A grey day for the FTSE
Fiona Cincotta June 30, 2020 7:13 PM
Mixed corporate news and worse than expected UK GDP data is keeping the FTSE in the red this morning, but the decline is softened by the prospect of a large UK infrastructure package
Mixed corporate news and worse than expected UK GDP data is keeping the FTSE in the red this morning, but the decline is softened by the prospect of a large UK infrastructure package and expectations that when lockdowns fully ease around the globe the recovery will be relatively quick.
InterContinental Hotels said that it expects its revenue per room to fall 7% for the current quarter, but that the improvement towards the end of the April to June period is being driven by the Americas and parts of Asia, including China. The slide in the share price has been relatively modest this morning as most of the negative news has been built into the price for weeks.
Engineering firm Smiths jumped over 7% after it revealed job cutting plans and a major restructuring, and said that it got through the worst of the pandemic with a small increase in underlying revenues.
Oil majors are trading lower after Royal Dutch Shell, like its peer BP a few weeks before, revised down its long term price expectation for Brent crude prices. The Anglo-Dutch oil producer booked impairment charges of between $15 billion and $22 billion in the second quarter to reflect this new reality. The company’s long term expectation for Brent is now at $60/bbl, generously above the current $41 at which oil is trading this morning, indicating that the producer expects a substantial increase in prices at some point this year and in 2021.
For the moment, data coming out of the UK is not quite reflecting this optimism of higher prices. Yes, shops have reopened last week and pubs will start trading from this weekend but UK GDP dropped by 2.2% in the first quarter, the biggest shrinkage since 1979. Trying to dig the country out of a recession that is likely to be lying ahead, the government is getting ready to pump another £5bn into infrastructure investment, a statement expected by Boris Johnson later Tuesday.
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.