3rd Dec 2020 11:08
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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J Sainsbury followed supermarket rivals Tesco and Wm Morrison Supermarkets in deciding to forego business rates relief. In March, the UK Chancellor of the Exchequer Rishi Sunak said the UK government would grant all retail, hospitality and leisure businesses a 100% business rates holiday for the next 12 months, with the intention of helping companies get through the Covid-19 pandemic. Sainsbury's said it spent GBP290 million as a result of Covid-19 in the first half of its financial year, which was partially offset by GBP230 million of business rates relief. The grocer's sales and profit was stronger than originally expected since the beginning of England's second national lockdown, hence the decision to forego business rates relief on all stores. Sainsbury's noted that due to this, it now expects an underlying pretax profit of at least GBP270 million of the financial year to March, which includes the assumption it will forgo around GBP410 million in business rates relief. On Wednesday, Wm Morrison Supermarkets said it was planning to waive GBP274 million of business rates for the 2021 financial year, following Tesco's announcement that it will repay GBP585 million of business rates relief received that same day.
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Phoenix Group said its shareholder capital coverage ratio remains "robust", and it set net-zero carbon targets for 2050. The long-term savings and retirement business said solvency II surplus at September 30 increased 14% to GBP5.0 billion from GBP4.4 billion at June 30. Phoenix reported cash generation of GBP1.71 billion in 2020, up from GBP707 million in 2019 and exceeding the upper end of its cash generation target range for the year of GBP1.5 billion to GBP1.6 billion. The London-based company reported a shareholder capital coverage ratio of 159% as at September 30, compared to 150% at June 30. This is at the mid-point of the Phoenix Group's target range of 140% to 180%. At September 30, 98% of Phoenix Group's shareholder debt portfolio was investment grade, with 21% being rated as BBB and 2% rated as BBB-. Chief Executive Andy Briggs said: "Our balance sheet remains resilient, underpinned by our high-quality portfolio of assets and unique approach to risk management, and our shareholder capital coverage ratio of 159% remains robust." Phoenix Group also announced that it has committed to becoming net-zero carbon by 2050.
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Standard Life Aberdeen said it has sold shares in HDFC Life Insurance Co in India, worth INR17.03 billion, around GBP172 million. The Edinburgh-based investment first said its wholly owned subsidiary 2006 Ltd disposed of 27.8 million shares on the National Stock Exchange of India and the Bombay Stock Exchange at a price of INR619.14 each. Proceeds from the share sale will go towards general corporate purposes. Standard Life's remaining shareholding in HDFC now stands at 8.9%. Based on the current share price of INR647.53, the value of this remaining shareholding is INR116 billion. The remaining stake is locked in until the end of March 2021. Being below 10% means that Standard Life no longer has the right to nominate one director to the board of HDFC Life. In early June, the group had sold 40.0 million shares in HDFC through subsidiary 2006 for INR19.66 billion.
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Countryside Properties reported a severe swing to annual loss, as a result of higher costs and a double-digit decline in revenue and home completions, while it set in motion plans to sell its Housebuilding arm. Also on Thursday, Countryside announced the departure of Non-Executive Chair David Howell with effect in 2021. Howell has been part of Countryside Properties for six years in 2014, and in his role as chair for five years since 2015. Countryside also publicly responded to shareholder Browning West, which on Wednesday proposed its own chief investment officer, Usman Nabi, be added to the Countryside board and a search be initiated to replace Howell as chair. In response, Countryside wrote a letter to Browning West stating that it would not pick its candidate for the role, and expressed disappointment over the shareholder's "public attack" on the company. However, the company said it already is putting into motion many of the measures raised by Browning West, including the process to sell its Housebuilding business and concentrate on its Partnerships division.
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MARKETS
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Stocks in Europe were soft on Thursday following a raft of PMIs confirming a deterioration in the service sector across the continent in November amid renewed virus restrictions, though the UK services sector suffered far less than initially expected. Sainsbury's shares were up 3.3%. Wall Street is set to follow Europe into the red, with the Dow Jones pointed down 0.2% and the S&P 500 down 0.1%, though the Nasdaq Composite is set to nudge up 0.1%.
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FTSE 100: down 0.1% at 6,454.80
FTSE 250: flat at 19,885.88
AIM ALL-SHARE: down 0.1% at 1,066.42
GBP: higher at USD1.3416 (USD1.3343)
EUR: higher at USD1.2112 (USD1.2086)
GOLD: higher at USD1,838.62 per ounce (USD1,827.01)
OIL (Brent): higher at USD48.01 a barrel (USD47.90)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK service sector contracted in November, though at a more moderate pace than initially expected, figures showed. The IHS Markit/Chartered Institute of Procurement & Supply UK services purchasing managers' index dropped to 47.6 in November from 51.4 in October. This marked the first time in five months the index has registered below the no-change mark of 50, indicating the services sector shrank in November. However, the reading was higher than the flash estimate of 45.8 and signalled a much slower downturn in activity than the April's record low of 13.4. "November data indicated a fall in new business volumes for the second consecutive month. The overall rate of decline was only modest and primarily reflected temporary closures among hospitality, travel and leisure businesses," said IHS Markit. England was put into a second national lockdown at the start of November, which lasted until early December.
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Brexit talks stretched late into the night on Wednesday as both sides fought their corners with the clock ticking down to the deadline for a trade deal. It was reported that several boxes of pizza were delivered to the talks venue on Wednesday night as officials from London and Brussels tried to hammer out an agreement ahead of the end of the transition period on December 31. The negotiations continued after Boris Johnson insisted the UK's "bottom line" on a post-Brexit trade deal is to "take back control". The Prime Minister said he was "absolutely committed" to trying to secure a deal "if we can" amid warnings talks with the EU have reached a "make or break" point. The EU's chief negotiator Michel Barnier briefed ambassadors from the 27 member states on the latest negotiations amid little sign of progress on the key issues. He was said to have warned that significant differences remain over fisheries, state aid rules and the governance arrangements for any agreement.
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A second wave-stricken services sector dragged down the eurozone's private sector activity in November, figures from IHS Markit showed. IHS Markit on Thursday said the eurozone's services business activity index fell to 41.7 in November from October's reading of 46.9. While November's reading remained below the no-change mark of 50, indicating contraction, it came in slightly above the flash reading of 41.3. The bloc's manufacturing purchasing managers' index, released on Tuesday, registered 53.8 for November, above the flash reading of 53.6 but below October's 54.8. The deterioration in the eurozone's service sector resulted in the composite PMI falling to 45.3 from 50.0 in October. Again, this was slightly better than November's preliminary reading of 45.1. Among eurozone countries, Germany was the only one to record a composite PMI in November above 50. Germany's reading came in at 51.7, softer than the 52.0 flash, and marking a five-month low. Ireland hit a two-month low of 47.7, while Italy, Spain and France all recorded six-month lows, with France bottom of the group with a reading of 40.6 for November versus 47.5 in October.
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China's services sector continued to grow in November, leading to the composite purchasing managers' index reaching a ten-year high, data from Caixin showed. Caixin's services PMI rose to 57.8 in November from 56.8 in October, also coming in higher than 54.8 in September. November's reading marks the second quickest rate of growth since April 2010, beaten only by June's 58.4. There was an improvement in the sector's growth momentum driven by a faster increase in new orders during the month. In addition, the rise in sales accelerated at the fastest rate since April 2010, and new export business has grown for the first time since June 2019. Services firms commented on greater customer numbers both locally and overseas, due to a sustained recovery in overall market conditions. For the third month in a row, business confidence for the year ahead strengthened in November, to the highest degree of sentiment since April 2011 and above the series average.
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