5th Aug 2020 08:12
(Alliance News) - Gold soared well clear of the USD2,000 an ounce mark early Wednesday, as the dollar continued to weaken on concerns about the US economy.
The precious metal was quoted at USD2,027 an ounce at the equities open, having touched a record high of USD2,030.
"Gold is on fire," said City Index analyst Fiona Cincotta.
"With Congress promising to work round the clock to reach a deal on a new rescue package by the end of the week and comments from the president of the Federal Reserve Bank of San Francisco that the US economy will need more support than initially thought, the stimulus taps are firmly switched on with no signs of them being turned off anytime soon," Cincotta commented.
"With the global economic recovery expected to be more drawn out than initially expected and the US dollar losing value, investors are increasingly turning to non-yielding gold to store wealth. Given that high fiscal spending and extremely accommodative monetary policy are expected to be in place for years, there is a good chance that gold has higher to go."
Added Stephen Innes, chief global markets strategist at AxiCorp: "The latest rise in US-China tensions that brings the [phase one] trade deal into question adds to an extensive laundry list of concerns that are sending investors toward safe-haven assets, and gold seems to be top of that list."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.0% at 6,094.29
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Hang Seng: up 0.4% at 25,034.18
Nikkei 225: closed down 0.3% at 22,514.85
DJIA: closed up 164.07 points, 0.6%, at 26,828.47
S&P 500: closed up 0.4% at 3,306.51
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GBP: up at USD1.3077 (USD1.3062)
EUR: up at USD1.1816 (USD1.1769)
Gold: up at USD2,027.24 per ounce (USD1,995.19)
Oil (Brent): up at USD44.52 a barrel (USD44.27)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
0930 BST UK CIPS-Markit services purchasing managers' index
0930 BST UK narrow money and reserve balances
1100 BST Ireland monthly unemployment
0955 CEST Germany services PMI
1000 CEST EU eurozone services PMI
1100 CEST EU retail trade
0815 EDT US ADP national employment report
0830 EDT US international trade in goods and services
0945 EDT US services PMI
1000 EDT US ISM report on business services PMI
1030 EDT US EIA weekly petroleum status report
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Rescuers searched for survivors in Beirut on Wednesday after a cataclysmic explosion at the port sowed devastation across entire neighbourhoods, killing more than 100 people, wounding thousands and plunging Lebanon deeper into crisis. The blast, which appeared to have been caused by a fire igniting 2,750 tonnes of ammonium nitrate left unsecured in a warehouse, was felt as far away as Cyprus, some 150 miles to the northwest. The scale of the destruction was such that the Lebanese capital resembled the scene of an earthquake, with thousands of people left homeless and thousands more cramming into overwhelmed hospitals for treatment. In the areas closest to the port, the amount of destruction caused by the long years of civil war between 1975 and 1990 was achieved in a second by a blast that levelled buildings within a radius of several hundred metres.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES ITV TO 'BUY' ('HOLD') - TARGET 80 (120) PENCE
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COMPANIES - FTSE 100
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Investment management and pensions provider Legal & General maintained its dividend, despite posting a drop in interim profit. Legal & General reported lower earnings as the 184-year-old insurer was hurt by the fallout from the coronavirus pandemic. For the half-year ended June 30, operating profit declined 6.3% to GBP946 million from GBP1.01 billion last year, while pretax profit dropped much more steeply, down 73% to GBP285 million from GBP1.05 billion. Legal & General declared an unchanged interim dividend of 4.93 pence. "We remain confident in our strategy and our ability to deliver resilient, organic growth through periods of macro-volatility, supported by strong competitive positioning in attractive and growing markets. Our confidence and our dividend-paying capacity are underpinned by the group's strong balance sheet with GBP7.3 billion in surplus regulatory capital, a GBP3.5 billion IFRS credit default reserve, and significant buffers to absorb a market downturn. We have a proven operating model which is reinforced by robust risk management practices," the insurer said.
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Soft drinks bottler Coca-Cola HBC said it is well-positioned as countries emerge from lockdowns after also posting a fall in half-year earnings. Coca-Cola HBC reported a fall in earnings due lower volume and negative package and channel mix, as Covid-19 control measures caused out-of-home consumption of its soft drinks to dry up. For the six months ended June 26, net sales revenue fell 16% to EUR2.83 billion from EUR3.35 billion last year, and operating profit declined 30% to EUR202.9 million from EUR288.9 million. Pretax profit fell 36% to EUR167.2 million from EUR260.8 million. Looking ahead, Coca-Cola HBC said current trading continues to confirm sequential improvement - with the second quarter the "trough" of performance caused by Covid-19 - but the bottler highlighted uncertainty as lockdown measures ease across its key territories. "We are planning for the continuation of safety and social distancing measures in our markets for the foreseeable future, or until a pharmaceutical solution is widely implemented. We are also expecting a weaker consumer environment and the tourist season to be negatively impacted this year. Finally, there is still the risk of an impactful second wave of the virus," Coca-Cola HBC warned. "We plan to capitalise on our advantages as the market recovers and remain flexible and focused on continuously driving efficiencies; however, it is still too early to provide financial guidance for the future."
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COMPANIES - FTSE 250
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Dublin-based healthcare services provider UDG Healthcare said it has named Non-Executive Director Shane Cooke as its new chair, succeeding Peter Gray who will retire on September 30. Cooke will assume the role on October 1.
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COMPANIES - GLOBAL
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Allianz said its first half revenue was flat, despite posting a slight fall in its second-quarter. In the three months ended June 30, revenue dropped 6.8% annually to EUR30.9 billion from EUR33.2 billion, the Munich-based insurer said. For the half, revenue was flat year-on-year at EUR73.5 billion. Net income fell 29% to EUR1.62 billion in the second-quarter from EUR2.27 billion in the year prior. For the first half, net income was 28% lower at EUR3.10 billion from EUR4.32 billion. In its Property-Casualty, Allianz said its combined ratio - a key profitability measure for insurers, with the lower the better - edged up to 96.7% in the first half from 94.0% a year prior. "The impact of Covid-19 on Property-Casualty business segment revenues has been more pronounced in the second quarter of 2020 but our franchise has proven resilient in terms of revenue growth," Chief Financial Officer Giulio Terzariol said.
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President Donald Trump defended his demand for the US government to get a piece of the action to let Microsoft or any other company in the US buy popular China-based social media app TikTok. Trump's stance was slammed by critics who said it appears unconstitutional and akin to extortion. "We have all the cards, because without us, you can't come into the US," Trump said during a White House press briefing. "If you're a landlord, you have a tenant, the tenant's business needs rent, it needs a lease." Trump maintained that a large share of any TikTok purchase price should go to the US treasury, and that Microsoft "agreed with me very much." Microsoft did not immediately return a request from AFP for comment.
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Wednesday's Shareholder Meetings
Big Yellow Group
Bushveld Minerals
Regional REIT
Highbridge Tactical Credit Fund
Shefa Gems
Permanent TSB Group Holdings
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By Tom Waite; [email protected]
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