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Tuesday Update

DB Live: Wall St rises; Virgin Atlantic deal; Co-op bank cuts

9.30pm: Wall street peaks

Wall Street continued its record sequence, closing at new highs after news that the US had held “constructive” talks with China on its phase one trade deal.

Although the gains were more modest than the previous session, the benchmark S&P 500 closed up 0.4%, while the tech-heavy Nasdaq rose 0.75%.

Only the Dow Jones is yet to reclaim its pre-coronavirus highs. It closed 0.21% lower.

4.45pm: London reverses gains

The FTSE 100 reversed much of yesterday’s gains, closing 67.72 points or 1.11% lower at 6,037.01.

4.30pm: Virgin deal sealed

Branson and Virgin website

Virgin Atlantic has secured backing from its creditors for a £1.2bn rescue plan which should keep its planes flying for at least the next 18 months.

The airline said shareholders, banks, aircraft owners and suppliers which were owed money approved the plan which will allow it to rebuild its balance sheet.

It had warned that without a deal it would run out of cash by next month.

The deal involves £400m in new cash, half of which will come from its main shareholder, Sir Richard Branson’s Virgin Group.

3pm: Co-op Bank axes staff and branches

Co-operative Bank is axing 350 staff and closing 18 branches.

The layoffs represent nearly 11% of the bank’s total workforce of 3,175 employees. None of the branch closures is in Scotland.

The cuts will primarily affect the head office and middle management roles as well as the staff working at the branches that are being closed.

Co-op Bank has already notified staff about the redundancies and branch closures, which will take effect by the end of the year.

The branch closures are expected to be completed by 1 December.

9am: London higher

The FTSE 100 built on Monday’s 100-point gain as US-China tensions eased and hopes rose of a Covid vaccine.

After an early 60 point surge, the index was trading 17 points (0.27%) higher at 6,121.33.

8.45am: Volpa owner says Hyslop ‘deluded’

A businesswoman running a major events company has accused Economy Secretary Fiona Hyslop of shortchanging the sector which risks being lost to Scotland.

Full story here

7am: German economy shrinks

Berliner Dom

The German economy contracted by a record 9.7% in the second quarter as private consumption, investments and exports all collapsed at the height of the COVID-19 pandemic, the statistics office said.

It is the sharpest decline since Germany began producing quarterly growth figures in 1970.

The figure represents a small upward revision to an earlier estimate which said total production of goods and services declined by 10.1% during the April-to-June period.

The contraction followed a 2% drop in activity in the previous three months.

James Fisher declares dividend

Marine services and engineering company James Fisher said it is well-positioned for any improvement in market conditions in the second half and beyond.

“Whilst the financial performance in 2020 will be lower than 2019, the Group remains well placed to deliver future growth for its shareholders,” it said in half year figures.

Revenue was 10% lower than the prior year at £258.1m (2019: £286.9m). All divisions showed good resilience and traded profitably in each month during the second quarter and underlying operating profit for the first half was £19.5m (2019: £24.5m). Underlying profit before taxation was £15.1m (2019: £20.9m).

The board said the group’s resilience has enabled it to declare an interim dividend of 8p per share, which is down against last year (11.3p), reflecting the reduction in underlying profit before taxation.

6am: Markets

The FTSE 100 index is expected to extend yesterday’s rally following robust trading in the US and Asian markets as hope grows around fresh US/China trade deal talks and a coronavirus vaccine.

The blue chip index jumped 102.84 points on Monday to close at 6,104.73.

On Wall Street the Dow Jones Industrials Average advanced by almost 1.4% while the broader S&P 500 index rose 1%, and the tech-laden Nasdaq Composite added 0.6%.

Japan’s Nikkei 225 index up 1.7%, although Hong Kong’s Hang Seng index shed 0.5%.

Markets were buoyed by reports that top US and Chinese officials saw progress in resolving concerns around the Phase 1 trade deal reached between the two countries in January.

Oil prices were buoyant, with Brent crude up +1.76% to $45.13/bbl in a move that wiped out all of last week’s declines and helped energy stocks lead the equity advance on both sides of the Atlantic.

Today’s agenda

* Virgin Atlantic’s creditors will vote on a £1.2 billion rescue plan. The airline, which is 51% owned by Richard Branson’s Virgin Group and 49% by US airline Delta, said it is on track to finalise its recapitalisation in the first week of September.

* Cloud computing firm Iomart holds its AGM

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