1st May 2020 11:26
(Alliance News) - The following is a summary of top news stories Friday.
----------
COMPANIES
----------
Royal Bank of Scotland reported a sharp drop in first-quarter profit, as it was forced to significantly increase its credit impairments to cope with the fallout from the Covid-19 pandemic. In the three months to March 31, the state-backed lender's operating pretax profit nearly halved to GBP519 million from GBP1.01 billion in the same period the year before. RBS recorded GBP802 million in impairment losses in the quarter, up from GBP86 million a year before. Over the past week, London's blue-chip lenders have taken a total GBP7.50 billion in credit loss impairments. The credit losses represents 90 basis points of gross customer loans, compared to 11 basis points the year before. The significant rise, RBS said, was to cover the "more uncertain economic outlook". Net interest income was down 4.4% year on year at GBP1.94 billion from GBP2.03 billion. Total income was up 3.9% however at GBP3.16 billion.
----------
Irish budget airline Ryanair could slash up to 3,000 jobs as it embarks on a restructuring in response to destructive effects the Covid-19 has had pandemic on travel. Ryanair also took aim at what it labelled as "state-aid doping", to which the likes of airline Deutsche Lufthansa and Anglo-German holiday operator TUI have turned in the face of the ongoing health crisis. Ryanair expects the recovery of passenger demand and pricing to 2019 levels will take at least 2 years, until summer 2022 at the earliest. Dublin-based Ryanair's outlook for its first half and beyond is bleak. Travel restrictions mean its first quarter traffic will be more than 99% lower than initially planned. It expects traffic of fewer than 150,000 passengers, a fraction of its initial forecast of 42.4 million passengers. It expects to operate fewer than 1% of its scheduled flight programme in April, May and June.
----------
Barratt Developments said work will resume at its construction sites on May 11, although its sales centres and show homes will remain closed. In April, peers Persimmon, Taylor Wimpey and Vistry Group made similar announcements of a phased re-opening of their construction sites. Work at Barratt's construction sites will recommence starting May 11 and the return will be phased, with around 50% or 180 of its sites reopened in the first phase - but all sites in Scotland will remain closed. At April 26, Barratt had completed 11,776 homes, slightly more than the 11,723 homes completed at the same time in 2019 including joint ventures. Forward sales amounted to 12,271 homes at a value of GBP2.85 billion. Cost base and cash flow measures implemented in response to the pandemic include the suspension of all land buying, as well as all recruitment activity. Non-essential capital expenditure has been postponed and cash flows are now being actively managed.
----------
Amazon.com said Thursday profit took a hit in the past quarter due to the global pandemic and that its earnings in current period would be wiped out by Covid-related expenses. The technology and e-commerce giant said revenue surged 26% in the quarter to more than USD75 billion as people hunkered down at home due to the pandemic turned to it for supplies and entertainment. But profit slipped 29% from a year ago to USD2.5 billion. Chief Executive Jeff Bezos said all profit in the April-June quarter would be erased by expenses linked to the global virus outbreak. Amazon said it expects anything from a USD1.5 billion operating loss to a USD1.5 billion operating profit in the second quarter to June 30.
----------
Apple on Thursday reported revenue slipped in the first three months of this year as revenue inched higher despite the pandemic's hit. Apple said it made a profit of USD11.2 billion on sales of USD58.3 billion in the quarter, compared to net income of USD11.7 billion on revenue of USD58 billion in the same period a year earlier. "Despite Covid-19's unprecedented global impact, we're proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables," Chief Executive Tim Cook said in an earnings release. Net sales of iPhones – the big earnings segment for Apple in recent years – dropped 6.7% from a year earlier to USD29 billion in a period where smartphone sales have been sagging, but services revenue rose 17% to USD13.35 billion.
----------
MARKETS
----------
US President Donal Trump threatened fresh tariffs against China Thursday night, reigniting a trade war that had been put on the backburner by the coronavirus pandemic.
As a result, the few financial markets that were open today were pushed into the red.
Adding further pressure was a dismal UK manufacturing PMI, with the print hitting a 28-year low.
The US looks set for a bleak open to the month, with all three major indices called to open at least 1.9% lower, with the tech-heavy Nasdaq Composite called 2.5% lower on disappointing quarterly updates from Amazon and Apple.
----------
FTSE 100: down 2.2% at 5,772.19
FTSE 250: down 1.6% at 16,187.84
AIM ALL-SHARE: down 1.2% at 800.31
GBP: lower at USD1.2555 (USD1.2601)
EUR: higher at USD1.0982 (USD1.0874)
GOLD: lower at USD1,675.60 per ounce (USD1,704.48)
OIL (Brent): lower at USD25.84 a barrel (USD26.50)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
The UK manufacturing sector saw "substantial disruption" in April, as output, new orders and employment fell at record rates amid the coronavirus pandemic. Manufacturing production, new orders and employment all contracted at the fastest rates in the 28-year survey history, IHS Markit said, while vendor lead times lengthened to their greatest extent in the survey's history. The global pandemic also hit overseas demand, leading to a series-record drop in new export business. The IHS Markit-Chartered Institute of Procurement & Supply purchasing managers' index fell to 32.6 in April from 47.8 in March, significantly below both the no-change mark of 50 and slightly below the flash reading of 32.9.
----------
UK Prime Minister Boris Johnson has promised to deliver a "comprehensive plan" next week on how the lockdown may be eased after declaring the UK is "past the peak" of the coronavirus outbreak. Johnson said on Thursday he would be producing a "road map, a menu of options" explaining how to get the economy moving and children back to school while still suppressing the disease's spread. Testing is a key part of the strategy in any effort to ease restrictions, and the public may find out on Friday if the government reached its target of carrying out 100,000-a-day by the end of Thursday.
----------
US President Donald Trump on Thursday threatened China with fresh tariffs as he stepped up his attacks on Beijing over the coronavirus crisis, saying he had seen evidence linking a Wuhan lab to the contagion. The virus is believed to have originated late last year in a market in the Chinese city of Wuhan that sold wild animals for human consumption, but speculation has swirled about a top-secret lab in the ground-zero city. Asked if he had seen anything giving him a high degree of confidence that the Wuhan Institute of Virology was the source of the outbreak, Trump replied, "Yes, I have." Pressed by reporters at the White House for details on what made him so confident, Trump replied: "I cannot tell you that." Trump is increasingly making Beijing's handling of the outbreak a major issue for his November re-election campaign. When asked about reports that he could cancel US debt obligations to China, Trump said he could "do it differently" and act in "probably a little bit more of a forthright manner." "I could do the same thing but even for more money, just putting on tariffs," he said.
----------
Japan's manufacturing sector had its downturn intensify in April with production falling at the sharpest rate since 2009, IHS Markit data showed. The headline au Jibun Bank purchasing managers' index dropped to an eleven-year low of 41.9 in April from 44.8 in March. Order books slid deeper into contraction and sales dropped at the fastest rate for over eleven years amid reports of order cancellations. Overseas demand dropped and new export orders fell at a rate not seen since the height of the financial crisis.
----------
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
RYA.L