A grey day for the FTSE
InterContinental Hotels said that it expects its revenue per room to fall 7% for the current quarter, but that the improvement towards the end of the April to June period is being driven by the Americas and parts of Asia, including China. The slide in the share price has been relatively modest this morning as most of the negative news has been built into the price for weeks.
Engineering firm Smiths jumped over 7% after it revealed job cutting plans and a major restructuring, and said that it got through the worst of the pandemic with a small increase in underlying revenues.
Oil majors are trading lower after Royal Dutch Shell, like its peer BP a few weeks before, revised down its long term price expectation for Brent crude prices. The Anglo-Dutch oil producer booked impairment charges of between $15 billion and $22 billion in the second quarter to reflect this new reality. The company’s long term expectation for Brent is now at $60/bbl, generously above the current $41 at which oil is trading this morning, indicating that the producer expects a substantial increase in prices at some point this year and in 2021.
For the moment, data coming out of the UK is not quite reflecting this optimism of higher prices. Yes, shops have reopened last week and pubs will start trading from this weekend but UK GDP dropped by 2.2% in the first quarter, the biggest shrinkage since 1979. Trying to dig the country out of a recession that is likely to be lying ahead, the government is getting ready to pump another £5bn into infrastructure investment, a statement expected by Boris Johnson later Tuesday.
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