12th Nov 2020 08:08
(Alliance News) - The UK economy returned to growth on a quarterly basis in the third quarter, the only quarter of 2020 that entirely escaped lockdown in England, according to figures from the Office for National Statistics on Thursday.
On an annual basis, UK gross domestic product fell 9.6% in the three months to September, the economy's contraction slowing from 21.5% in the second quarter of 2020. The third-quarter reading was slightly worse than market forecasts, cited by FXStreet, for an annual contraction of 9.4%.
However, on a quarterly basis, UK GDP grew by 15.5% in the third quarter, having shrunk by 19.8% in the second quarter. The quarterly figure also slightly missed the consensus estimate, which called for 15.8% growth.
The ONS said this was the largest quarterly expansion in the UK economy since quarterly records began in 1955 and reflected the continued easing of lockdown restrictions in the third quarter.
The ONS also said UK industrial production decreased 6.3% year-on-year in September following a 6.4% decline in August. Manufacturing production shrank 7.9% on an annual basis in September, easing from an 8.4% drop in August.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.9% at 6,325.65
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Hang Seng: down 0.3% at 26,159.64
Nikkei 225: closed up 0.7% at 25,520.88
DJIA: closed down 23.29 points, 0.1%, at 29,397.63
S&P 500: closed up 0.8% at 3,572.66
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GBP: down at USD1.3185 (USD1.3199)
EUR: up at USD1.1775 (USD1.1763)
Gold: up at USD1,871.02 per ounce (USD1,863.53)
Oil (Brent): soft at USD44.00 a barrel (USD44.30)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
ECB forum on central banking concludes.
1100 GMT Ireland consumer price index
1100 CET EU industrial production
0830 EST US CPI
0830 EST US initial jobless claims
1100 EST US EIA weekly petroleum status report
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Bustling housing market activity in the UK is expected to continue into the new year, according to surveyors. The Royal Institution of Chartered Surveyors said house hunter numbers increased for the fifth month in a row in October and sales look to remain buoyant for the remainder of 2020. Its latest survey found a net balance of 46% of property professionals reported that new buyer inquiries increased rather than decreased in October. The flow of fresh properties coming on the UK market also remained strong, with a balance of 32% of professionals reporting an increase in new instructions.
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UK Prime Minister Boris Johnson on Wednesday said there is "no time to waste" on climate action as he called on world leaders to put forward ambitious commitments to tackle the crisis. Johnson also promised to set out plans for driving UK action in comments marking a year until the UK hosts the United Nations "Cop26" climate summit. The event was meant to be held this November but was delayed by the pandemic. The keenly-awaited "10 point plan" from Downing Street on a green industrial revolution is expected to outline action in areas such as cutting emissions from transport, electricity and buildings, and the use of hydrogen and other new technology. Johnson has already highlighted plans to have every home in the country powered by offshore wind within 10 years as part of the plan. The UK has a legal target to cut greenhouse gases to "net zero" by 2050, with huge cuts to emissions and any remaining pollution offset by measures such as planting trees, and has sought to position itself as a world leader on the issue.
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BROKER RATING CHANGES
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BARCLAYS CUTS CRODA TO 'UNDERWEIGHT' ('EQUAL WEIGHT') - TARGET 5650 (4450) PENCE
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JEFFERIES CUTS COMPASS GROUP TO 'HOLD' ('BUY') - TARGET 1400 PENCE
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UBS CUTS RYANAIR TO 'NEUTRAL' (BUY) - PRICE TARGET 14.70 (14.85) EUR
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EXANE BNP RAISES RYANAIR TO 'OUTPERFORM' (NEUTRAL) - PRICE TARGET 18 (11) EUR
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COMPANIES - FTSE 100
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Burberry reported a drop in first-half earnings as the fashion house pointed out that 60% of its stores globally closed due to the coronavirus pandemic during the period. For the half-year ended September 26, revenue was down 31% at GBP878 million from GBP1.28 billion a year before, and pretax profit was down 62% at GBP73 million from GBP193 million. Burberry declared no interim dividend having paid out 11.3 pence last year. "We are encouraged by the recovery in the second quarter but remain conscious of the uncertain macro-economic environment caused by Covid-19. We currently have more than 10% of our stores closed globally following the recent lockdowns in EMEIA. With the brand resonating and attracting new and younger consumers, we have taken the decision to reduce markdowns and this will be a revenue headwind in the second half with the main impact in third quarter but will serve the long-term interest of the brand. We are well-positioned to continue to drive performance and deliver growth in the medium term," the company said.
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B&M European Value Retail reported a strong first half as customers turned to its discount offering during the pandemic. For the half year to September 26, revenue was up 25% to GBP2.24 billion from GBP1.79 billion last year, and pretax profit more than doubled to GBP235.6 million from GBP106.0 million. B&M raised its interim dividend 59% to 4.3p per share from 2.7p last year and also declared a special dividend of 25.0p. Looking ahead, B&M said like-for-like sales growth in the UK is expected to moderate over the second half, but so far in the third quarter, trends have been at a similar level to the interim period. "Although both the B&M UK and Heron Foods businesses remain open, there is significant uncertainty surrounding both the nature and duration of Covid-19 restrictions during the second half of the financial year. As such, the range of potential outcomes for FY21 remains unusually wide at this stage of the year and it is difficult to make a clear assessment of how consumers will react over the coming months," the company said.
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Whitbread is set to make fewer job cuts than first proposed, The Times reported on Thursday, lifting hopes that an extension of the UK government's furlough scheme and recent vaccine hopes could help the beleaguered hospitality industry. Whitbread could more than halve the 6,000 job losses announced in September, The Times reported. A consultation process ends on Friday and the Premier Inn hotel chain owner is expected to tell staff that a "significant number" of the job cuts will no longer be needed, the newspaper said.
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COMPANIES - FTSE 250
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Apollo Management International confirmed that it won't make a takeover offer for bookmaker William Hill, but said it reserves the right to do so if the current offer from Caesars Entertainment falters. Apollo also noted that the UK Takeover Panel agreed that Apollo was allowed to bid for the non-US businesses of William Hill, which include its UK betting shops. It noted that Caesars has stated its intention to sell those businesses after acquiring William Hill for its US operations.
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Several Greek hotel owners are facing huge losses this year as Tui AG has decided to defer the payment of money due to them this year until March, the Financial Times reported. The Anglo-German tour operator has issued several contract amendments requiring the hoteliers to hold off until March to receive three-quarters of the money due to them for stays made this year, the newspaper explained. According to the FT, the payments run into the hundreds of thousands for many hotels, with two hotel owners saying they are owed more than EUR600,000 each. The Greek tourism minister said the government was "monitoring the situation closely".
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COMPANIES - GLOBAL
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President Donald Trump's administration said it was still working to resolve its security concerns over Chinese-owned app TikTok after the firm sought to delay a deadline to sell its US operations. Chinese company ByteDance has until Thursday to restructure ownership of the app in the US to meet national security concerns, but it filed a petition in a Washington court this week asking for a delay. The company said in a Tuesday statement that it had asked the government for a 30-day extension because of "continual new requests and no clarity on whether our proposed solutions would be accepted," but it had not been granted. On Wednesday, the US Treasury Department said in a statement it "remains focused on reaching a resolution of the national security risks arising from ByteDance's acquisition of Musical.ly."
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Thursday's Shareholder Meetings
James Halstead PLC - AGM
Ricardo PLC - AGM
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By Tom Waite; [email protected]
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