area to be placed in Tier 3. The measures – which came into force in the early hours of Tuesday – mean pubs and bars in the Cheshire town must close unless they serve substantial meals. Nottingham and the boroughs of Broxtowe, Gedling and Rushcliffe will move into Tier 3 on Thursday, with details expected to be set out later on Tuesday. The two areas will join the Liverpool City Region, Greater Manchester, Lancashire and South Yorkshire in Tier 3, placing 8.2 million people in England under the toughest restrictions.
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US President Donald Trump hailed a "momentous day" on Monday, shortly after the Senate confirmed Amy Coney Barrett as a justice on the Supreme Court in a narrow 52-48 vote. The confirmation gives the top court a six-to-three conservative majority and is a win for Trump, who nominated Barrett shortly after the death last month of former justice Ruth Bader Ginsburg, a liberal icon. Republicans in the Senate moved swiftly to fill the vacancy before next week's presidential election. The vote, among the closest in modern history, was a partisan affair, with just one Republican defecting to join the minority Democrats. The centre-left Democrats fear Barrett will swing the court in a sharply conservative direction, potentially for years to come, including on issues such as health care protection, abortion, gay rights and gun control.
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India and the US will on Tuesday signed an accord on sharing sensitive information ahead of talks between their defence and foreign ministers that will focus on countering China's growing influence. US Defence Secretary Mark Esper and Secretary of State Mike Pompeo will meet India's External Affairs Minister Subrahmanyam Jaishankar and Defence Minister Rajnath Singh as Indian and Chinese troops face off at their disputed Himalayan border. The Pompeo-Esper visit to New Delhi is part of a concerted US campaign to draw India into a deeper defence relationship. Esper and Singh "reinforced their commitment to deepening military-to-military cooperation" during talks on Monday, said a US Defense Department statement. Jaishankar tweeted after his talks with Pompeo that relations between the emerging allies have "grown substantially in every domain".
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