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Burberry says first-half sales could halve, Severn Trent trades in line with forecast

By Josh White

Date: Wednesday 15 Jul 2020

(Sharecast News) - London open

The FTSE 100 is expected to open 61 points higher on Wednesday, having closed up 0.06% at 6,179.75 on Tuesday.
Stocks to watch

Luxury fashion brand Burberry said it expected first half sales to fall by up to 50% as the coronavirus pandemic continued to have a material impact. The company on Wednesday said first quarter comparable sales plunged 45% to £257m with stores closed during global lockdowns, although the rate eased to -20% in June with growth in mainland China and Korea ahead of pre-Covid levels. "Based on this trading assumption, we would expect H1 2021 gross margin to decline by around 200 basis points to 300bps year-on-year and ... operating expenses to reduce by a mid-teens percentage compared to last year," the company said.

Severn Trent said the first quarter was in line with its expectations and predicted annual performance would be in line with guidance.The water company said it had not seen evidence to change its estimates for the impact of Covid-19.

GlaxoSmithKline said on Wednesday that the Oncologic Drugs Advisory Committee of the US Food and Drug Administration had voted in favour of the benefit of monotherapy treatment with belantamab mafodotin, as outweighing the risks for patients with relapsed or refractory multiple myeloma who had received at least four prior therapies. The FTSE 100 pharmaceuticals giant said the recommendation was based on data from the 'DREAMM' clinical trial programme, including the pivotal 'DREAMM-2' study, which enrolled "heavily pretreated" patients who had actively progressing multiple myeloma that had worsened despite current standard of care. It said the FDA would consider the recommendation of the committee, but was not obligated to follow it.

Newspaper round-up

The £3.8bn stamp duty giveaway unveiled by chancellor Rishi Sunak last week has already sparked a mini property boom in the southern England commuter belt, according to the UK's biggest property website, Rightmove. The data indicates that most of the benefit of the £3.8bn giveaway will flow to Conservative-voting areas in the outer orbit of London. Rightmove named Milton Keynes, Watford and the north-west London borough of Harrow as the areas witnessing rises of more than 100% in buyer enquiries since the stamp duty announcement was made last Wednesday. - Guardian

Wealthy households could be in line for tax rises to claw back the cost of extra spending during the coronavirus pandemic, after the government called for a wide-ranging review of capital gains tax. - Guardian

A string of major British firms have pledged to stop using petrol and diesel vehicles by 2030 and are calling for ministers to accelerate their own plans to go carbon neutral. BT, British Gas owner Centrica, outsourcer Mitie and Marmite maker Unilever are among the companies which have vowed to switch to electric fleets within a decade as part of the fight to cut carbon emissions and other pollution. - Telegraph

Britain's biggest accounting firms have been criticised by the industry regulator for the "unacceptable" quality of their audits after a review found one in three was substandard. The Financial Reporting Council's annual inspection of the seven biggest firms - KPMG, EY, PWC, Deloitte, Grant Thornton, BDO and Mazars - reviewed 88 audits, including those for 45 FTSE 350 companies. It found that 29 of the 88 audits reviewed required more than limited improvements, while seven of these required significant improvements. Of the FTSE 350 audits, 13 were found wanting, with two requiring significant improvements. - The Times

America's biggest banks are to set aside more than $47 billion to cover an expected wave of loan defaults resulting from the coronavirus pandemic. JPMorgan, Citigroup and Wells Fargo, three of the big four US lenders, collectively earmarked a further $28 billion for loan losses yesterday as they reported their second-quarter results, having already made significant provisions at the end of the first quarter. - The Times

US close

Wall Street stocks finished on a positive note on Tuesday, following key earnings reports from some of the country's biggest banks.

The Dow Jones Industrial Average ended the session up 2.13% at 26,642.59, the S&P 500 added 1.34% to 3,197.52, and the Nasdaq Composite was 0.94% firmer at 10,488.58.

It was a positive session throughout for the Dow, which had opened 198.83 points higher, after another record spike in new Covid-19 cases in Florida saw the blue-chip index record just a small gain during the previous session.

Tuesday's main focus was earnings from the major banks, with JPMorgan Chase reporting forecast-beating second-quarter numbers after heightened market volatility delivered record trading revenues and helped offset a weaker performance in retail banking.

Citigroup posted better-than-expected second-quarter earnings as a surge in trading revenues helped offset a slowdown in its banking unit.

Shares in JPMorgan finished up 0.57%, while Citigroup went the other direction, closing 3.93% below the waterline.

Wells Fargo was well into the red too, after the bank slashed its dividend as lower interest rates and soaring credit provisions prompted a slide into the red during the second quarter.


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