FTSE notches higher on mixed corporate news
Fiona Cincotta April 28, 2020 5:08 AM
This morning is heavy with corporate news showing the damage from the coronavirus, which in turn is pulling whole sectors lower.
This morning is heavy with corporate news showing the damage from the coronavirus, which in turn is pulling whole sectors lower. Still, the index is trading in the black as the gradual reopening of businesses in Europe and the US is infusing some optimism into the market.
What is worth bearing in mind for most of the FTSE companies currently reporting - except for HSBC - is that March was the only month during the reporting period when COVID affected their operations. The next quarterly results are set to show even more damage as Europe and the US start pulling out of the grip of the pandemic.
BP’s revenue for the quarter decreased relatively modestly but the biggest hit came from fair value accounting effects revaluing the price of the company’s oil down to current price levels. BP’s shares fell 1.5% and Shell, which is due to report on Thursday, followed with a smaller decline. An overnight drop in crude oil prices causing WTI to trade below $11/bbl also weighed.
Shares in Marks & Spencer dropped 1.5% after the firm abandoned plans to pay dividends this year because both its clothing and food sales have been affected by the pandemic. Closures of in-store cafes also contributed to the loss of earnings. Peers Sainsbury, Morrison and Tesco also traded lower despite Kantor data showing that UK grocery sales increased more than 5% year-on-year to April 19, rising by £524m.
HSBC earnings were hit by the bank’s high loan loss provision which includes a large exposure in Singapore. HSBC has a much higher presence in Asia than other UK banks and has been more heavily affected by the virus, which has been active in the Asian region since January. That’s why, despite a slide in HSBC shares, the rest of the UK banking sector is holding up well with Barclays and the Royal Bank of Scotland both trading close to 3% higher.
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