Revenue down for WPP in second quarter, G4S preparing to separate cash solutions business
London open
The FTSE 100 is expected to open four points lower on Friday, having closed up 1.21% at 7.285.90 on Thursday.
Stocks to watch
Second quarter like-for-like revenue less pass-through costs at advertising giant WPP fell 1.4% quarter on quarter, for a first-half decrease of 2%, the company said on Friday. Reported billings were flat at £26.5bn, while revenue for the period was up 1.6% to £7.6bn as the company maintained full year guidance on like-for-like revenue less pass-through costs, which it expected to be 1.5% - 2.0% lower. Reported pre-tax profits fell 44% to £478m driven primarily by a “significant” gain in 2018 that was not repeated and a charge on the revaluation of financial instruments versus a credit in 2018.
Security services firm G4S said it was planning to separate its cash solutions business as it reported a jump in interim adjusted profit before interest, tax and amortisation. In the six months to the end of June, profit rose 1.7% to £234m on revenue of £3.75bn, up 4.7%.
AstraZeneca announced positive overall survival results from the phase 3 ‘FLAURA’ trial on Friday, a randomised, double-blinded, multi-centre trial of Tagrisso (osimertinib) in previously-untreated patients with locally-advanced or metastatic non-small cell lung cancer, whose tumours had epidermal growth factor receptor mutations. The FTSE 100 pharmaceuticals behemoth said Tagrisso showed a “statistically-significant” and “clinically-meaningful” improvement in overall survival - a secondary endpoint in the FLAURA phase 3 trial - compared with erlotinib or gefitinib, both of which were previous standard-of-care treatments in such a setting.
Newspaper round-up
Hundreds of schoolchildren have been drafted in to make Amazon’s Alexa devices in China as part of a controversial and often illegal attempt to meet production targets, documents seen by the Guardian reveal. Interviews with workers and leaked documents from Amazon’s supplier Foxconn show that many of the children have been required to work nights and overtime to produce the smart-speaker devices, in breach of Chinese labour laws. – Guardian
Uber lost $5.24bn in the last three months, its largest-ever quarterly loss, news that sent the ride-hailing company’s shares sliding 10%. The company was reporting earnings for only the second time following its share sale in May. The latest losses were worse than analysts had expected and the company announced revenues that were also below predictions. Uber’s revenues rose 14% to $3.17bn in the second quarter, below analysts’ expectations of $3.3bn and the smallest percentage on record. – Guardian
Uncertainty about the date of leaving the European Union is more damaging than a no-deal Brexit, the new deputy chairman of the Conservative Party has said. Paul Scully, who was appointed deputy chairman by Boris Johnson, also said that it was unlikely that Boris Johnson will call a general election before the UK is expected to leave the European Union on Oct 31. – Telegraph
Kraft Heinz’s new chief executive yesterday admitted he had “significant work ahead” after unveiling a $1.2 billion writedown of the food giant’s brands following sluggish sales, sending the shares tumbling to record lows. Miguel Patricio, 55, said: “The level of decline we experienced in the first half of this year is nothing we should find acceptable moving forward.” – The Times
The new cabinet minister Jacob Rees-Mogg appears to be in line for a £1 million payday after the fund management group he co-founded reported healthy profits in spite of difficult market conditions. Somerset Capital Management, which specialises in emerging markets, booked distributable profits of £19.5 million for the year to March, down from £25.3 million last time. – The Times
US close
Wall Street stocks finished higher on Thursday, bringing traders some sense of relief after the rollercoaster trading conditions seen during the previous session.
The Dow Jones Industrial Average ended the day up 1.43% at 26,378.19, the S&P 500 added 1.88% to 2,938.09, and the Nasdaq 100 was ahead 2.29% at 7,724.83.
At the open, the Dow was 145.76 points higher, after US stocks turned in a mixed performance on Wednesday, when a late rally helped to erase a massive drop seen earlier in the day.
At the same time, the yield on the benchmark 10-year Treasury note briefly slid below 1.6%, hitting its lowest level since 2016 in the process and further narrowing the spread versus the yield on two-year notes, a widely watched recession indicator.
On Thursday morning, however, the 10-year yield was back up at around 1.75%, although it remained far beneath the level of overnight interest rates.
Gold futures also jumped by more than 2.0% on Wednesday, sending them above the $1,500 per ounce level for the first time in six years.
In the process, its year-to-date gains also overtook those of the S&P 500.