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Thursday update

DB Live: Market lifted by Primark; M&B loss

4.45pm: London close

London stocks closed higher on renewed hopes of a potential coronavirus vaccine, and as investors digested a better-than-expected US non-farm payroll figures (see below).

The FTSE 100 ended the session 82.4 points or 1.34% higher at 6,240.36.

Sterling was mixed against its major trading pairs, last falling 0.11% against the dollar to $1.2461, while it gained 0.14% on the euro to €1.1102.

2pm: US jobs surge

The US produced 4.8 million jobs last month, added to the 2.5 million unexpectedly added in May, helping to turbocharged investor sentiment, both for US equities and the dollar.

The unemployment rate remains high at 11.1%, but the payroll figure roundly beating the expectations of economists who had expected an increase of three million new jobs and an unemployment rate of 12.3%.

In anticipation of the figures Dow futures were up 0.98%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.66% and 0.41% higher, respectively.

1.45pm: Labour unimpressed with Covid changes

Scottish Labour leader Richard Leonard said he is unhappy with the latest changes on social distancing.

“Today’s statement poses more questions than it answers. We needed clarity from the First Minister and her government, and this statement did not offer it.

Full story here

12.50pm: Housing plan approved

Govan Housing Association’s proposal for a residential-led mixed-use regeneration of land at Water Row has been awarded planning permission in principle.

Developed in conjunction with Central Govan Action Plan (CGAP), Glasgow City Council, and Collective Architecture, a masterplan featuring about 200 homes as well as 3,500 square metres of commercial space, set within high-quality public space gained approval last January.

12.35pm: Face coverings and travel changes

Face coverings will be mandatory in shops in Scotland, travel restrictions lifted, and the two-metre rule will be relaxed in hospitality.

Full story here

10am: Markets – London lifted by Primark

European shares climbed as encouraging economic data from across the globe and hopes of a COVID-19 vaccine lifted sentiment ahead of the crucial US jobs data.

The FTSE 100 was up 57 points (0.93%) at 6,214.93 with Primark owner Associated British Foods leading the way with a 7.3% rise to 2,108p, after a trading update (see below).

“There’s a lot to like in these numbers – and it’s the first time we’ve been able to say that in a while,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

7.45am: Tourist tax call

Plans for a tourist tax must be scrapped to avoid further delaying the recovery of the hotels and hospitality sector, says a real estate company.

Colliers International makes the call as its latest reports on hotels show that Edinburgh, Glasgow and London are likely to be among the slowest to recover from the impact of the lockdown. Oxford, Cambridge and Stratford Upon Avon are also likely to see a slow return to health.

Full story here

7am: Primark to see sharp fall in profit

Primark

Primark said nearly all stores are now trading again and while sales are encouraging it is expected to report an adjusted operating profit, excluding exceptional charges, in the range £300-£350m for the full year compared to £913m reported for the last financial year.

Owner Associated British Foods said the chain suffered £650m a month in lost sales since the lockdown was imposed at the end of March.

“Trading in our reopened stores has in aggregate been reassuring and encouraging,” said the company. Since the reopening of the first stores on 4 May, cumulative sales for the seven-week period to 20 June were £322m and were 12% lower than last year on a like-for-like.

Progress has been made with landlords to secure an equitable outcome for the rent payments for the period when stores were not trading.

Specifically, UK rent payments due for the six month period of March to September have mostly been made, with the remainder payable shortly, with the amount and frequency by mutual agreement.

“With our stores trading, we have now placed orders worth over £800m for the autumn/winter season and, with further orders to be placed shortly, we expect the total for the coming season to exceed £1bn. Our sourcing team is in frequent and direct contact with each of our suppliers in relation to other supportive measures.”

Primark was one of the big European retailers which temporarily stopped buying products from south east Asia, but said it has paid, or has committed to pay for, all goods which were either in production or were finished goods in transit at the time of the store closures, on standard terms and without discount.

To reduce the cash outflow resulting from the loss of sales, Primark cancelled orders for goods where the handover date from the supplier was after 17 April. It reduced its operating expenses by over 50% and this limited the cash outflow to some £100m per month while the stores remained closed.

Mitchells & Butlers

Mitchells & Butlers, the pub and restaurant group, posted a half-year loss after taking a huge property write-down to reflect the impact of the coronavirus lockdown on its estate.

Most of its UK sites have been closed since March, but pubs and restaurants can reopen again this month and Mitchells said it expects to have the majority operating again by the end of the month.

The FTSE250-listed company added that all its pubs will be risk-assessed and only those that can operate under the new social distancing guidelines will resume trading.

Sales in the six months to 11 April fell 12.4% to £1.04bn although before COVID-19 sales had risen by 2.6% in the first quarter on a like-for-like basis before being affected by wet weather in the Spring.

Losses for the period were £121m after a £148m impairment, which the pub group said was almost all was coronavirus related.

Premier deal

Premier Oil said its creditors have approved the acquisition of the Andrew Area and Shearwater assets from BP under the amended terms.

Separately, Premier will not be pursuing the purchase of the additional 25% interest in Tolmount from Dana Petroleum, following the termination of the Escrow Agreement on 30 June.

6.45am: Markets

Spread betting firm CMC Markets expects the blue-chip index to open around 40 points higher at 6,198, having shed 11.78 points.

Stocks in Asia tracked higher overnight, with Japan’s Nikkei ahead 0.4%, China’s blue-chip index up 0.6%, while Hong Kong’s Hang Seng index rose 1.7%.

In New York, the Dow Jones Industrial Average closed 78 points, or 0.3%, lower after some profit-taking.

But the broader S&P 500 index added 0.5%, and the tech-laden Nasdaq Composite gained 1%.

6am: Branson to support airline

Sir Richard Branson is set to pump £200m of emergency cash immediately into Virgin Atlantic as it seeks to secure a £1billion rescue deal.

His Virgin Group will back the airline as it battles to stay afloat, says the Daily Mail.

A third of the airline’s 10,000 staff may be axed as the airline industry struggles amid widespread flight cancellations and question marks about how long it will take travel to return to pre-Covid levels.

Today’s agenda

* Two metre rule: Scotland’s First Minister Nicola Sturgeon will announce the government’s position on relaxing social distancing rules

* US Jobs: The June US jobs report is brought forward by a day because of the Independence Day holiday weekend, meaning it will be announced on the same day as the more timely initial weekly jobless claims. The economy is likely to have created jobs at a record rate as more restaurants and bars resumed operations

Today’s top Daily Business headlines

Exclusive: New attack on Higgins as Scotland ‘misses out’ on new fund

M&Co considering options in high street bloodbath

Innovative Scots turbine blade closer to market

‘Survival’ now the key factor for many businesses



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