Wednesday Update

DB Live: NatWest jobs go; M&G profits fall; ASOS; Balfour Beatty

4.45pm: Markets rise strongly

The FTSE 100 enjoyed a stellar day, rising sharply on the back of hopes of a return to growth. The index closed just off its intra-day peak of 6297.2 at 6,280.12, up 125.78 (2.04%).

UK housebuilders saw a sharp surge in construction activity help improve sentiment. Barratt Developments, Persimmon, and Taylor Wimpey advanced 3.4%, 3.3% and 3,2%, respectively.

Savings and investments group M&G gained 3.6% after it said first-half performance was “resilient” (see below).

4pm: Three dead in Stonehaven train crash

Latest updates here

3pm: Bank cuts

NatWest RBS is cutting about 550 jobs across its retail business and closing one of its remaining offices in London as it anticipates a wave of expected loan losses due to the COVID-19 pandemic.

It is understood there will be no compulsory redundancy as a result of this announcement.

“We have been reviewing our London property strategy to better reflect how we will work in the future,” a NatWest spokeswoman said. “As a result, we will exit Regents House, and will reconfigure our London remaining properties at 250 Bishopsgate and 440 Strand.”

10am: Market rises

London’s FTSE100 rose against expectations that it would pull back after yesterday’s strong gains and weakening prospects of stimulus in the US.

Traders shrugged off confirmation of recession in the UK to look ahead to growth in the next quarter.

Two hours into the session the index was up 48 points (0.78%) at 6,202.

Insurer Admiral rallied as it reinstated its special dividend and reported a better-than-expected jump in first-half pre-tax profit after motor claims fell as drivers stayed home during the lockdown.

Just Eat Takeaway was also in the black as first-half earnings and revenue grew as it benefited from lockdowns.

M&G gained even as it said first-half profit more than halved as the savings and investments company suffered fund outflows and pressure on retail margins (see below).

8am: Gilbert joins European Tour

Asset manager Martin Gilbert comments on his new role and golf goes on without fans.

Full story here

7.30am Fabiani to step down

Scottish Parliament Deputy Presiding Officer Linda Fabiani will not seek re-election at next year’s Holyrood elections.

Ms Fabiani, who has been an ever-present member of the Scottish Parliament since it was reconvened in 1999, told her East Kilbride constituency association of her decision last night.

7am: M&G adjusted profits fall

John Foley

The asset manager announced that adjusted operating profit for the half year fell to £309 million from £714m last time.

There was an and IFRS profit after tax of £826 million, up from £795m.

Assets under management and administration declined to £339 billion, reflecting negative market movements in March.

Net outflows were £4.1bn with retail asset management recording a £7.7bn decline cushioned by £2.8bn of institutional inflows and a net £800m rise in retail savings through PruFund.

Completion of Ascentric from Royal London is scheduled for 1 September following FCA approval of change in control.

The company has declared an interim dividend of 6p per share, in line with the policy of paying one-third of the previous year’s final dividend.

John Foley, chief executive, said: “This has been a resilient performance in extremely difficult times, with the value of our diversified business mix coming through strongly. “

ASOS sales ahead of forecast

The online retailer said sales and profit for the full year are expected to be significantly ahead of market expectations.

Revenue growth is now expected to be between 17% and 19% with profit before tax in the region of £130m-£150m.

The improvement in expectations is supported by stronger than anticipated underlying demand and the continuation of the beneficial returns profile highlighted in our last trading statement.

It has seen a significant and sustained reduction in returns rates since April.  In part this reflects customer demand for ‘lockdown’ categories, such as activewear and face and body.

Balfour Beatty loss

Underlying loss from operations for the half year to 26 June came in at £14 million (2019: £72m profit), principally due to impact of COVID-19.

Leo Quinn, group chief executive, said: “The financial impacts of COVID-19 are unavoidable; but they will pass.

“Since the start of Build to Last, our balance sheet, order book and expert capability are at record levels. We look forward with confidence to returning to profitable managed growth, and to delivering ongoing value for all our stakeholders.”

UK officially in recession

lock on gates at bar

GDP shrank by a record 20.4% in the second quarter as the UK plunged into recession for the first time since the 2008 financial crash.

According to the Office of National Statistics (ONS), the economy is now 22.1% smaller than it was at the end of 2019.

The decline was largely driven by a 20% fall in output in April, the biggest monthly decline on record, as the UK went into full lockdown.

Full story and reaction here

Today’s Agenda

ONS publishes the latest UK GDP numbers. The consensus is for a decline in output of 21%

Today’s top Daily Business headlines

Chancellor could delay Autumn Budget

Craneware boss Keith Neilson unveils placing for acquisition spree

Douglas Ross unveils his first Shadow Cabinet

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