Level 2

Weekly review

By Josh White

Date: Friday 31 Jul 2020

(Sharecast News) - The FTSE 100 ended the week down 226.06 points at 5,897.76.
Equity view

British American Tobacco on Friday reported better-than-expected profits, driven by sales of more high-priced cigarettes and strong demand for its vaping products in the US.

Glencore reported a 15% decline in coal production in its first half on Friday to 58.1 million tonnes, which it put down to the Covid-19 related asset suspensions in Colombia, while it raised its earnings expectations for the year thanks to a "very strong" countercyclical marketing performance in the first half.

The Law Debenture Corporation confirmed on Friday that its 2020 dividend would be at least equal to the 2019 level of 26p per share, making for a dividend yield of 5%, as its net asset value total return slid 16.5%.

Babcock said on Friday that finance director Franco Martinelli plans to retire after 18 years at the aerospace and defence company.

Royal Dutch Shell swung to a heavy net first-half loss, but paid a dividend as the Covid-19 crisis hammered oil and gas prices.

Pest control and hygiene services company Rentokil posted a decline in interim profit on Thursday as it took a hit from the temporary closure of some businesses due to the coronavirus lockdown.

AstraZeneca reported a 12% rise in total revenue in its first half on Thursday, or 14% at constant exchange rates, to $12.63bn (£9.75bn), with growth across all three of its therapy areas and in all of its regions.

Compass Group reported a 44% fall in organic revenue in its third quarter on Thursday, with revenue down 14% year-on-year in the first nine months overall.

Jupiter Fund Management saw its bottom line shrink by over a third during the first half of the year amid net outflows, but kept its dividend payout unchanged.

French pharmaceutical giant Sanofi and GlaxoSmithKline have agreed to provide the UK with as many as 60.0m doses of their Covid-19 vaccine candidate, subject to final contract.

Aveva Group said it delivered "strong growth" in recurring revenue during the first quarter on Wednesday, although its overall revenue was down amid the Covid-19 crisis, and as it transitioned its business model.

Soaring iron ore prices and better-than-expected interim profits allowed mining giant Rio Tinto to pay out a dividend.

Asset manager St.James's Place beat analysts' estimates on many metrics for the second half of its financial year, posting funds under management of £115.7bn, with both gross inflows and net inflows edging past forecasts.

Irish convenience food group Greencore posted a drop in third-quarter sales on Tuesday as it took a hit from the Covid-19 pandemic, and announced the sale of its molasses businesses.

Virgin Money UK reported a decline in net interest margins during the third quarter of its financial year, even as its deposits and business loans continued growing.

Builders' merchant Travis Perkins reported a 20% fall in first-half revenues on Tuesday as its performance was dented by the coronavirus lockdown, but trends are improving.

Ascential said on Monday that it swung to an interim loss as revenue declined due to the coronavirus pandemic.

Signature Aviation reported a 31% fall in continuing group like-for-like revenue in its first half on Monday, which it said was "solely due" to the impact of Covid-19.

FTSE 250 IT provider Kainos announced a special dividend on Monday and said annual profit and revenue will be ahead of market expectations as trading from 1 April to date has been strong despite the impact of Covid-19.

Cairn Energy said on Monday that it has agreed the sale of its Senegal assets to Lukoil for $400m in cas and announced plans for a special dividend.

Economic news

UK house prices bounced back in July, boosted by pent-up demand after the coronavirus lockdown ended, according to a survey released by Nationwide on Friday.

The further easing of coronavirus restrictions in England that was due to take place on Saturday has been postponed.

Car production tumbled across the UK in the first half of the year after the sector cut more than 11,000 jobs in the wake of the Covid-19 pandemic.

Furloughed workers who lose their jobs during the coronavirus crisis will be eligible for redundancy pay based on their normal wages under new laws that will take effect on Friday.

Lending to individuals began to bounce back in June alongside a stronger than expected pace of mortgage approvals.

The chief executive of Heathrow Airport asked the UK government on Wednesday to urgently introduce passenger testing after reporting a 96% fall in passenger numbers during the second quarter.

Amazon is planning a wider UK rollout of its online grocery service by the end of 2020 as it tries to take advantage of consumers' needs during the pandemic.

Retail sales rose a little in July after non-essential shops were allowed to reopen following the Covid-19 lockdown, but sales are expected to dip next month, according to a survey from the Confederation of British Industry.

Ratings agency Moody's downgraded Rolls-Royce's credit rating to junk on Monday, saying it expects "substantial" cash outflows as the engine maker takes a hit from the coronavirus pandemic.

The UK could cut the majority of the CO2 emissions generated by traffic by installing e-highways in a project that would pay for itself within 15 years and cost around £20bn, a think-tank said.

International events

Spain posted a record fall in GDP in the second quarter, plunging a worse-than-expected 18.5% and sending the country into a deep recession, data from the National Statistics Institute showed on Friday.

Euro area gross domestic product recorded a contraction 12.1% over the second quarter.

German GDP fell by a record 10.1% quarter-on-quarter in the second quarter as the Covid-19 crisis took its toll, according to figures released by Destatis on Thursday.

The European Union warned of a potential shortage of syringes, wipes and protective gear needed for a mass Covid-19 vaccination programme and called on member states to buy the required equipment as a bloc.

Iran's Revolutionary Guards conducted military drills this week and launched missiles at a mock US Navy ship, leading two nearby US military bases to go on heightened alert.

A closely-watched lead indicator for US home sales edged past forecasts in June, underpinned in part by continued low mortgage rates.

Home price inflation in the States slowed in May, the results of a closely-followed gauge revealed.

Consumer sentiment in the States ebbed a bit more than expected in July as Americans tempered their short-term expectations.

Israeli researchers have claimed that an off-the-shelf treatment may possibly reduce the symptoms from Covid-19 to those of the common cold.

Gold prices hit a record high on Monday, rising above $1,900 for the first time since 2011 amid escalating tensions between the US and China and concerns about a second wave of coronavirus infections.

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