30th Apr 2020 11:36
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Royal Dutch Shell announced its first dividend cut since the second world war as it grapples with lower oil prices. It has slashed its first quarter dividend to 16 US cents from 47 cents. Shell's first quarter current cost of supplies earnings attributable to shareholders, excluding items, were USD2.9 billion, down 46% on a year ago due to a drop in oil, gas and liquefied natural gas prices as well as lower sales volumes. The oil major produced 3.7 million barrels of oil equivalent per day, down 1% on a year before.
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Lloyds Banking Group reported a sharp fall in profit in the first quarter, which was blamed on a significant rise in credit loss impairments. Lloyds recorded pretax profit of just GBP74 million, which is down 95% on the GBP1.60 billion seen the same period the year before. Lloyds took a GBP1.43 billion impairment charge in the quarter, up from GBP275 million a year before, but the lender stressed its loan book remains "robust and well positioned".
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Sainsbury's reported the Covid-19 crisis could hurt profit by GBP500 million, but it has seen a jump grocery sales during the virus pandemic. Its annual results meanwhile showed sales nudged 0.1% lower to GBP32.39 billion. On a like-for-like basis, sales were down 0.6%. Pretax profit rose however to GBP255 million from GBP202 million. It didn't make a final payout, meaning its dividend for the year was slashed by 70% to 3.3 pence from 11.0p.
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British American Tobacco said that following a strong operational performance in 2019, it expects to report earnings growth for 2020 despite the impact from Covid-19 being "difficult to predict". BAT said it had made a strong start to the year, with positive volume growth benefiting from a rise in trade and consumer stocks, and a strong price mix. Despite the Covid-19 pandemic, BAT said most of its factories have remained open at full capacity, and the group has built up an average stock of two months in finished goods. To date, BAT has seen a limited impact on consumer demand, pricing or the ability of consumers to access products as a result of nationwide lockdowns implemented around the world. Although sales in global travel retail have been significantly hit, this represents less than 1% of group sales. BAT expects high single-figure growth in earnings per share on a constant currency basis in 2020.
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Reckitt Benckiser Group posted a double-digit first-quarter revenue rise amid higher sales of hygiene and health products as a result of the virus pandemic, with the Dettol maker even nudging its 2020 outlook higher. Reckitt said its "2020 performance is now expected to be better than original expectations" but conceded the "outlook for the balance of 2020 remains uncertain". Total Reckitt sales climbed 12% to GBP3.54 billion in the quarter to March 31. On a like-for-like basis, sales were 13% higher. The largest sales rise came from over-the-counter health products. These jumped by about a third to GBP618 million. It helped the FTSE 100-listed company to a 13% sales hike in the Health unit to GBP2.19 billion. In Hygiene, sales jumped 11% to GBP1.36 billion.
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St James's Place reported a drop in funds under management over the first quarter as its investment performance took a beating from Covid-19 sell-offs. At March 31, St James's Place recorded GBP101.67 billion in funds under management, down 1.8% from GBP103.52 billion at the same point a year before. From the end of 2019, managed funds are down 13% from GBP116.99 billion. During the first quarter, St James's Place recorded a net investment return of negative GBP17.69 billion - with all three asset classes suffering. St James's Place is withholding one-third, or 11.22p, from its 2019 final dividend. In order to enact this, the wealth manager has declared a second interim divided for 2019 of 20.0p - equivalent to around two-thirds of the previously proposed final dividend, and is withdrawing its recommendation to pay a final dividend. Going forward, the wealth manager said it will only pay one dividend for 2020, and the decision will be made in February 2021.
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Glencore lowered its 2020 production guidance due to the effects of the Covid-19 pandemic and following mixed first-quarter output. For the three months to the end of March, copper production declined by 9% to 293,300 tonnes from 320,700 tonnes the same period a year before, mainly hurt by a fall from African Copper. Gold production dipped by 1% year-on-year to 199,000 ounces, and coal dropped by 4% to 31.9 million tonnes. Ferrochrome output was down 3% to 388,000 tonnes, lead production dropped by 17% to 61,700 tonnes, and cobalt output fell by 44% to 6,100 tonnes. Looking ahead, due to the continued and uncertain impact of the virus outbreak, Glencore cut its guidance for almost all of its commodities. The miner expects copper production of 1.25 million tonnes for the year, down from prior guidance at 1.30 million tonnes, due to a slower ramp-up of the Mopani smelter.
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AstraZeneca and Oxford University announced a deal to make and distribute a potential Covid-19 vaccine. The collaboration is focused on the university's ChAdOx1 nCoV-19 vaccine, currently in development by the Jenner Institute and Oxford Vaccine Group. Phase 1 clinical trials began last week in healthy volunteers and data could be out as soon as next month, with late-stage trials following by the middle of 2020. Pharmaceutical giant Astra will be responsible for the vaccine's development, manufacturing and distribution.
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MARKETS
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London shares were lower with Shell shares weighing on the FTSE 100. The euro was firm against the dollar ahead of the European Central Bank's interest rate decision at 1245 BST. US stock market futures were pointed higher ahead of earnings from Comcast, Kraft Heinz and McDonald's before the market open in New York. Trillion-dollar market capitalisation firms Apple and Amazon will report after the closing bell.
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FTSE 100: down 0.2% at 6,104.03
FTSE 250: down 0.2% at 16,807.37
AIM ALL-SHARE: up 0.4% at 816.44
GBP: up at USD1.2500 (USD1.2434)
EUR: firm at USD1.0868 (USD1.0855)
GOLD: up at USD1,715.33 per ounce (USD1,702.03)
OIL (Brent): up at USD26.42 a barrel (USD22.90)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Prime Minister Boris Johnson will front his first daily press conference since recovering from Covid-19 amid mounting pressure on him to set out a path out of the lockdown. But with the UK's coronavirus death toll now the third highest in the world after the US and Italy, Downing Street is playing down any expectations of an easing of restrictions. Number 10 said a Cabinet meeting earlier in the day would look at the "response in general" but not make any decisions on lockdown measures. That response was facing further criticism as Health Secretary Matt Hancock's deadline arrived for carrying out 100,000 Covid-19 tests a day. With just over 52,000 tests carried out on Tuesday, the deadline looks set to be missed although that will not become clear until Friday.
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Eurozone gross domestic product slipped in the first quarter of 2020, preliminary data from Eurostat showed. Separately, the statistical body said unemployed edged up in March while inflation softened in April on energy prices. The eurozone economy contracted 3.8% in the first three months of the year, and shrank 3.5% in the wider European Union, both on a sequential basis. In the fourth quarter of 2019, GDP had risen 0.1% and 0.2% respectively. "These were the sharpest declines observed since time series started in 1995," Eurostat observed. "In March 2020, the final month of the period covered, Covid-19 containment measures began to be widely introduced by member states." Annually, GDP fell 3.3% in the euro area and by 2.7% in the EU after growth of 1.0% and 1.3% in the final quarter of 2019. These were the steepest falls since the third quarter of 2009, when eurozone GDP fell 4.5% and the EU contracted 4.4%.
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China's manufacturing conditions had a fresh deterioration in April after "broadly stabilising in March", IHS Markit said. The headline seasonally adjusted purchasing managers index slipped to 49.4 in April from 50.1 in March. Any figure above 50.0 shows expansion. "That said, the decline was marginal and much softer than the record pace seen in February when many firms closed down to stem the spread of the virus," IHS Markit added.
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The US recorded 2,502 coronavirus deaths in the past 24 hours, according to the latest real-time tally. After two days of a relative easing in the toll on Sunday and Monday, the numbers have spiked again the past two days. At least 60,853 people have now died in the country. US President Donald Trump said Wednesday he'll resume flying around the country from next week and looks forward to holding "wild" campaign rallies as soon as he can.
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The US Federal Reserve said Wednesday the coronavirus pandemic has already caused "tremendous" health and economic hardship, and warned the damage to the US economy will continue. The crisis "will weigh heavily on economic activity, employment and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," the policy-setting Federal Open Market Committee said at the conclusion of its two-day meeting. The central bank kept the benchmark interest rate at zero.
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