Market report

BA cuts loss, raises capacity | Heineken secures India’s UB


5pm: London lower

Blue chips retreated from yesterday’s uplift to finish in negative territory, though of the day’s lows. The FTSE 100 closed at 7,032.3, down 46.12 (0.65%).

Danni Hewson, AJ Bell financial analyst, said: “What a difference a day makes.  Twenty-four little hours after investors were celebrating a bumper crop of earnings, sentiment has soured.  July has been tumultuous for markets and navigating the conflicting economic data, geo-political shenanigans and a tsunami of company results has required Olympic standard dexterity.

“Today’s been no exception with bright spots including stonking figures from publishing and education company Pearson and online estate agent Rightmove which kept them at the top of the FTSE 100 green list but on the other side of the ledger big falls from Intertek and British Airways owner IAG pulled London’s blue-chip index down.

“US markets also look glum.  That push pull of good news bad news taking hold once again.  Amazon languished near the bottom of the Nasdaq heap as investors mull over an expected slowdown in sales and a record EU fine but as a whole market losses were lessened following news that consumer spending last month topped estimates.

“Silly season has never been so welcome or so potentially troublesome.”

7am: BA owner cuts loss

British Airways pic

IAG, owner of British Airways, Iberia and Aer Lingus, posted a €2.04 billion operating loss for the half year, down from €4.05bn last year.

The company said summer capacity would rise to 45% of pre-pandemic levels from 22% in the previous quarter, in the latest sign that a travel recovery is under way, although it said significant uncertainty remained.

IAG said it was focused on ensuring it could quickly react to changes in restrictions and take advantage of demand where it arose, but declined to give a profit forecast for the year due to COVID-19.

Britain will lift more restrictions on arrivals from abroad on Monday, allowing IAG’s usually most profitable airline BA to catch up with Spanish units Iberia and Vueling which have already benefitted from an earlier loosening of travel rules in Europe.

7am: Heineken takes controlling stake in India brewery

Heineken drinks

Heineken has obtained control of United Breweries in India, brewer of iconic Kingfisher brand.

This follows the Dutch giant’s recent acquisition of additional ordinary shares in UBL on 23 June, taking its shareholding from 46.5% to 61.5%.

Dolf van den Brink, chairman of the executive board and CEO, commented: “UBL has a proud history dating back more than a century as an influential shaper of the beer industry in India.

“It built its position as the undisputed market leader in India with a strong network of breweries across the country and a fantastic portfolio led by its iconic Kingfisher brand family, complemented more recently by a strong Heineken international brand portfolio.

“We are honoured to build on this legacy and look forward to working with our colleagues at UBL to continue to win in the market, delight consumers and customers and unlock future growth.”

“India offers an exciting long-term growth opportunity as per capita beer consumption is low at 2 litres per annum. Its growing population of nearly 1.4 billion people includes a strong emerging middle class, enabling further premiumisation. UBL will be a top Heineken operating company and Kingfisher a top five global brand.”

7am: NatWest (RBS)

NatWest, parent of Royal Bank of Scotland, has announced a return to profitability and a restoration of its dividend.

Full story here

Global markets

After the bell yesterday results from disappointed the market. Revenues for Q2 at $113 billion came in short of expectations, while Q3 guidance was also lower than expected.

The figures came too late for the markets which closed higher. The Dow Jones was up 154 points and the S&P 500 rose 19.

In Asia, Japan’s Nikkei 225 is off 450 points following disturbing trends in the number of COVID cases while in Hong Kong the Hang Seng is down 600 points, despite backpedalling by the Chinese regulators on trading.

Oil prices dropped but remain on track to post steep weekly gains with demand growing faster than supply.

Brent crude futures for September expiring today, fell 45 cents, or 0.6%, to $75.60 a barrel by 0506 GMT, following a 1.75% jump on Thursday.

US West Texas Intermediate crude futures fell 43 cents, or 0.6%, to $73.19 a barrel.

But both benchmark contracts were headed for gains of around 2% for the week, buoyed by indications of tight crude supplies and strong demand in the US.

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