- FTSE 100 index up 13 points
- Rolls-Royce to lay off 15% of workforce
- Inflation starts descent towards zero
11.15am: Rolls-Royce to sack 9,000 people as part of cost-saving plan
The Footsie swung back in the green in late morning, up 13 points to 6,015, though sterling also rose 0.1% to US$1.2268.
In the blue-chip fallers, Rolls-Royce Holdings PLC (LON:RR.) dipped 1% to 265.2p after admitting it expects to axe 9,000 jobs, which should save around £700mln annually.
The engine maker is aiming at yearly savings of at least £1.3bn and will also cut spending across other areas as it reacts to the decline in demand as coronavirus hits air travel.
However, the cash costs related to the restructuring is likely to be around £800mln over this and the coming two years.
“While job cuts had been widely trailed at Rolls-Royce, the decision to lay off more than 15% of its global workforce still carries weight and highlights the damage coronavirus is doing to the company,” noted Russ Mould, investment director at AJ Bell.
“The long-term implications of such lay-offs should not be underestimated either. If or when the aviation sector takes flight once more, Rolls might need to recruit and train a whole raft of new people, affecting the pace of its own recovery. Rolls doesnt have the luxury of looking too far ahead; for now it simply needs to keep itself in the air while it tries to navigate extreme market turbulence.”
10am: Inflation slows down in April but not bottomed yet
FTSE 100 briefly fluctuated above the 6,000 mark in mid-morning, but then headed back underwater, after the latest reading showed a slowdown in inflation.
Londons leading index shed 7 points to 5,994, while the pound dipped0.1% to US$1.2235 from earlier highs.
WATCH: Morning Report: FTSE 100 falls as Rolls-Royce confirms 9000 job cuts
UK consumer price inflation was 0.8% in April, down from 1.5% in March, mostly due to lower oil prices and analysts expect it to drop further.
Experts say it may take months for the figure to bottom as consumer spending and business activity slow due to coronavirus.
James Smith, an economist at ING Economics, forecasts inflation might touch zero over the summer.
Recovery from the crisis is expected to be gradual rather than V-shaped, mostly due to the dire jobs market, he says.
“While the governments Job Retention Scheme has been successful in slowing the speed of unemployment so far, there are growing fears that we could see a wave of redundancies later in the year depending on how the furlough scheme evolves. This would imply that wage pressures are set to remain largely muted,” Smith commented.
On the other hand, supply constraints could push some prices higher as demand begins to return and supply chains readjust to new safety measures.
New requirements could also mean a need for more workers.
“Still, the broader economic picture of consumer and business caution suggests that demand will take a long time to recover – and that implies inflation is going to stay generally muted. We dont expect the UK economy to return to its pre-virus size until 2022 at the earliest,” Smith concluded.
8.50am: Further falls for Footsie
The FTSE 100 index beat a retreat in early trade on Wednesday as optimism around a potential coronavirus vaccine has well and truly faded.
The index of UK blue-chips fell 39 points early to 5,963.43.
The markets dip into the red reflected a “tamping down” of expectations around US firm Moderna Incs inoculation, analysts said.
“A report from Boston Globe Medias STAT news cast doubt on the success of the vaccine trials, not because they necessarily were a failure, but because the company failed to provide the critical information to allow the rest of the scientific community to assess the vaccines efficacy,” said Connor Campbell of Spreadex.
On the market, much song and dance was made of Marks & Spencer PLCs (LON:MKS) trading performance, which appears not to have been as dreadful as anticipated. M&S shares on the FTSE 250 index rose 3.6%.
Reacting to the prelims, Michael Hewson of CMC Markets said: “As numbers go these could have been a lot worse, and it is clear that M&S reacted quickly to the pandemic. The decision to cancel some of its summer stock was a shrewd move, while the dropping of the dividend, while painful was also necessary.”
No surprises that the credit checking services of Experian (LON:EXPN) are in demand as the world heads into recession. It showed its confidence in the future by holding its dividend payment, prompting a 5.6% jump in the share price.
AstraZeneca (LON:AZN) received a 1.8% boost from plans mapped out by investee company Moderna to float in the US.
Proactive news headlines:
Mosman Oil And Gas Ltd (LON:MSMN) has announced a deal to sell its stake in the Welch oil field in Texas, for US$300,000. It has received a US$30,000 deposit and the balance will be paid within 30 days. It said proceeds raised through the sale will facilitate investment in its Stanley project and provide working capital, supporting the company whilst oil prices remain low. Welch is producing and has development potential but Mosman noted that a prior ranking exercise determined that the Stanley and Greater Stanley projects offer “better growth”. The field generated a gross profit of A$264,619 in the six months ended December 31, 2019.
Gfinity PLC (LON:GFIN) announced that it has signed an agreement with Formula 1 motorsports Grand Prix group F1 to deliver the main elements of the F1 Esports Series in 2020, 2021 and 2022. The AIM-listed firm said it will deliver the Pro Draft Reveal show and the Pro series in 2020, the Challenger Series qualifying events, Pro Draft live show and Pro Series in 2021 and qualifying events in 2022. Under the terms of the contract, Gfinity will deliver a dedicated account management team to deliver all elements of the programme, provide a full league operations team to write all rules and govern drivers participating in the tournament and provide the use of its proprietary 'Race Control' in-race adjudication system. The company will also use its arena in London as the main venue for live broadcasts.
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Bango PLC (LON:BGO) said it has successfully launched carrier billing routes in the Google Play store for new operators in Asia, Latin America and Africa. The mobile commerce group said customers in Peru, Hong Kong and South Africa will now be able to pay for content and services in Google Play by using the Bango Platform to charge the cost to their phone bill.
Silence Therapeutics PLC (LON:SLN) said it has strengthened its leadership ahead of a listing on the American growth market, Nasdaq. It also confirmed it is in discussions with other potential commercial partners after inking a major deal with AstraZeneca earlier this year. And it laid out the timeline for progressing its two key drug candidates. As part of a comprehensive shake-up the firm, which specialises in gene silencing, has also brought on board Investec as its broker and nominated advisor.
Bloomsbury Publishing PLC (LON:BMY) has said it is basing its outlook on a gradual recovery in book sales to begin in July amid the coronavirus pandemic, the firm revealed alongside its latest annual results on Wednesday. That would be a severe downside scenario, it added, but on this basis it has sufficient financial headroom to cope. Costs have been cut across the business, said chief executive Nigel Newton and the company has assumed print revenues decline by 65% over the period to July before starting to pick up again through to March 2021. Print book orders accounted for almost four-fifths of Bloomsburys revenues in the year to February and these have been severely disrupted by the coronavirus pandemic lockdowns, he said, even though demand has increased for digital, audio and e-books.
Faron Pharmaceuticals Oy (LON:FARN) (NAASDAQFIRSTNORTH:FARON) has shared the peer-reviewed analysis of the effects of a drug given to severely ill patients that help explain the unexpected read-out from the companys 2018 phase III clinical trial of its then lead drug, Traumakine. The article in 'Intensive Care Medicine' looks at the role played by glucocorticoids when used in harness with intravenous interferon beta-1a such of the type developed by Faron. It found the mechanism of action interferon beta-1a was blocked by glucocorticoids. Faron chief executive, Dr Markku Jalkanen, hailed the Intensive Care Medicine article as a “crucial publication”.
OptiBiotix Health PLC (LON:OPTI) announced that it has entered into a non-exclusive license agreement for its SlimBiome trademark with Evolution_18 and the related launch of fibre gummies containing OptiBiotix's SlimBiome proprietary weight management technology. The life sciences business, which is developing compounds to tackle obesity, high cholesterol, diabetes and skincare noted that Evolution_18 is a US-based company founded by Bobbi Brown who is known for turning a simple makeup line, Bobbi Brown Essentials, into a billion-dollar global brand with Estée Lauder Companies.
Collagen Solutions PLC (LON:COS) has announced that Collagen Solutions (US) Inc. and Collagen Solutions (NZ) Limited, its wholly-owned operating subsidiaries in the USA and New Zealand, respectively, have received a mix of loan and grant funding based on those governments' coronavirus (COVID-19) economic support programmes. The AIM-listed developer and manufacturer of biomaterials and regenerative medicines for the enhancement and extension of human life noted that Collagen Solutions USA received US$240,000 in US government-backed loan funding. It added that Collagen Solutions NZ also received NZ$35,000 from the New Zealand Ministry for Social Development's Wage Subsidy Scheme.
Metal Tiger PLC (LON:MTR) said it has completed a further equity derivative collar financing arrangement with its lender secured over 328,798 shares held by the company in Australian explorer Sandfire Resources (ASX:SFR). Under the terms of the agreement, AIM-listed Metal Tiger has entered into a stock lending arrangement allowing the lender to borrow the Sandfire shares. As a result, the company has borrowed around A$1mln from the lender secured on the above terms with a maturity date of May 18, 2023. Metal Tiger said the proceeds of the financing will be used to fund “a near term substantial investment opportunity” as well as other potential investments.
Arix Bioscience PLC (LON:ARIX) said its portfolio company, Amplyx Pharmaceuticals, has closed a US$53mln Series C extension fundraising round, taking the total to US$90mln New investors included Pfizer and Adage Capital. UK-listed venture capital company Arix has a 3% stake worth US$6.4mln. Amplyx will use the cash injection to develop fosmanogepix (APX001) and MAU868 for the treatment of life-threatening fungal infections and BK Virus.
IXICO PLC (LON:IXI) has reported higher earnings for the first half of its current financial year, while also highlighting that its order book has “strengthened further” since the period-end. For the six months ended March 31, 2020, the brain imaging and neuroscience data specialist reported underlying earnings (EBITDA) of £700,000, up from £100,000 a year ago, while revenues jumped by 33% to £4.6mln. EBTIDA margins also rose in the period to 14.8% from 4%, while profit per share increased to 1.01p from 0.46p. Looking ahead, IXICO said it ended the period with an order book of £15.3mln, however, this has risen to over £22mln in April following the signing of more contracts.
Newmark Security PLC (LON:NWT) has said demand for hygiene screens and night pay hatches has risen due to the coronavirus outbreak, but noted that the overall impact of the pandemic remains uncertain. In a trading update for the year to April 30, 2020, the AIM-listed group said activity in the second half of the year was broadly in line with management's expectations, though had started to slow from April onwards. As a result, revenues for the year will be slightly below the previous twelve months though the impact on group operating profit is not yet clear, the group added.
Sativa Group PLC (LON:SATI), the Aquis Exchange-quoted leading quoted CBD wellness and medicinal cannabis group, which announced on April 22 that it had entered into a letter of intent with StillCanna regarding a possible offer for the company has said the UK Takeovers & Mergers panel has consented to an extension of the deadline, until 5.00pm on June 3, 2020, to enable the parties to complete the compilation of the necessary information and due diligence before the announcement of a firm intention to make an offer. By this time the offeror must either announce a firm intention to make an offer for Sativa or announce that it does not intend to make a bid. Henry Lees-Buckley, CEO of Sativa commented: "Our due diligence in respect of StillCanna is progressing well and our expectation is to complete this process in the coming days.”
Amur Minerals Corporation (LON:AMUR), the nickel-copper sulphide mineral exploration and resource development company focused on the far east of Russia, announces that Ljupco (Lou) Naumovski is stepRead More – Source
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