By Powerscourt on 30/08/2020
Amid all the COVID-19 gloom, US stocks are set for the best August since 1986, after the technology-dominated rally following the crash in values in March. The S&P 500 index is up 6.8 per cent for the month (and 56 per cent from March) and if the gains hold on Monday, that would mark the best August since the index’s 7.1 per cent advance 34 years ago. Some commentators have suggested the rally is driven by lack of choice in other asset classes.
The UK Prime Minister’s desire to get the UK’s office workers back into city centres may take a while to come to fruition. According to the FT, several of the UK’s biggest banks are already converting underused parts of their high street branches into office space for staff to use as an alternative to bringing staff back to headquarters. Virgin Money and Metro Bank have already drawn up plans to add new facilities for flexible working in branches. Lloyds Banking Group, which has the UK’s largest branch network, will start testing a similar policy from October.
Meanwhile, The Sunday Times reports that BP is to sell its iconic head office at 1 St James Square and relocate in due course to Sunbury, Surrey. While the move is driven by economics and the agenda of Bernard Looney, the dynamic new CEO, it will not help the back-to-office movement.
Staying in the UK, plans on how to raise taxes to pay for the increased debt linked to the COVID-19 pandemic have been leaked. The reports suggest the Treasury don’t want to increase income tax rates. Proposals under consideration are believed to include cutting pension tax relief, an online sales tax and moving capital gains tax into line with income tax. Plans to raise fuel duty and remove loopholes in the inheritance tax system are also being discussed. Aligning capital gains tax with income tax would raise the state levy on asset sale profits for basic-rate taxpayers from 10 percent to 20 percent.
Bloomberg reports that police in Berlin clashed with “far right activists” after a mostly peaceful protest against coronavirus restrictions. Demonstrators held signs saying “End the Coronavirus Dictatorship”. About 200 people were arrested. On a similar theme – protesters who have branded the coronavirus pandemic a “hoax” gathered in Trafalgar Square.
France has suffered an “exponential” increase in Covid-19 cases with 7,379 new infections in 24 hours, according to the country’s public health authority. The number of new cases has been growing steadily throughout August, but jumped from 6,111 positive tests on Thursday and 5,429 on Wednesday.
And in the US, a projection from the University of Washington suggests there could be nearly 320,000 deaths by the beginning of December, though it says this could be reduced to 250,000 if 95% of Americans wear masks in public.
WHAT ARE COMPANIES SAYING?
The suits retailer has reportedly called in KPMG to work on a company voluntary arrangement (CVA) that would result in the closure of some of its 125 UK stores and rent reductions on others. Talks with landlords aimed at switching to rents linked to turnover have not yielded sufficient agreement. The company, which employs about 1,000 people, was acquired by Crew Clothing owner Menoshi “Michael” Shina for £22m on March 12, less than two weeks before all non-essential retailers were ordered to close. The next month, Shina unsuccessfully tried to renege on the deal.
The Sunday Times has reported that the FTSE 100 oil giant plans to leave its London HQ permanently. The company is planning to sell its office in St James for around £300m, and will then rent it back for two years before completely moving out of the building to a new base in Sunbury, Surrey. This follows recent comments from CEO Bernard Looney who said that the business was moving to a “hybrid work style” following the successes of working through home throughout lockdown. The company purchased the building in 2001 for £117m in 2001.
IN THE NEWS
Pandemic exposes ‘severe stress’ in commercial property financing – Financial Times
Trains row threatens to derail office return plan – Telegraph
A strong bounce so far – but can it survive the autumn? – The Times