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BA sees return to profit next year | Co-op Bank back in black
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5pm: US jobs and Pfizer pill lift market
London closed higher after US job creation gathered pace in October. The economy added 531,000 jobs, compared to a revised 312,000 additions in September.
The FTSE 100 closed 24.05 points higher at 7,303.96.
Travel sector stocks got a boost after Pfizer announced that its new antiviral Covid pill cuts the risk of hospitalisation or death by 89%. Pfizer shares rose as high as 8% in New York, while Rolls-Royce and Melrose Industries closed up 5.8% and 4.3% in a positive read-across.
Brent oil was quoted at $82.82 a barrel at the equities close, from $82.05 at the close on Thursday.
9.45am: Weir buys Canada firm
Weir Group is acquiring Motion Metrics, a Canada-based global mining technology business, for an initial £89m payable in cash.
Motion Metrics is the market leading developer of innovative Artificial Intelligence (AI) and 3D rugged Machine Vision Technology used in mines worldwide.
Its technology helps miners increase safety, efficiency and sustainability of their operations. As part of the agreement, Motion Metrics Vancouver headquarters will become Weir’s global centre for excellence in AI and Machine Vision technology.
9.30am: BT leads risers
BT again led the day’s risers amid speculation that a bid is imminent from French Billionaire and shareholder Patrick Drahi.
The telecoms group also restored its divided payments yesterday and said it did not need a partner to fund the roll-out of network arm Openreach’s fast fibre. Shares were up 3.8% to 165.8p.
Shares in IAG, owner of British Airways, fell 3% to 164.5p after it said it it expects operating losses before exceptionals this year of around €3bn.
It hopes to return to profitability in 2022 following “a significant recovery” in bookings (see below).
8.15am: FTSE 100 higher on Bank verdict
The FTSE 100 opened 18 points higher at 7,297.87 as equity traders continued to respond positively to yesterday’s Bank of England decision on interest rates.
7am: British Airways cuts losses
Luis Gallego, CEO of British Airways owner IAG, said the recovery is under way and the airline is aiming for a return to profitability next year.
IAG reported a fall in operating loss for the third quarter to €452 million from a restated of loss of €1.9 billion last year.
The reported operating loss for the nine months came in at €2.487bn (2020 restated: operating loss €5.9bn).
IAG expects its 2021 operating loss before exceptional items to be approximately €3bn.
Mr Gallego said: “There’s a significant recovery underway and our teams across the group are working hard to capture every opportunity. We continue to capitalise on surges in bookings when travel restrictions are lifted.
“All our airlines have shown improvements with the group’s operating loss more than halved compared to previous quarters. In Q3, our operating cash flow was positive for the first time since the start of the pandemic and our liquidity is higher than ever, reaching €12.1bn on a pro forma basis at the end of October.
“The full reopening of the transatlantic travel corridor from Monday is a pivotal moment for our industry. British Airways is serving more US destinations than any transatlantic carrier and we’re delighted that we can get our customers flying again.
“Longhaul traffic has been a significant driver of revenue, with bookings recovering faster than shorthaul as we head into the winter. Premium leisure is performing strongly at both Iberia and British Airways and there are early signs of a recovery in business travel.
“In the short term, we are focused on getting ready to operate as much capacity as we can and ensuring IAG is set up to return to profitability in 2022.
“We also remain resolute in our climate commitments. We’re transforming our business and driving change to create a truly sustainable airline industry.
“IAG has led the way by being the first airline group worldwide to commit to achieving net zero carbon emissions by 2050 and we welcome IATA’s recent announcement that the industry will join us in meeting this goal.”
7am: Co-op Bank back in black
Cooperative Bank returned to the black over the nine months to the end of September, posting an underlying profit of £24.9m (2020: loss of £45.6m) and statutory pre-tax profit of £28.5m (2020: £68.1m).
Costs have been cut but the cost:income ratio remains high at 90%.
Nick Slape, chief executive, said: “I am delighted to report a third consecutive quarter of underlying and statutory profit.
“Total income has increased by 16% and customer net interest margin has risen to 157bps from 144bps year-on-year.
“Costs have reduced by 8% to £244m on an underlying basis, and have reduced by 14% on an unadjusted statutory basis to £250m year-to-date.”
Asian shares failed to follow a global record-setting rally, held back by Chinese property stocks.
Japan’s Nikkei 225 fell 0.7%, albeit from a month high reached the day before, as manufacturers’ earnings disappointed.
Hong Kong’s Hang Seng weighed on the regional index, falling 1.25%, pressured by index heavyweight HSBC as the rate sensitive bank’s shares tumbled 5%, hurt by the BoE’s dovish call, as well as by property stocks.
US markets remained broadly buoyant after Wednesday’s record highs, when the US Federal Reserve said the economy was strong enough for it to start tapering its pandemic bond buying programme.
The Dow Jones Industrial Average was down 0.09%, while the S&P 500 gained 0.42% and the Nasdaq Composite advanced 0.81%.
Oil reversed course and gave up some of Friday’s early gains. US crude rose 0.34% to $79.05 a barrel, while Brent crude lost 0.1% to $80.44 per barrel, back near month lows hit a day earlier following a report that Saudi Arabia’s output would soon surpass 10 million barrels per day for the first time during the COVID-19 pandemic.