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UK TOP NEWS SUMMARY: UK Economic Rebound Softens In September

Wed, 23rd Sep 2020 11:10

(Alliance News) - The following is a summary of top news stories Wednesday.


Hazard detection firm Halma said it has delivered a "resilient" performance in the year-to-date, adding that revenue trends have gradually improved from the end of the first quarter. However, it continues to expect adjusted pretax profit for the current financial year to be 5% to 10% below GBP267.0 million recorded for financial 2020 ended March 31. Separately, Amersham, England-based Halma said Paul Walker intends to relinquish the chair and step down from the board by 2021. He will be moving to business publisher and events organiser RELX to take up the same role in the first half of 2021, replacing Anthony Habgood.

PZ Cussons said profit fell in its most recent financial year as revenue from its Africa and Asia Pacific regions declined while costs and expenses crept higher. The personal care products maker said pretax profit for its financial year ended May 31 fell 33% to GBP29.3 million from GBP43.6 million the year before. Revenue fell 2.4% to GBP587.2 million from GBP603.0 million. This was explained as resulting from "growth in the Europe & the Americas region offset by reductions in both the Africa and Asia Pacific regions." Separately, PZ Cussons issued a trading statement for its first quarter ended August 31. It said that revenue was up 19% in the quarter on a reported basis with its Focus Brands growth experiencing 37% growth at constant exchange rates compared to the previous year.

Diploma said that it has raised GBP194 million through a previously announced share placing, subscription and retail offer. The company on Tuesday had announced the equity raise to fund the proposed GBP357 million acquisition of Chicago-based Windy City Wire Cable & Technology Products. Diploma, which manufactures medical diagnostic instruments, seals and cables, has placed 11.1 million new ordinary shares at 1,711 pence per share, raising GBP190 million. Diploma said each of its directors subscribed 15,484 shares in total under a subscription agreement, raising GBP265,000. In addition, retail investors subscribed 222,200 shares, raising GBP4 million. In total, the placing, subscription and retail offer comprised 11.3 million new ordinary shares and the share issue price is equal to the closing share price of 1,711p on Tuesday.

Lone Star Funds has dropped out of the race to acquire UK grocer Asda after being unable to match the price sought by owner Walmart, the Telegraph reported on Tuesday. The US private equity firm was seen as a frontrunner along with asset manager Apollo Global Management after Walmart restarted an auction for a majority stake in Asda following a pause during the lockdown period. The US retailer was forced to put Asda back on the market after a merger with J Sainsbury was blocked last year by the UK Competition & Markets Authority with the regulator finding the merger would leave customers worse off. UK-based private equity firm TDR Capital also remains in the running for Asda.


London stocks surged on Wednesday, extending the previous session's gains. Wall Street is also on course for a higher open, with the Dow Jones seen up 0.8%, the S&P 500 up 0.5% and the Nasdaq also pointed 0.5% higher. The dollar had been flying high in morning trade, but edged back as the day progressed, leaving both the pound and euro higher despite data showing the pace of economic recovery in the UK and eurozone weakened in September.

FTSE 100: up 2.3% at 5,960.62

FTSE 250: up 1.7% at 17,106.59

AIM ALL-SHARE: up 0.8% at 951.54

GBP: higher at USD1.2734 (USD1.2717)

EUR: firm at USD1.1710 (USD1.1702)

GOLD: lower at USD1,888.90 per ounce (USD1,904.86)

OIL (Brent): higher at USD42.09 a barrel (USD41.60)

(changes since previous London equities close)


The strength of the UK private sector's rebound moderated in September, figures showed, with growth in the services sector slowing notably. The IHS Markit/Chartered Institute of Procurement & Supply flash composite purchasing managers' index reading fell to 55.7 points in September from 59.1 in August. Remaining above the no-change line of 50 indicates the private sector continued to expand in September, though at a slower pace than seen in August. September's print was the lowest since June, IHS Markit noted. Chris Williamson, chief business economist at IHS Markit, commented: "The UK economy lost some of its bounce in September, as the initial rebound from Covid-19 lockdowns showed signs of fading. It was not surprising to see that the slowdown was especially acute in services, where the restaurant sector in particular saw demand fall sharply as the Eat Out to Help Out scheme was withdrawn." Dragging on the composite reading was the UK's dominant services sector, with the PMI slipping to a three-month low of 55.1 from 58.8 in August. The manufacturing sector also recorded a slowdown in growth, though more moderately, with a reading of 54.3 in September - a two-month low - versus August's 55.2.

The UK government has warned that Britain could face much tougher measures if new rules to curb coronavirus fail to get the infection rate under control. On Tuesday evening, Prime Minister Boris Johnson said the nation faces an "unquestionably difficult" winter and warned the latest restrictions could last the next six months. In a televised address Johnson said "we must reserve the right to go further" if the pace of transmission continues to rise. The new strategy for England will see office staff once again working from home, the wider use of face masks and a 10pm curfew on pubs and restaurants. Businesses will face GBP10,000 fines or closure for failing to comply with regulations, and people risk GBP200 penalties for failing to wear masks or breaching the "rule of six". The military could be used to free up police officers to tackle coronavirus rulebreakers.

Business activity across the eurozone just barely remained in expansion in September due to a drag from the services sector, data from IHS Markit revealed. The flash Eurozone purchasing managers' composite output index declined to 50.1 points in September, compared to August's final reading of 51.9, as a drop in the services sector more than offset a gain in manufacturing. In July, the flash eurozone PMI had a reading of 54.9, so September represents a second month of fall back. The flash Eurozone services purchasing managers' index activity index fell into contraction by dropping to 47.6 points from 50.5 in August, while the flash Eurozone manufacturing PMI index was 53.7 compared to 51.7 the month before. IHS Markit said that after rebound in July and August, the PMI has indicated a near stalling the the economy at the end of the third quarter of 2020, as ongoing social distancing measures and a rise in Covid-19 infection rates stunted demand, most notably for consumer facing services.

Justice Ruth Bader Ginsburg, whose death has opened a crucial US Supreme Court seat that the Republican president, Donald Trump, has promised to quickly and controversially fill against the wishes of Democrats, will lie in repose beginning Wednesday at the US high court. Trump will announce his pick to replace Ginsburg on Saturday, with Senate Republicans promising a swift vote on the nominee. Democratic opponents, led by presidential candidate Joe Biden, however, are demanding that the process wait until after the November 3 election, when it will be known whether Trump is getting a second term. Republicans are ignoring this, giving Trump, who has already replaced two other justices, a chance to tilt the nation's highest court to the right for decades to come, whether he beats Biden or not. Speaking Tuesday at a campaign rally in Moon Township, Pennsylvania, Trump said he would reveal his nominee at 5:00 pm local time on Saturday at the White House. "We're going to pick a great woman," he said to chants of "Fill that seat!" from the crowd. "We have great support from the Republican Party."

Copyright 2020 Alliance News Limited. All Rights Reserved.

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