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FTSE 100 back over 6,000 points despite rising cost of Covid-19 crisis - business live FTSE 100 back over 6,000 points despite rising cost of Covid-19 crisis - business live
(32 minutes later)
UK stock market has hit its highest level since early March, despite coronavirus lockdown hitting retail sales and driving bad debts upUK stock market has hit its highest level since early March, despite coronavirus lockdown hitting retail sales and driving bad debts up
After an upbeat morning, the UK stock markets is still at a seven-week high as traders await the latest US GDP report in 90 minutes time.
In London, cruise operator Carnival (+10%), Barclays bank (+6.6%) and energy firm Centrica (+5.9%) are the top risers.
European markets are a little more subdued, though:
FTSE 100: up 45 points or 0.75% at 6003 points,
German DAX: up 36 points or 0.3% at 10,832
French CAC: down 8 points or 0.2% at 4,561 points
AstraZeneca, Britain’s biggest drugmaker, is involved in a number of initiatives to find a treatment for Covid-19.
It is testing its diabetes drug Farxiga to treat hospitalised covid-19 patients at risk of serious complications to try and prevent heart or kidney failure.
The firm has started enrolling 900 people in the UK, the rest of Europe and the US for a late-stage clinical trial and expects to have the first results in a couple of months. The firm also has two out of six medicines in the government’s Accord programme to fast-track covid-19 treatments, and expects to dose the first patients in the next few days.
One is the blood cancer drug Calquence, which is being tested to see if it can suppress the cytokine storm that inflames the lungs and other organs of some Covid-19 patients. It has already been given to some Covid-19 patients with advanced lung disease in the US, where researchers at the NIH’s National Cancer Institute observed “some clinical benefit”.
AstraZeneca has teamed up with fellow pharma giant GlaxoSmithKline and the University of Cambridge to set up a new coronavirus testing lab in Cambridge that should able to carry out 30,000 tests a day by early May. AstraZeneca has also donated nearly nine million face masks to healthcare workers around the world, including half a million in the UK.
The drugmaker has benefited from clients stockpiling respiratory drugs such as Symbicort, which boosted sales by 16% to $6.4bn in the first three months of the year, but its chief executive Pascal Soriot said the overall impact of the Covid-19 crisis on AZ would be negative, as fewer people are going to the doctors and using medicines. He expects the crisis to last between three and six months.
Shares in UK electricals chain Dixon Carphone have surged 20% this morning, after it showed it was getting to grips with the pandemic.Shares in UK electricals chain Dixon Carphone have surged 20% this morning, after it showed it was getting to grips with the pandemic.
Dixons reported that its online sales have grown by 166% in the last five weeks, under the lockdown, as customers flock to buy home computers, gaming consoles and kitchen gadgets.Dixons reported that its online sales have grown by 166% in the last five weeks, under the lockdown, as customers flock to buy home computers, gaming consoles and kitchen gadgets.
This means Dixons has recovered around two-thirds of the £400m sales lost because its UK and Ireland shops are closed.This means Dixons has recovered around two-thirds of the £400m sales lost because its UK and Ireland shops are closed.
It also reported strong trading at its Nordic stores (which are still open), where it has been learning how to operate under physical distancing rules.It also reported strong trading at its Nordic stores (which are still open), where it has been learning how to operate under physical distancing rules.
Shares have jumped to 81p, a one-month high.Shares have jumped to 81p, a one-month high.
European airline manufacturer Airbus has struck a very cautious note today, saying the travel industry may not recover until 2025.European airline manufacturer Airbus has struck a very cautious note today, saying the travel industry may not recover until 2025.
Airbus CEO Guillaume Faury warned:Airbus CEO Guillaume Faury warned:
He believes it could take “three to five years” for passengers to be as willing to fly as before the crisis.He believes it could take “three to five years” for passengers to be as willing to fly as before the crisis.
Raffi Boyadjian, senior investment analyst at trading firm XM, says there is a “mood of cautions optimism” in the markets today.Raffi Boyadjian, senior investment analyst at trading firm XM, says there is a “mood of cautions optimism” in the markets today.
The rally in shares, and in oil, come as several countries began to ease their lockdown measures.The rally in shares, and in oil, come as several countries began to ease their lockdown measures.
Boyadjian says:Boyadjian says:
Just in: Economic confidence across the eurozone has suffered its worst ever fall -- quite a contrast with the recent stock market rally.Just in: Economic confidence across the eurozone has suffered its worst ever fall -- quite a contrast with the recent stock market rally.
The European Commission’s economic sentiment index has slumped to just 67.0 points this month, down from 94.2 in March and 103.4 in February.The European Commission’s economic sentiment index has slumped to just 67.0 points this month, down from 94.2 in March and 103.4 in February.
The gloom is darkest in the service sector - where the confidence measure slumped to -35 points from -2.3 in March.The gloom is darkest in the service sector - where the confidence measure slumped to -35 points from -2.3 in March.
The survey also showed the consumers are more worried about losing their jobs, and also expect prices in the shops to rise.The survey also showed the consumers are more worried about losing their jobs, and also expect prices in the shops to rise.
The days of cramming thousands of bankers into skyscrapers may be numbered, due to Covid-19.The days of cramming thousands of bankers into skyscrapers may be numbered, due to Covid-19.
The City of London and Canary Wharf are both pretty deserted right now, with financial services companies telling staff to work remotely where possible - either at remote sites, or from home.The City of London and Canary Wharf are both pretty deserted right now, with financial services companies telling staff to work remotely where possible - either at remote sites, or from home.
Barclays has a large tower block at the Wharf, but CEO Jes Staley is pondering whether it needs to pack its staff into one place.Barclays has a large tower block at the Wharf, but CEO Jes Staley is pondering whether it needs to pack its staff into one place.
He told reporters that the Canary Wharf offices will open gradually, with just two people allowed in an elevator at once.He told reporters that the Canary Wharf offices will open gradually, with just two people allowed in an elevator at once.
And in the long term.....And in the long term.....
Keeping staff two metres apart is pretty much impossible on a busy trading floor, unless you sharply reduce the number of people in the office at once. Bosses will also be very nervous about future disruption -- one Covid-19 case could force everyone to go home.Keeping staff two metres apart is pretty much impossible on a busy trading floor, unless you sharply reduce the number of people in the office at once. Bosses will also be very nervous about future disruption -- one Covid-19 case could force everyone to go home.
Another factor: the City seems to have coped well with remote working.Another factor: the City seems to have coped well with remote working.
Staley says it is “absolutely remarkable” that technology has allowed 70,000 staff to keep Barclays’ operations running properly “from their kitchens.”Staley says it is “absolutely remarkable” that technology has allowed 70,000 staff to keep Barclays’ operations running properly “from their kitchens.”
But, there will be a knock-on impact if City workers stay home, as Neil Wilson of Markets.com explains:But, there will be a knock-on impact if City workers stay home, as Neil Wilson of Markets.com explains:
The oil price is recovering this morning too, helping to nudge stocks higher.The oil price is recovering this morning too, helping to nudge stocks higher.
Brent crude has gained 3% to $21.07 per barrel, while US crude has gained 13% to $13.94 per barrel.Brent crude has gained 3% to $21.07 per barrel, while US crude has gained 13% to $13.94 per barrel.
David Madden, market analyst at CMC Markets, explains:David Madden, market analyst at CMC Markets, explains:
Hitting 6,000 points again is a “significant milestone” in FTSE 100’s recovery from the pandemic-inspired stock market slump, says Russ Mould, investment director at AJ Bell.Hitting 6,000 points again is a “significant milestone” in FTSE 100’s recovery from the pandemic-inspired stock market slump, says Russ Mould, investment director at AJ Bell.
He gives some of the credit to Barclays, where decent investment bank trading made up for growing problems in the UK economy.He gives some of the credit to Barclays, where decent investment bank trading made up for growing problems in the UK economy.
Standard Chartered, the emerging markets-focused bank, has also reassured investors today despite reporting falling profits.Standard Chartered, the emerging markets-focused bank, has also reassured investors today despite reporting falling profits.
The FTSE 100-listed lender told the City that it sees signs of recovery in its key markets in Asia, predicting:The FTSE 100-listed lender told the City that it sees signs of recovery in its key markets in Asia, predicting:
Standard Chartered is also setting aside more money to cover bad loans, with a credit impairment of $956m for the last quarter.Standard Chartered is also setting aside more money to cover bad loans, with a credit impairment of $956m for the last quarter.
Today’s rally follows encouraging results from Google’s parent company, Alphabet, last night.
Alphabet posted higher revenues in the last quarter than expected, despite a “significant and sudden slowdown in advertising” in March.
CFO Ruth Porat also reported “some early signs” that customers are returning to more normal behaviour - helping to lift shares by 7% in pre-market trading....
Roughly two-thirds of the companies on the FTSE 100 are up this morning, pushign the index over 6,000 points.
The rally is being led by energy companies (+2.1%), telecoms firms (+1.5%), financial stocks (+1%) and miners (+0.95%).
Boom! Britain’s FTSE 100 index has just pushed over the 6,000 points mark for the first time since 11 March.
That means it has clawed back all the losses since the stomach-churning crash on 12 March (the worst day since 1987).
Here are the top risers, and fallers, as investors continue to grasp hopes that Covid-19 lockdowns will end soon, helping the world economy to rebound.
UK clothing and homeware group Next has reported that sales plunged over 40% in the last quarter, due to the lockdown.
Next told the City that the drop in sales has been “faster and steeper” than anticipated in its March stress test.
It now expects lower sales for both the first and second half of the year.
It told shareholders this morning that customers had already voted with their feet before the lockdown:
Although Next’s stores are still closed, it began partially reopening its internet shopping offering two weeks ago. It says 70% of ranges are now available, with operations rejigged to comply with physical distancing rules.
It is also limiting daily orders, and will shut down until the next morning when this is hit.
The coronavirus crisis is bad news for the advertising industry too.
Advertising giant WPP has reported that revenues fell 4.9% in the last quarter, including a 7.9% tumble in March, as companies began to slash their marketing programmes.
WPP expects more pain ahead (understandably - you can hardly expect travel firms and restaurant groups to do much advertising right now).
CEO Mark Read told Reuters:
The rising economic cost of Covid-19 has hit profits at UK bank Barclays.
Barclays is setting aside £2.1bn to cover a surge in bad debts, anticipating that its business and consumer customers will struggle to repay their loans.
This dragged profits for the first quarter of 2020 down to £923m, some 38% less than a year ago, and lower than hoped.
CEO Jes Staley pinned the blame firmly on the coronavirus:
Staley also warned of tough times ahead:
Shares in Barclays are up 5% this morning, though - as its Investment Bank reported a “particularly strong Markets performance”.
IAG are the top faller in London, down almost 6%, after its British Airways division announced it would eliminate one in four jobs.
Job cuts often go down well in the City (they’re a pragmatic lot). Not today, though.
Traders are alarmed that IAG also announced that it made a loss of €535m in the last quarter, with revenues down 13%, with worse to come.
CEO Alex Cruz told staff he was acting “decisively”to ensure that British Airways has a strong future. Unions, though, are furious that IAG is slashing staff rather than seeking government help.
Michael Hewson of CMC Markets comments:
The FTSE 100 has hit a new seven-week high at the start of trading in London.
The blue-chip index has gained 30 points to reach 5989 points, for the first time since Wednesday 11 March.
Cruise operator Carnival are the top riser, up 7.4%, suggesting traders are anticipating the end of coronavirus restrictions.
April has been a good month for Wall Street. With two days to go, stocks are up 10% - their best performance for many a year (after a torrid March).
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we learn how badly America’s economic growth was hit by the first phase of the Covid-19 crisis, and what its central bank will do to fight it.
GDP figures for the first quarter of 2020 are expected to show that the US economy shrank in January-March, at an annualised rate of around 4%. That would reflect the early impact of the global pandemic, as lockdowns spread from Asia to Europe and then America.
The threat of a deep recession has already spurred America’s Federal Reserve into a series of massive stimulus programmes. The Fed holds a policy meeting today, but isn’t expected to change monetary policy -- having already slashed borrowing costs to nearly zero.
Instead, investors will be looking for signals that the Fed will continue to generously support the economy -- and thus asset prices -- until the Covid-19 pandemic is over. It has already pledged more than $2 trillion of loan guarantees and other financial help.
Optimism that policymakers will keep doing Whatever It Takes have lifted the markets to their highest levels in seven weeks. Britain’s FTSE 100 is only a whisker below the 6,000 point mark, having fallen through 5,000 points last month.
Stocks have rallied in Asia too, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.7% to its highest since 12 March.
Australia’s S&P/ASX 200 index rose by 1.5%, while China’s CSI 300 inched up by 0.3%.
The FTSE 100 index has gained 5% in April, cutting its losses during 2020 to a mere 21%.
That reflects a lot of optimism that coronavirus lockdowns will ease, economies will return to something like normality, and a deep depression will be avoided.
But given so many companies are reporting falling sales and profits, and suspending their dividends, does this rally have firm foundations?
Last night, British Airways laid out plans to cut 12,000 jobs -- as it responds to the collapse in the travel business.
The big fear is that Covid-19 infections spike again once governments start to reopen offices, factories and schools.
Fiona Cincotta of City Index explains:
The agenda
10am BST: Eurozone consumer and economic confidence data
1.30pm BST: US GDP for Q1 2020- expected to fall by an annnualised rate of 4%
7pm BST: US Federal Reserve interest rate decision
7.30pm BST: Fed chair Jerome Powell’s press conference