7th Jul 2020 11:13
(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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JD Sports Fashion's annual profit was slightly higher amid a strong sales growth, especially from its core fascias, but said footfall in its recently reopened stores has suffered as customers avoid busy areas. The FTSE 100-listed sports fashion retailer reported a GBP348.5 million pretax profit for its financial year ended February 1, up 2.5% from GBP339.9 million the year before. Lancashire-headquartered JD Sports posted a 29% increase in revenue to GBP6.11 billion from GBP4.72 billion thanks to a strong 12% like-for-like sales growth from global Sports Fashion fascias, including more than 10% growth from its core UK & Republic of Ireland Sports Fashion fascias. However, higher selling and distribution and administrative expenses meant that the profit increase was far less dramatic. Going into financial 2021, Covid-19 is still hurting commercial operations and is expected to "have a material impact on the group's results for the period to 30 January 2021".
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Whitbread said more than 270 of its UK hotels reopened already and most of its remaining estate will reopen during July, after lockdown dealt a serious blow to first-quarter sales. The company, which owns the Premier Inn hotel chain, said 24 of its UK restaurants and more than 270 of its UK hotels are open again after the Covid-19 lockdown with the majority of the rest reopening in July. All 19 of its German hotels are open again. However, as expected given that lockdown restrictions forced almost all of Whitbread's estate to close from the end of March, sales fell sharply in the 13 weeks ended May 28. UK like-for-like sales dropped 80%, including an 81% drop in Food & beverage sales and 79% fall in Accommodation sales. Total UK sales were also down 80% with a 79% Accommodation drop and 80% decline for Food & beverage. UK & International total sales fell 79% in Whitbread's first quarter, with an 80% fall for Food & beverage and Accommodation sales dropping 79%.
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Micro Focus International said its loss widened substantially in the first half of its financial year following a USD922 million impairment charge on Covid-19 compared to no such charge the year before. The Berkshire-headquartered FTSE 250-listed software and consultancy company posted a USD1.04 billion pretax loss for the six months ended April 30, hugely widened from a loss of only USD99.6 million the year before. This resulted from exceptional USD922.2 million goodwill impairment charge "attributable to the increased economic uncertainty as a result of Covid-19, which has led to an increase in the pre-tax discount rate and expected disruption to new sales activity and timing pressure on renewals." No such charge was seen in financial 2019. Revenue was 13% lower at USD1.45 billion from USD1.66 billion the previous year.
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MARKETS
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London shares were lower amid renewed coronavirus fears. Whitbread was the worst blue-chip performer. US stock futures were pointed lower after a solid rally on Wall Street to start the week.
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FTSE 100: down 1.3% at 6,204.98
FTSE 250: down 0.8% at 17,409.44
AIM ALL-SHARE: down 0.1% at 886.08
GBP: down at USD1.2478 (USD1.2492)
EUR: down at USD1.1274 (USD1.1312)
GOLD: down at USD1,775.84 per ounce (USD1,784.81)
OIL (Brent): down at USD42.68 a barrel (USD43.43)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The US is still "knee-deep" in its first wave of coronavirus infections and must act immediately to tackle the recent surge, the country's top infectious diseases expert said Monday. Anthony Fauci said the number of cases had never reached a satisfactory baseline before the current resurgence, which officials have warned risks overwhelming hospitals in the country's south and west. "It's a serious situation that we have to address immediately," Fauci said in a web interview with National Institutes of Health director Francis Collins. But Fauci added he did not strictly consider the ongoing rise in cases a "wave." "It was a surge or a resurgence of infections superimposed upon a baseline," he said. "If you look at the graphs from Europe, the EU as an entity, it went up and then came down to the baseline. Now they're having little blips, as you might expect, as they try to reopen. We went up, never came down to baseline, and now we're surging back up." The death toll from the virus in the US hit 130,000 Monday, according to a tally by Johns Hopkins University, and the number of infections is nearing three million.
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The effects of the coronavirus pandemic on the EU's economy will be even more devastating than initially thought, according to the latest forecast from the European Commission. In the 19 euro area countries, gross domestic product should contract by 8.7% this year, according to the calculations of EU economic experts, significantly deeper than the 7.7% decline predicted in May. For the whole 27-country EU, a downturn of 8.3% is expected in 2020. "The summer forecast shows, first of all, that the road to recovery is still paved with uncertainty," EU Economy Commissioner Paolo Gentiloni said as he presented the sobering figures in Brussels on Tuesday. Moreover, the recovery from the slump will be "slightly less robust" than modelled in the last forecast from early May, according to a statement from the commission. Despite a number of policies taken at the EU and national level, the bloc is only expected to return to growth in 2021. The eurozone can anticipate a return to GDP growth at 6.1% next year, while the whole EU should see a rebound of 5.8%.
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Germany's industrial production rose sharply in May, but was unable to match consensus forecasts, data from Destatis showed Tuesday. In May, industrial production rose 7.8% on the previous month, after April experienced a revised 18% reduction. Consensus forecasts, according to FXStreet, expected a 10% rise in May. Industrial production, excluding energy and construction, was up 10% in May on the previous month. Energy production was up 1.7%, while construction grew 0.5%. By sector, intermediate goods production fell slightly, by 0.1%, while consumer good production rose 1.4%. Capital goods production jumped 28%. The production in the automotive industry increased markedly in May, after a "very low level" in April. However, it was still just under 50% lower than in February, Destatis said. On an annual basis, industrial production was down 19% in May.
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Hong Kong's leader Tuesday defended Beijing's new security law for the financial hub, saying it would restore stability and confidence as she vowed to "vigorously implement" the controversial legislation. Speaking at a press conference a week after China imposed the law on the semi-autonomous city, Chief Executive Carrie Lam combined warnings with assurances to Hong Kong's 7.5 million residents. "The Hong Kong government will vigorously implement this law," she said. "And I forewarn those radicals not to attempt to violate this law, or cross the red line, because the consequences of breaching this law are very serious." She denied allegations the law would stifle freedoms and hit out at what she said were "fallacies" written about its impact. "I'm sure with the passage of time...confidence will grow in 'One Country, Two Systems' and in Hong Kong's future," she added, naming the model that allows Hong Kong to keep certain liberties and autonomy from the mainland. The content was kept secret from Hong Kongers until the moment it was imposed one week ago, bypassing the city's legislature. It targets crimes under four categories: subversion, secession, terrorism and colluding with foreign forces, and gives China jurisdiction in some especially serious cases.
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Beijing on Tuesday reported zero new coronavirus cases for the first time since the emergence of a cluster in the Chinese capital in June that prompted fears of a domestic second wave. A total of 335 people have been infected since a cluster emerged at the city's massive Xinfadi wholesale market in early June. Beijing's health commission said on Tuesday it detected only one asymptomatic case the previous day, which China does not include in its confirmed cases counts. While Chinese authorities are still investigating the cause of the latest outbreak, the virus was detected on chopping boards used to handle imported salmon at Xinfadi market, prompting a ban on certain imports and increased scrutiny of foreign food suppliers. The Beijing government has tested more than 11 million people for Covid-19 since June 11 – roughly half the city's population, officials said at a press conference Monday. Residents lined up in the summer heat at testing venues across the city in June, with hundreds of thousands of samples collected each day. Localised lockdowns across the city have been eased in recent days, with people living in areas of the city considered "low risk" now allowed to travel freely again.
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More than five million residents of Melbourne will be locked down for six weeks after coronavirus cases surged in Australia's second-biggest city, authorities announced. State Premier Daniel Andrews said the lockdown would begin at midnight Wednesday and last at least six weeks, as he warned residents "we can't pretend" the coronavirus crisis is over. After the south-eastern city detected 191 new cases in 24 hours, Andrews said there were now too many incidents of the virus to trace and track. "These are unsustainably high numbers," he said. "No-one wanted to be in this position. I know there will be enormous amounts of damage that will be done because of this. It will be very challenging." Most school students will return to remote learning while restaurants and cafes will be limited to serving takeaway food. "There is simply no alternative other than thousands and thousands of cases and potentially more," he told reporters. Although the lockdown covers the Melbourne metropolitan area, the entire state of Victoria will effectively be sealed off from the rest of the country from Tuesday midnight, as state borders are closed.
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