Direct Line to take £44m travel claim hit, ITV sees advertising slump

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The FTSE 100 was flat at the open on Wednesday, having closed down 1.66% at 5,849.42 on Tuesday.

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Insurer Direct Line said it expected to take a gross hit of £44m, or £25m net, in travel claims from the impact of the coronavirus pandemic, offset by a 70% fall in motor claims as people made fewer car journeys. The UK's biggest motor insurer said on Wednesday that it also expected to incur around £70m of costs including supporting customers in financial difficulty, pausing all redundancies until at least the autumn and providing all NHS workers with free breakdown services. Direct Line added that it reported a 4.7% rise in first-quarter gross written premiums to £789.6m.

Broadcaster ITV reported a slump in April advertising revenues and a drop in total first-quarter revenues as it took a hit from the coronavirus pandemic. In the three months to the end of March, total external revenues declined 7% to £694m, with total ITV Studios revenue down 11% to £342m. The company said it had been impacted by the phasing of deliveries and restrictions on working practices due to the Covid-19 pandemic. Broadcast revenue rose 2% to £500m, with ITV total advertising revenue up 2% as originally guided, and online revenues 26% higher.

Online supermarket company Ocado reported a hefty 40.4% rise in second quarter retail revenue, but pulled full year guidance as Britons had food supplies delivered during the coronavirus lockdown. The rise compared to a 10.3% rise in the first quarter. Britons cleared supermarket shelves last March as coronavirus fears sparked a wave of panic buying. A lockdown imposed by the government also saw many afraid to leave home, and turning to online suppliers.

Newspaper round-up

The majority of Britain’s business owners will need less than a week to restart operations after any loosening of the government lockdown, according to a weekly survey by the British Chambers of Commerce. The latest BCC tracker poll found that almost two-thirds of respondents employing fewer than 10 people said they would need fewer than seven days to get ready. About half of respondents that employ more than 50 people could be open within seven days. – Guardian

Youth unemployment in Britain will reach the 1 million mark over the coming year unless the government provides job guarantees or incentives for school leavers and graduates to stay on in education, a think tank warns. The Resolution Foundation (RF) said that in the absence of action an extra 600,000 people under the age of 25 would swell dole queues, with a risk of long-term damage to their career and pay prospects. – Guardian

Disney’s profits have fallen by more than 90pc as the coronavirus pandemic shuts down its network of theme parks. The company took a $1bn (£800m) hit from its giant tourism division, which includes its theme parks, cruises and retail stores, as part of a $1.4bn it said it had lost due to the pandemic. – Telegraph

Ocado is at risk of a shareholder rebellion today over a £59 million pay package handed to its boss. Glass Lewis, a leading shareholder advisory service, has recommended that investors reject the online grocer’s remuneration report because of the “excessive compensation” awarded to executives. It also said that shareholders should oppose the re-election of Andrew Harrison, the director who chairs Ocado’s remuneration committee. – The Times

Deloitte is considering making cuts to employee pension benefits for its UK staff as the Big Four accountancy firm shores up its finances. Last week Deloitte started to consult its British-based staff on a plan to reduce the employer pension contribution that they receive from as much as 12 percent of salaries to 4.5 per cent. The move, first reported by Sky News, would be a temporary measure and could affect thousands of Deloitte’s workers in the country. – The Times

US close

US stocks closed higher on Tuesday as market participants again bet on the nation's economy opening up and cheered a further recovery in oil prices.

At the close, the Dow Jones Industrial Average was up 0.56% at 23,883.09, while the S&P 500 was 0.90% firmer at 2,868.44 and the Nasdaq Composite saw out the session 1.13% stronger at 8,809.12.

The Dow closed 133.33 points higher on Monday, continuing on a rally started at the tail end of the previous session when tech stocks led a late turnaround and an improvement in oil prices to comfortably above $20 per barrel also helped boost sentiment.

Investors were mindful of the potential for a second wave of Covid-19 cases on Tuesday as the state of California revealed on Monday that several retailers would be allowed to offer a roadside collection of goods by the end of the week.

New York Governor Andrew Cuomo also said daily rates of hospitalisations and deaths were declining, indicating the Empire State was on "the other side of the mountain". However, Cuomo noted that the drop was not as steep as officials had hoped.