2nd Jul 2020 11:04
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Associated British Foods reported a double-digit revenue fall for the past nine months and said it expects profit at low-cost fashion retailer Primark to be a third of what was achieved a year ago. However, nearly all Primark stores have now reopened and early sales have been strong. AB Foods group revenue for the 40 weeks to June 20 was down 13% on a year ago at constant currency, with sales down 39% in the third quarter alone. Among divisions in the third quarter, grocery was the stand-out performer, with revenue up 9%, while retail sales at Primark slumped a sharp 75%. Primark stores were closed for most of the third quarter, with revenue recorded in the period relating to two short periods of trading before stores closed in mid-March and after they started to reopen at the end of the quarter. AB Foods said Primark stores have reopened more quickly than expected, particularly in Ireland, since its June 1 trading update. A total of 367 stores now have reopened, with the remain 8 expected to follow in the near future, it said. Trading in the reopened stores so far has been "reassuring and encouraging".
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Budget airlines Ryanair Holdings and Wizz Air Holdings both saw a dramatic drop in passenger numbers in June as a result of air travel restrictions imposed by governments across Europe to contain the spread of Covid-19. Ryanair's traffic in June dropped by 97% to 400,000 passengers versus the 14.2 million passengers it carried a year earlier. The airline's subsidiary Lauda flew no passengers in June compared to 600,000 the year before. In early June, Ryanair announced Lauda's fleet was grounded because of the coronavirus pandemic, but will gradually start flying again on July 1. Ryanair had planned to shutter the loss-making arm but employees agreed to a last-minute wage deal. Ryanair said it operated just 2,800 scheduled flights in June versus its budgeted schedule of 79,600. Ryanair's figures did, though, mark an improvement on May. The Irish budget airline reported a 99.5% dive in May traffic to just 70,000 passengers. Meanwhientral and eastern European-focused Wizz Air reported an 86% fall in June passenger numbers to 502,253 from 3.6 million in June 2019.
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DS Smith reported a rise annual profit - with box volumes ahead of internal targets - but has opted against a shareholder payout. For the 12 months to April 30, the London-headquartered packaging firm's pretax profit improved 5.1% to GBP368 million from GBP350 million. Revenue, however, slipped 2.1% to GBP6.04 billion from GBP6.17 billion. Profit grew despite a drop in revenue, DS Smith said, as it recorded GBP237 million in profit from discontinued operations, compared to GBP12 million the year before. "We have made good strategic and financial progress in the year, with the disposal of our Plastics division reinforcing our focus on sustainable fibre-based packaging and our strong commercial focus driving record margin," Chief Executive Miles Roberts said. DS Smith said its performance in the first 10 months of its financial year was "robust", but then took a "relatively limited" GBP15 million hit from the pandemic in the final two months. The FTSE 100-listed packaging firm has already declared it would not issue an interim dividend, but has now also decided against a final dividend too - as its short term outlook "remains too uncertain".
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MARKETS
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Some encouraging vaccine news from Pfizer and BioNTech helped to boost stocks in Europe on Thursday, with Wall Street also on course for a higher start. The Dow Jones is called up 0.9%, the S&P 500 up 0.6% and the Nasdaq up 0.5%. Among the risers in the FTSE 100 was Associated British foods, while DS Smith tugged at the other end of the index. The dollar was lower ahead of key US jobs data due at 1330 BST, with consensus pencilling in an increase of 3.0 million jobs in June, according to FXStreet.
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FTSE 100: up 0.8% at 6,204.65
FTSE 250: up 1.0% at 17,362.00
AIM ALL-SHARE: up 0.3% at 885.67
GBP: higher at USD1.2518 (USD1.2459)
EUR: higher at USD1.1286 (USD1.1260)
GOLD: higher at USD1,771.48 per ounce (USD1,764.23)
OIL (Brent): higher at USD42.32 a barrel (USD41.80)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The global coronavirus pandemic is accelerating, the World Health Organization warned Wednesday, as the worst-hit US closed bars and beaches ahead of the Independence Day holiday. Infections hit their highest level worldwide in the past week, WHO data showed, with chief Tedros Adhanom Ghebreyesus saying new cases had topped "160,000 on every single day." The grim milestone came as the EU left Russia, Brazil and the US off its final list of nations safe enough to allow residents to enter its borders. With new Covid-19 cases in the US surging to more than 40,000 daily, several US states imposed 14-day quarantines on out-of-state travellers in the buildup to Saturday's July 4 festivities. California suspended indoor dining at restaurants in Los Angeles and several counties while New York scrapped plans to allow restaurants to seat customers inside from next week. The rollbacks came as the EU reopened its borders to visitors from 15 countries.
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US President Donald Trump says he supports injecting a fresh round of stimulus into the economy, as the recovery from the coronavirus recession tries to get underway. Trump told the Fox Business Network he wants to ensure stimulus benefits encourage people to get back to work, arguing the last round of expanded unemployment payments incentivized employees to stay home. "It's got to be done properly," Trump said in an interview broadcast Wednesday. "We're working on that and I'm sure it will come together." Trump said he would be meeting Senate Majority Leader Mitch McConnell to discuss details of a new stimulus plan. It may include more direct cash payments. Democrats in the House of Representatives passed a USD3 trillion fresh stimulus bill that Republicans rejected out of hand, saying it was too expensive and contained progressive agenda items unrelated to the coronavirus pandemic. Trump claimed his plan would get more money to consumers than the Democrats' proposal.
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The eurozone unemployment rate edged upwards in May as Covid-19 lockdowns continued to take a toll, data from Eurostat showed, though not as sharp as consensus expected. The eurozone seasonally adjusted unemployment rate was 7.4% in May, up from 7.3% in April, but still beat market consensus, which according to FXStreet had anticipated an increase to 7.7%. Compared with April, the number of those out of work increased by 253,000. Separately, Eurostat reported a drop in industrial producer prices for May. Annually, prices slumped by 5.0%, a sharper decline than April's 4.5% fall, which was attributed to energy, where prices fell by 17%, and a 2.9% decrease in prices for intermediate goods.
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Germany's parliament is expected to put to bed Thursday fears that the country's powerful central bank could be barred from participating in a crucial eurozone-wide bond-buying scheme. In a stunning decision in May, Germany's Federal Constitutional Court threatened to block the Bundesbank, the central bank, from taking part in the stimulus plan unless the European Central Bank could show within three months that its government debt purchases are not "disproportionate". While the court made clear its ruling did not affect ECB programmes to shore up the economy during the coronavirus pandemic, it raised uncertainty over an important stimulus tool as Europe faces the worst economic storm since World War II. Based on an early June decision by the ECB governing council and documents forwarded to Berlin, the Bundestag is expected Thursday to say it is satisfied the bank did not overstep its mark.
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China said it reserves "the right to take corresponding measures" if the UK pushes forward with its plan to give three million Hong Kong residents the right to settle in the country. Boris Johnson accused Beijing of a "clear and serious breach" of its treaty with Britain by imposing a much-criticised national security law on the territory. The prime minister said he would introduce a route for people with British National Overseas status to apply for visas to live and work in the UK and apply for citizenship. In response, the Chinese Embassy in the UK said such a move would be in breach of "international law and basic norms governing international relations". A statement said: "We firmly oppose this and reserve the right to take corresponding measures.
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