Rolls-Royce pulls dividend, Sage scraps share buyback
By Josh White
Date: Monday 06 Apr 2020
(Sharecast News) - London open
The FTSE 100 is expected to open 155 points higher on Monday, having closed down 1.18% at 5,415.50 on Friday.
Stocks to watch
Rolls-Royce pulled its dividend and implemented pay cuts from the boardroom to the shop floor as it moved to mitigate the impact of the coronavirus pandemic. The aircraft engine maker said it would cut salary costs across its global workforce by at least 10% in 2020. Salaries for senior managers and the executive team would be reduced by 20% comprising a cut and deferral with an extra bonus deferral for the chief executive and chief financial officer.
Sage scrapped its ?250m share buyback as the company predicted the Covid-19 crisis would hit revenue growth in the second half of the financial year.
Sports betting and gambling company GVC Holdings said on Monday that it started the year "well", with group net gaming revenue up 1% and online net gaming revenue ahead 19% in the first quarter. The FTSE 250 firm said that the closure of retail outlets and the cancellation of sports events had "significantly reduced" revenue from mid-March, however, adding that following the initiation of a number of mitigating actions, it now expected to reduce the EBITDA impact to about ?50m per month, from a previous estimate of ?100m. As a result, the average monthly cash outflow would be limited to ?15m per month.
Newspaper round-up
House sales in the UK will collapse this year as the coronavirus pandemic puts the property market into deep freeze. But prices will fall by only 3% and will rebound next year, according to global consultancy Knight Frank. In the first reassessment of the property market by one of the major forecasters, Knight Frank said the number of house sales in the UK would plummet from 1,175,000 last year to just 734,000 this year. - Guardian
The Bank of England's Governor has insisted the UK will not fall into an inflationary spiral of the type seen in Zimbabwe, as Threadneedle Street prints money on a massive scale. Andrew Bailey said the Bank would "not hesitate to take all necessary actions" to support British businesses through the disruption while also ensuring inflation remained consistent with its 2pc medium-term target. - Telegraph
The coronavirus lockdown will cost the economy ?2.4 billion a day for as long as it lasts and consumer confidence has crashed to its lowest level since the financial crisis, according to two gloomy new reports about the state of the economy. Shutting down the economy will reduce Britain's gross domestic product by 31% as social restrictions prevent businesses from functioning, the Centre for Economics and Business Research said. Output at hotels, restaurants, retailers, cleaning services, museums and galleries and manufacturing will more than halve. - The Times
A group of medical, technology and aviation experts has called on the government to back a plan to create hundreds, possibly thousands, of intensive care beds in grounded aircraft. It says that using aircraft is a proven concept used by the military and that there is a surfeit of wide-body aircraft, such as Boeing 747 jumbo jets or doubledecker Airbus A380s, lying idle at airports. - The Times
US close
Stocks on Wall Street finished lower on Friday after data revealed that non-farm payrolls collapsed in March, although a rally in crude oil futures helped to stem losses.
By the end of trading, the Dow Jones Industrial Average was down 1.69% at 21,052.53, while the S&P 500 was 1.51% weaker at 2,488.65 and the Nasdaq Composite lost 1.53% to 7,373.08.
Volatility was also lower however, with the CBoE's VIX volatility index erasing 8.07% to 46.80.
The main focus for investors on Friday was news that the US jobs market deteriorated massively in March as the Covid-19 pandemic began sweeping across the country and some state authorities moved to a lockdown.
According to the Department of Labor, non-farm payrolls collapsed by 701,000, worse than consensus expectations for a reduction of 81,000, with travel & leisure accounting for the bulk of employment losses as companies in that sector shed 459,000 workers.
At the same time, the unemployment rate shot higher, from 3.5% for February to 4.4% in March, against consensus forecasts for a reading of 3.8%.
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