Friday Update

DB Live: Stimulus plan; Markets up; Virgin-AAM; BP-Premier

10pm: Stimulus package in autumn

Rishi Sunak

Rishi Sunak has decided to delay a major stimulus package until the autumn to assess the economy’s recovery from the coronavirus fallout, the Financial Times reported.

The chancellor will still announce some limited measures next month, but this would not be a “Budget or mini-Budget”.

Emergency public spending will cost around £133 billion in the current financial year, helping to lift the budget deficit to wartime levels.

9.30pm: US closes strongly

The Nasdaq breached its all-time closing high reached in February but pared its gains to end the session a hair’s breadth below it. All three major US stock indexes advanced 2% or more.

The S&P 500 and the Dow are now 5.7% and 8.3% below their respective closing records.

4.45pm Markets ‘back with a bang’

London Stock Exchange

Ahead of the close in London, Russ Mould, investment director at AJ Bell, said the market rally “is back with a bang”.

The FTSE 100 index closed up 142.86 points, or 2.3%, at 6,484.30, and ended the week up 4.3%.

“Even more impressive is the rally in Asian stocks with the MSCI Asia ex-Japan index up 6.6% on the week,” he said.

Helping to drive the rally was Europe’s central bank providing more stimulus with a plan to buy an extra €600 billion of bonds in a bid to revive the eurozone’s struggling economy.

“In the UK, investors flocked to buy shares in banks, oil producers, miners and insurers, implying a “risk-on” market. More defensive stocks like healthcare, pharmaceuticals and consumer goods were out of favour, with Pennon, Hikma and Smith & Nephew being the top three fallers in the FTSE 100. Gold was also in decline, slipping 0.4% to $1,706 per ounce.

“Investors continued to bid up airlines despite the sector being in turmoil, betting that they will survive the crisis and that their shares have been oversold. International Consolidated Airlines soared by 10.3%, EasyJet jumped 8.6% and Jet2-owner advanced 5.4%.” 

Oil price jumps

Anticipation that OPEC and allied countries will extend record production cuts through July is sending oil prices higher.

Brent crude futures, the global benchmark, have risen above $41 per barrel for the first time since early March.

OPEC is expected to meet on Saturday to discuss extending output cuts by one month.

3pm: Taylor Wimpey upbeat

Taylor Wimpey shares leapt after the housebuilder said it is preparing for a return to work in Scotland as it order book across the UK continues to increase.

Analysts believe the company’s upbeat message reveals pent-up demand.

Full story here

2pm: US jobs surprise

Equity markets were given new impetus following the US’s unexpectedly strong non-farm payrolls data.

Ulas Akincilar, head of trading at the online trading platform, Infinox, said: “Against all predictions, the US jobs market has hit back. The headline figure – 2.5 million more Americans are in work now than were a month ago – is a triumph for President Trump and a turbocharger for the Dollar.

“Under the surface there are still serious worries. The overall unemployment rate has improved only slightly, and barely at all for African Americans and young people. And the number of people laid off permanently continues to rise.

“Yet compared to the horror show of April’s figures, this latest print feels like an unalloyed win. America is reopening for business and amid the wreckage of the pandemic, millions of jobs are being created.

“Quite what sort of decimated economy American companies are finding as they pull up the shutters won’t become clear for several months, but for now the US equity markets are roaring into the weekend after a full week in bull territory.”

12.30pm: Job fears at Victoria’s Secret

25 stores owned by the lingerie retailer are in administration.

Full story here

11.50am: New BBC DG

BBC Studios’ CEO, Tim Davie, will replace Tony Hall as Director General of the BBC.

Mr Davie acted as DG in 2012 and 2013 during the Jimmy Savile scandal and had been praised for “steadying the ship.”

Among his key tasks will be negotiating the future of the TV licence syste, funding levels with the Government, and finding a successor for Donalda Mackinnon as head of BBC Scotland.

Full story here

11.45am: Iran sees virus return

Iran has become the first country in the world to report a second wave of coronavirus infections after easing its lockdown, reports MailOnline.

The country logged a record 3,574 cases of the virus on Wednesday, beating its previous worst day of 3,186 cases on 30 March.

Iran, which imposed a lockdown in February, began easing its restrictions in mid-April as the disease declined.

Cases began picking up again in early May and have now been above 3,000 for three days running, as gyms and public offices were reopened at the weekend.

10.30am: Impact of lockdown

Scotland’s unemployment rate is thought to have risen from 4.1% in the last quarter to about 7% as 75,000 claimants joined the register last month, according to the latest government data.

Full story here

10.20am: Michelin parc advisers

Ryden and Westport Property have been appointed as marketing and leasing advisers to Michelin Scotland Innovation Parc in Dundee following the closure of the tyre factory.

The 700,000 sq ft site is being repurposed for new business development. 

8.15am: London open

The FTSE 100 resumed its upward momentum, trading 78 points (1.23%) higher at 6,419.63.

7.30am: Virgin and Aberdeen JV funding

Virgin Money

Virgin Money and Aberdeen Asset Management  have agreed to provide up to £12.5m each of extra funding for their asset management joint venture.

The companies formed the joint venture in March 2018 to sell Virgin Money customers asset management services.

Aberdeen Asset Management, part of Standard Life Aberdeen, paid more than £40m for a 50% stake in the venture. The deal was struck before Virgin Money was sold to CYBG later in 2018.

“There is no immediate income statement or capital impact for Virgin Money in relation to this action,” Virgin Money said.

7.10am: BP slashes Premier price

BP has cut the price of its deal with Premier Oil to sell the company oil and gas fields in the North Sea, following the collapse in the oil price.

Premier will now pay $210m to BP on completion of the deal, as opposed to $600m agreed in January.

As part of the revised terms, BP will hold on to $300m of cash flows from the fields for a period of time, while the estimated revised abandonment obligations have been reduced to $240m from $600m.

The new deal ends Premier’s long running feud with key backer ARCM, the Hong Kong-based hedge fund that had moved to block the acquisition.

Wood sets carbon target

Robin Watson

Wood, the global engineering and consultancy company, is to cut its greenhouse gas emissions by 40% by 2030.

Full story here

Today’s top Daily Business headlines

Bentley adds to car sector woes with 1,000 job cuts

BA refuses to attend meeting with Home Secretary

Royal Dunkeld Hotel under new ownership

Bellrock raises £1m as Langmead takes chair

Firms facing 10 June deadline on furloughed staff

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