Compass repaying furlough cash, Diageo trading picks up in second half
London open
The FTSE 100 is expected to open 10 points lower on Wednesday, having closed down 2.47% on Tuesday at 6,947.99.
Stocks to watch
Compass said it was repaying government furlough cash despite reporting plunging half-year profits and revenues due to the coronavirus pandemic. The catering giant on Wednesday said revenue fell by 32.4% to £8.4bn and operating profit decreased by 78.3% to £168m due to the adverse impact of COVID and related actions to resize the business and adjust costs. It did not specify how much it received in under the job retention scheme, but did report £119m in furlough payments and tax deferrals.
Coca-Cola HBC reported 2.7% currency-neutral revenue growth in its first quarter on Wednesday, or 6.1% on a like-for-like basis, driven by sparkling and energy drinks, its emerging segment, and “strong execution” in the at-home channel. The FTSE 100 soft drinks bottler said growth accelerated in the emerging segment, while the established and developing segments were still impacted by Covid-19 restrictions extending through most of the period. Volumes were up 1.5%, or 4.7% on a like‑for‑like basis, with sparkling and energy drinks together growing 10.7%.
Diageo has restarted its £4.5bn plan to return capital to shareholders after the drinks maker's business continued to recover in the second half of its financial year. The drinks maker said trading picked up across all regions since the end of December and it expected organic operating growth of at least 14% in the year to the end of June. Cash generation is strong, it said in a trading update. Performance in North America was particularly strong, reflecting resilient demand and good marketing, Diageo said.
Newspaper round-up
David Cameron lobbied ministers and senior officials 56 times at the height of the pandemic in an increasingly desperate attempt to beg the government to support a controversial bank he worked for and owned a stake in. The scale of the former prime minister’s chummy lobbying – by text, WhatsApp, email and phone calls – on behalf of Greensill Capital was revealed by Parliament’s Treasury select committee on Tuesday. - Guardian
A senior manager at Goldman Sachs in London has quit the US investment bank after making millions from investing in Dogecoin, the joke crypto asset which has risen by more than 1,000% in value this year. City sources said Aziz McMahon, a managing director and head of emerging market sales, had resigned from the bank after making money from investing in the digital currency based on the Doge internet meme. - Guardian
Campaigners have urged Boris Johnson not to abandon a high-speed rail link connecting Leeds to London after the Queen’s Speech stoked fresh fears that the £32bn eastern branch of HS2 could be axed. Ministers will press ahead with the western portion of HS2 which will link Manchester to the capital in a new bill unveiled alongside today's speech setting out the Government's agenda. - Telegraph
The boss of Just Eat Takeaway.com aimed an astonishing rant at analysts yesterday, claiming that “some can’t even do basic maths”. Jitse Groen, who runs the FTSE 100 food delivery group, tweeted that he was “amazed how bad these analysts have become”, adding: “All of them mix up definitions. It’s unbelievable.” It was unclear what prompted the tirade, particularly as it was launched in the wake of an upgrade by analysts at Exane of Just Eat Takeaway’s shares from “underperform” to “neutral”. - The Times
A group of MPs has called on the governor of the Bank of England to intervene in the proposed sale of the mutual insurer LV= to a private equity group. They are concerned that the board of LV= may be misleading its 1.25 million members and have asked Andrew Bailey to take a look at the proposal and the background to it. - The Times
US close
Wall Street stocks closed lower on Tuesday despite big-name tech stocks staging a late reversal.
At the close, the Dow Jones Industrial Average was down 1.36% at 34,269.16, while the S&P 500 was 0.87% softer at 4,152.10 and the Nasdaq Composite saw out the session 0.09% weaker at 13,389.43.
The Dow closed 473.66 points lower on Tuesday, extending losses recorded on Monday as last week's ransomware attack on a major US fuel pipeline and a rotation out of growth stocks both dominated headlines.
In focus throughout the session, big tech stocks were again in the red early in the day, with shares in Facebook, Apple and Amazon all moving lower before paring losses later, while Tesla shares slumped following a report from Reuters that claimed the electric carmaker had halted plans to expand its Shanghai plant into an export hub.
Elsewhere in the corporate space, Hanesbrands said first-quarter net sales had shot up 25% to $1.51bn on the back of double-digit growth in both its global innerwear and activewear businesses, while Electronic Arts earnings forecasts fell short of expectations on the Street.