IAG swings to first quarter loss, RSA remains within guidance
London open
The FTSE 100 is expected to open five points higher on Thursday, having closed up 0.07% at 5,853.76 on Wednesday.
Stocks to watch
British Airways owner IAG swung to a first quarter operating loss of €535m as it warned of a “significantly worse” second quarter due to the coronavirus pandemic that has grounded most of its fleets. The result compares with a profit of €135m a year ago. Total operating losses including exceptional items relating to fuel and foreign currency hedges came to €1.8bn. The company added that it would defer the delivery of 68 aircraft as it forecast passenger demand not recovering before 2023.
RSA Insurance Group said group net written premiums totalled £1.52bn in the first quarter, which was down 1% excluding exits and in line with its plans. The FTSE 250 company said its business operating profit for the first quarter was up by double digit percentages, both including and excluding exit portfolios, with an improved combined ratio and slightly lower investment income, as guided. It said the Covid-19 coronavirus pandemic affected its balance sheet, but not its operating profit “materially”, given the timing of lockdowns late in the quarter.
Newspaper round-up
More than a month into coronavirus lockdown measures large parts of the British economy are now on life support. Nearly one in four UK workers have been furloughed in the past fortnight, with their wages subsidised by the state in an attempt to stop the unfolding economic crisis – already expected to be the deepest recession since 1709 – from getting even worse. - Guardian
Debenhams will permanently close a further five of its department stores, all located in shopping centres owned by the property firm Hammerson, putting 1,000 jobs at risk. The news came as Hammerson’s deal to sell its retail parks to the private equity firm Orion also collapsed. Debenhams fell into administration for the second time in a year last month, as it sought to protect itself from legal action by its creditors during the pandemic.- Guardian
Business leaders have called for a detailed timetable setting out how the economy will reopen as they fight to save millions of jobs. Bosses are desperate for Boris Johnson to lay out a clear route away from lockdown when he gives a landmark speech on Sunday, so they can plan ahead following weeks of conflicting messages and off-record briefings. – Telegraph
Ocado faced a backlash from investors at its annual meeting over huge bonuses awarded to its boss Tim Steiner and other top executives. Almost a third of its shareholders voted against the remuneration report, including BlackRock and Royal London Asset Management, on Wednesday. Bonuses totalled £88m for its top brass, including a £54m award for Mr Steiner. – Telegraph
The administrator of Flybe has warned that a sale of the failed airline is at risk from the potential loss of its operating licence and the crisis in the industry. EY, appointed in March after Europe’s biggest regional carrier collapsed, has received about 20 non-binding offers, including for the majority of the remaining business, according to the joint administrators’ proposals. However, EY said that global travel restrictions meant that the timeframe to complete any sale was challenging and, coupled with the uncertainty over the future of the airline industry, had resulted in “capital constraints, eroding valuations and diminished bidder appetite”. – The Times
US close
Major US indices turned a mixed performance on Wednesday, bringing an end to a rally that started on Monday following some dismal payroll figures.
At the close, the Dow Jones Industrial Average was down 0.91% at 23,664.64 and the S&P 500 was 0.70% weaker at 2,848.42, while the Nasdaq Composite saw out the session 0.51% stronger at 8,854.39.
The Dow closed 218.45 points weaker on Wednesday, reversing gains recorded in the previous session as market participants again bet on the nation's economy opening up and cheered a further recovery in oil prices.
Wednesday's moves come as Donald Trump acknowledged on Tuesday that there would undoubtedly be "more death" from the Covid-19 pandemic if the US began to re-open but argued that closed businesses would cost people their lives in other ways - including overdoses and suicides.
Covid-19 has already inflected at least 1.1m Americans and killed more than 70,000, according to Johns Hopkins University.
A reversal in West Texas Intermediate crude prices also put pressure on indices but a rally in tech stocks helped the Nasdaq stay in the green.