Shell to take second quarter hit, InterContinental says RevPAR trend improving

London open

The FTSE 100 is expected to open 14 points lower on Tuesday, having closed up 1.08% at 6,225.77 on Monday.

Stocks to watch

Shell said it expected to take a $20bn - $27bn hit to second quarter pre-tax profits from impairments after revising its outlook for commodity prices and margin outlook amid the Covid-19 pandemic. The company on Tuesday said it expected a Brent oil price of $35 a barrel for 2020, rising to $40 in 2021, $50 in 2022 and $60 the following year and the long term in 2020 real terms. Production was expected to be between 2,300 and 2,400 thousand barrels of oil equivalent per day. “Although this production range is higher compared with the outlook previously provided, it has had a limited impact on earnings in the current macro environment,” shell said in a trading update.

InterContinental Hotels said revenue per available room (RevPAR) fell 75% in the second quarter but that the trend was improving and 90% of its hotels were now open. RevPAR declined 82% in April, 76% in May and 70% in June with the improvement mainly in China and franchised hotels in the Americas. The FTSE 100 group said the pace of reopenings had accelerated with about 10% still shut.

Rotork reported on Tuesday that, despite the “unprecedented” economic environment, its trading had held up “reasonably well” amid the Covid crisis. The FTSE 250 firm said that, based on trading to mid-June it expected that, subject to the timing of the receipt of expected orders, group order intake in the first half would be between 16% and 18% lower than the previous year's £362m on an organic constant currency basis, with Asia Pacific orders modestly lower year-on-year, and demand in the Europe, Middle East and Africa region holding up better than that in the Americas.

Newspaper round-up

The chancellor is expanding a £500m fund for UK startups hit by the coronavirus crisis, to ensure firms that shifted their headquarters abroad can still access the scheme. The Future Fund will now benefit companies that are seen as British in all but name, having moved their parent company to tap US investors or take advantage of so-called accelerator programmes. Accelerators like US-based Y Combinator often ask firms to set up a US entity in order to access financing, mentorships and expert networks overseas. – Guardian

More than 300,000 planned new homes may remain on the drawing board over the next five years, deepening the UK’s housing crisis, as a result of the coronavirus pandemic, new research predicts. Stalled construction and the recession will slash the number of new homes being built, with 85,000 predicted to be lost this financial year, according to a study by the property agency Savills with the housing charity Shelter. – Guardian

Restrictions on German company Wirecard have been lifted by the Financial Conduct Authority (FCA) after thousands of Britons were left potentially unable to access their own cash. Newcastle-based Wirecard Card Solutions Limited's licence was frozen after a major accounting scandal at its German parent company. Fintech firm Curve was among those who said the FCA decision would temporarily prevent customers from using their accounts. – Telegraph

Thousands of Wirecard investors are preparing to sue the German state for billions of euros over its alleged failure to pre-empt the worst accounting scandal in the history of its premier share index, the Dax. Two separate class actions will accuse the financial watchdogs of negligence after it emerged that they had assigned only one full-time worker to investigate claims of a complex €1.9 billion fraud at Wirecard last year. – The Times

Households are slowly regaining confidence in the economy as the lockdown is lifted and businesses begin to reopen, according to a survey. Although the country is experiencing one of its worst economic downturns in modern history, consumers are feeling more hopeful about their job prospects and personal finances. Consumer confidence edged up by 2.5 points to 98.5 in June, according to the poll by YouGov and the Centre for Economic and Business Research. Any reading above 100 suggests that households are more optimistic than they are pessimistic. – The Times

US close

Stocks closed in the green on Wall Street on Monday, despite a spike in new coronavirus cases in certain US states over the weekend.

The Dow Jones Industrial Average ended the session up 2.32% at 25,595.80, the S&P 500 added 1.47% to 3,053.24, and the Nasdaq Composite was 1.2% firmer at 9,874.15.

It was a positive session throughout for the Dow, which opened 390.80 points higher, reversing around half of the losses recorded in the final session of last week after 45,255 additional coronavirus cases were reported on Friday alone.

On Saturday, Florida reported a single-day increase of 9,636 on Saturday and an additional 8,577 on Sunday, after authorities had already again banned drinking at bars across the state.

Texas has also rolled back some of its reopening plans as a result of record spikes in infections, while Arizona Governor Doug Ducey warned that new Covid-19 cases were "growing fast across all age groups and demographics".

Health and Human Services secretary Alex Azar warned over the weekend that the "window is closing" for the country to stem the outbreak.

However, despite the flurry of negative Covid-19 headlines, financial markets continued to err on the positive side of cautious.