Powerscourt

By Powerscourt on 01/08/2020

Powerscourt Coronavirus Briefing – 01 August 2020

ANALYSIS

A spirit of inquiry is abroad in the US. Health experts, including Dr Anthony Fauci, yesterday testified in front of a congressional subcommittee investigating the Trump administration’s pandemic response. In bad news for the President’s re-election campaign, the hearing’s Chairman concluded that the government had still not developed and implemented a national strategy to protect the American people.

To compound his plight, the US Dollar suffered its worst monthly performance in 10 years in July, a trend that implies diminished trust in US institutions, which could be worsened by the implementation of further economic stimulus measures.

In England, today was to have been the day that leisure businesses – including casinos, bowling alleys and skating rinks – could reopen, indoor performances could resume and wedding receptions of up to 30 permitted. At midday yesterday Boris Johnson announced that these plans were to be delayed at least until 15 August as cases in England were on the rise again. Just as with the announcement of local lockdowns in the North of England the evening before, the last-minute nature of the announcement caused uproar.

Even though the Prime Minister has put the brakes on opening up some sectors of the economy, the furlough scheme remains on course to start winding down from this weekend. In the weeks to come we will see how many are encouraged to return to their newly configured workplaces and whether the feared wave of job cuts will materialise.

 

WHAT ARE COMPANIES SAYING?

 

Retail & Consumer

Byron
Byron will permanently close 31 restaurants with the loss of 651 jobs despite the burger chain being bought out of administration. It will shut more than half its 51 sites after becoming the latest casual dining business to be hammered by the coronavirus pandemic. Administrators at KPMG said that the brand and certain assets had been sold to a newly formed company called Calveton in a move that will protect its 20 remaining sites and 551 employees.

Jaguar Land Rover
Jaguar Land Rover fell to another loss during lockdown and announced plans for further cost savings, raising fears of more job cuts ahead. Shutting plants because of coronavirus costs JLR £1.1bn, the car maker said, as it reported a £413m pre-tax loss in the first quarter. The lockdown contributed to a 42.4% fall in retail sales to just 74,067 cars in the three months to the end of June. Revenues declined in line with sales, falling from £5.07bn last year to £2.9bn during the quarter.

 

Industrials & Transport

BP
The biggest dividend left in the FTSE is hanging in the balance with BP expected to reveal losses next week after the collapse in oil prices. Analysts say BP’s share price indicates that the market is expecting it to follow the lead of Royal Dutch Shell, its larger rival, which cut its dividend by 66% last quarter. However, some argue that BP could opt for a smaller cut or even maintain the payout after a modest recovery in oil prices and moves to bolster its balance sheet.

 

Financials & Real Estate

London Stock Exchange Group
London Stock Exchange Group is examining a sale of its Italian business to secure regulatory approval in Brussels for its $27 billion acquisition of Refinitiv. The FTSE100 group said that it had started “exploratory discussions” about a disposal of MTS, its Italian bond trading business, as well as its Borsa Italiana division, which includes the Milan exchange. The discussions come as the owner of the London Stock Exchange has cautiously begun to set out plans to bring some workers back into the office.

 

Healthcare

GlaxoSmithKline
The US has agreed to pay Sanofi and GlaxoSmithKline up to $2.1bn to accelerate the development of the experimental COVID-19 vaccine the companies are developing and secure an initial 100m doses. The majority of the funding will go to Sanofi since the French pharma group came up with the vaccine candidate, which will be paired with GSK’s adjuvant, an extra ingredient designed to boost its effectiveness. The US is aiming to compress the time it takes to bring a vaccine to market from the usual decade to 12-18 months. 

 

IN THE NEWS

UK must heed ‘warning light’ amid concerns over second coronavirus wave, says Boris Johnson – The Daily Telegraph

Airlines face test after adding back transatlantic flights – Financial Times

Jobless fears as furlough scheme wound down – The Times




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