11th Sep 2020 08:01
(Alliance News) - The UK gross domestic product rebounded in July, following two consecutive quarterly falls, but has still only recovered just over half of the lost output caused by the coronavirus, the Office for National Statics said Friday.
The ONS noted July's 6.6% growth marked the country's third consecutive monthly increase. In the first and second quarter, however, GDP shrank, on a quarterly basis, by 2.2% and 20%, respectively.
On an annual basis, UK gross domestic product fell 21% in the three months to June, having contracted 1.7% in the first quarter of 2020.
The second quarter contraction was the largest the UK had seen since 1955.
Monthly gross domestic product grew by 6.6% in July as lockdown measures continued to ease, following growth of 8.7% in June and 2.4% in May - which followed a record fall of 20% in April.
"While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic," ONS Director of Economic Statistics Darren Morgan said.
July's monthly figure came in slightly behind market consensus, according to FXStreet, of 6.7% growth.
July GDP is now 19% higher than its April low. However, it remains 12% below the levels seen in February, before the full impact of the coronavirus pandemic.
In the rolling three months to the end of July, UK GDP fell 7.6%, as government restrictions on movement continue to dramatically reduce economic activity.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down down 8.42 points at 5,994.9
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Hang Seng: up 0.7% at 24,481.28
Nikkei 225: closed up 0.7% at 23,406.49
DJIA: closed down 405.89 points, 1.5%, at 27,534.58
S&P 500: closed down 1.8% at 3,339.19
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GBP: down at USD1.2823 (USD1.2877)
EUR: down at USD1.1838 (USD1.1880)
Gold: down at USD1,942.90 per ounce (USD1,957.51)
Oil (Brent): down at USD39.87 a barrel (USD40.50)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
0930 BST UK Bank of England Quarterly Inflation Attitudes Survey
1230 BST UK NIESR Monthly GDP Tracker
0800 CEST Germany CPI
0800 CEST Germany WPI
0900 CEST Spain Industrial Production
0900 CEST Spain CPI
1000 CEST Italy Labour Cost Index
0830 EDT US CPI
0830 EDT US Real Earnings
0830 EDT Canada Industrial capacity utilization rates
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Talks on a post-Brexit trade deal between the UK and the EU are hanging in the balance after Brussels demanded the UK abandon plans to override key elements of the Withdrawal Agreement. At a stormy meeting in London on Thursday, the Cabinet Office Minister Michael Gove insisted the government "could not and would not" drop measures in legislation tabled earlier this week. It prompted European Commission vice-president Maros Sefcovic to accuse the UK of an "extremely serious violation" of international law, putting the ongoing trade talks in jeopardy. Meanwhile UK Prime Minister Boris Johnson is facing growing unrest among Tory MPs deeply unhappy at the threat to undermine Britain's traditional support for the international rule of law. The former chancellor Norman Lamont said the government was in a "terrible mess" and warned the UK Internal Market Bill would not get through the Lords in its present form. In the Commons, senior Conservatives are tabling an amendment to the Bill which they said would limit the powers it gave to ministers in relation to the Withdrawal Agreement. The row erupted as the latest round of trade talks – also taking place in London – ended on Thursday with both sides acknowledging that "significant differences" remain. Johnson has set a deadline of October 15 for an agreement to be reached, otherwise he has said he will simply walk away from the negotiating table. However Sefcovic said the UK side needed now to rebuild trust which had been "seriously damaged" by the events of the past days. He said the provisions in the Bill relating to the Withdrawal Agreement had to be dropped by the end of September and that the EU would "not be shy" about taking legal action if the government refused.
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US President Donald Trump on Thursday denied lying to Americans about the severity of the coronavirus after a bombshell new book by journalist Bob Woodward revealed that he deliberately downplayed the crisis. Trump's taped admission to Woodward that he minimised the pandemic in public, while being aware from the start about the unique danger presented by Covid-19, has set off alarm bells less than eight weeks before election day. Asked at a hastily organised White House press conference "Why did you lie to the American people?" Trump responded: "I didn't lie." The Republican, who is down in the polls against Democrat Joe Biden and faces overwhelming disapproval from Americans on his handling of the coronavirus crisis, insisted that he'd softened the dangers in public so as to preserve calm. "I don't want to jump up and down and start screaming 'Death! Death!'" he argued. But Trump has been thrown onto the defence after multiple excerpts and recordings from Woodward's book "Rage" were released on Wednesday. Following two Fox News interviews, dozens of tweets, and the press conference, Trump continued his bid to get his election message back on track by holding a rally with supporters in Freeland, Michigan.
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California firefighters battled the state's largest ever inferno Thursday, as tens of thousands of people fled blazes up and down the US West Coast and officials warned the death toll could shoot up in coming days. At least eight people have been confirmed dead in the past 24 hours across California, Oregon and Washington, but officials say some areas are still impossible to reach, meaning the number is likely to rise. The August Complex Fire became the biggest recorded blaze in Californian history on Thursday, after multiple fires in the state's northwest combined amid high temperatures and winds to rip through 470,000 acres of dry vegetation. In neighbouring Oregon, where at least five towns have been "substantially destroyed" and up to 40,000 people evacuated, governor Kate Brown said twice the state's annual average had burned in just the past 72 hours.
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India and China have agreed to "disengage as soon as possible" after troops engaged in a series of clashes at their disputed Himalayan border, according to a joint statement from the two countries. The nuclear-armed neighbours accused each other this week of firing shots across the flashpoint border – intensifying a months-long standoff that has already claimed at least 20 lives. Tens of thousands of troops from both sides have been deployed to the border, which sits at an altitude of more than 4,000 metres. After a meeting Thursday between Chinese Foreign Minister Wang Yi and his Indian counterpart Subrahmanyam Jaishankar in Moscow, a joint statement said the two sides had agreed to de-escalate. "(The) border defence forces of both countries should continue dialogue, disengage as soon as possible, maintain the necessary distance, and ease the situation on the ground," the statement said. The two also agreed to "avoid actions that may escalate the situation".
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BROKER RATING CHANGES
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BERENBERG RAISES ROLLS-ROYCE TO 'BUY' (HOLD) - PRICE TARGET 270 (890) PENCE
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COMPANIES - FTSE 100
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Pan-European stock market operator Euronext said it is in negotiations with the London Stock Exchange Group PLC to buy the Milan stock market. Euronext – which operates the stock exchanges of Amsterdam, Brussels, Dublin, Lisbon, Oslo and Paris – confirmed in a statement "it is currently in discussions with Cassa Depositi e Prestiti to submit an offer to London Stock Exchange Group PLC for the acquisition of the business and key operational assets of Borsa Italiana." "A further announcement will be made as and when appropriate," it said.
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Rio Tinto announced the resignation of its CEO and two other top officers Friday over the mining giant's destruction of a 46,000-year-old Aboriginal site to expand an iron ore mine in Australia. The Anglo-Australian firm was facing a growing investor revolt over the destruction of the sacred site in the Juukan Gorge in Western Australia's remote Pilbara region – one of the earliest known locations occupied by Australia's indigenous people. Following a board investigation into the May 24 incident, Rio Tinto said CEO Jean-Sebastien Jacques was stepping down "by mutual agreement" along with the chief of the company's core iron ore division, Chris Salisbury, and corporate relations head Simone Niven. "What happened at Juukan was wrong and we are determined to ensure that the destruction of a heritage site of such exceptional archaeological and cultural significance never occurs again at a Rio Tinto operation," Chair Simon Thompson said in a statement.
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Miner Anglo American reported the value of rough diamond sales for De Beers' sixth and seventh sales cycles of 2020, amounting to USD116 million and USD320 million, respectively. Owing to the restrictions on the movement of people and products in various jurisdictions around the globe, De Beers has continued to implement a more flexible approach to rough diamond sales during the sixth and seventh sales cycles, Anglo American said. "Diamond markets showed some continued improvement throughout August and into September as Covid-19 restrictions continued to ease in various locations, and manufacturers focused on meeting retail demand for polished diamonds," said De Beers Chief Executive Bruce Cleaver.
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COMPANIES - FTSE 250
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Emerging markets investment manager Ashmore Group reported a slight rise in annual profit but a drop in assets under management due to the Covid-19 pandemic. For the year to the end of June, the company's pretax profit increased 1% year-on-year to GBP221.5 million. Adjusted net revenue increased by 5% to GBP325.0 million when compared to the prior year, driven by 7% growth in net management fees. The asset manager declared a dividend of 12.10 pence to give a 2% year-on-year increase in total payout to 16.90p. Ashmore said assets under management declined by 9% to USD83.6 billion amid negative market performance reflecting the third-quarter impact of Covid-19 pandemic.
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COMPANIES - GLOBAL
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Microsoft said Thursday it thwarted recent cyberattacks from China, Russia and Iran targeting both Republican and Democratic presidential campaigns, as technology giants scrambled to protect election security less than two months ahead of the US vote. The announcement came as Twitter said it would implement a policy next week to remove "false or misleading information intended to undermine public confidence in an election," including unverified claims of victory; and Alphabet's Google said it would take steps to ensure its "auto complete" search feature doesn't make such misguided suggestions. Microsoft said that attackers have been targeting staff from the campaigns of President Donald Trump and his Democratic rival, Joe Biden. "In recent weeks, Microsoft has detected cyberattacks targeting people and organisations involved in the upcoming presidential election," said corporate vice president Tom Burt. It was clear that "foreign activity groups have stepped up their efforts targeting the 2020 election as had been anticipated," according to Burt.
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Oracle said its first-quarter revenue surged above guidance with the technology company hailing its cloud services. In the three months to August 31, revenue climbed 1.% annually to USD9.38 billion from USD9.22 billion. Net income rose 5.3% to USD2.25 billion from USD2.14 billion a year earlier and pretax profit grew by 4.6% to USD2.60 billion from USD2.48 billion. Non-GAAP earnings per share jumped 15% to USD0.93 from USD0.81 a year ago. "Quarter one was fantastic with total revenue beating guidance by more than USD150 million, and non-GAAP earnings per share beating guidance by USD0.07," Chief Executive Officer Safra Catz.
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Indian conglomerate Reliance denied a report Thursday that it was planning to sell a USD20-billion stake in its retail business to US rival Amazon.com Inc in a deal that could upend the country's hugely lucrative e-commerce sector. The report published by Bloomberg on Thursday said that Reliance, owned by Asia's richest man Mukesh Ambani, had offered Amazon a 40% stake in its retail subsidiary RRVL, citing an unidentified person with knowledge of the matter. The deal, which would have been the largest for India and for the Silicon Valley behemoth according to Bloomberg data, would have shaken up the South Asian nation's retail sector, transforming the relationship between two firms that have spent months locked in frenzied competition.
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Friday's Shareholder Meetings
Ferrexpo PLC
NextEnergy Solar Fund Ltd
SVM UK Emerging Fund PLC
Argentex Group PLC
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By Tapan Panchal; [email protected]
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