Judging from this week’s government briefings, all fairly stern, the prospect of normalcy for UK businesses seems to be slipping further and further away. Talk of social distancing for the best part of 2020 and no vaccine potentially until next year would mean that many businesses even when they restart will have to operate at a much smaller capacity.
FtSE stocks slipped across the board as investors chewed on the new reality, with their overall mood not helped by the fact that European leaders failed to offer any more support at the end of their summit yesterday.
In London, aerospace component maker Meggitt was among the worst hit stocks, accompanied by product testing firm Intertek and airlines. Investors were also underimpressed with Burberry’s directors deciding to cut their salaries by 20% in the next three months, a drop in the ocean while shops across the UK remain shut. The luxury brand share price took a 4.5% hit this morning.
It was not all gloom and doom though and Reckitt Benckiser, supermarket chains and house builders recorded some gains in early trade. Persimmon also briefly moved into positive territory after revealing plans to restart construction work from Monday, following on similar decisions by Taylor Wimpey and Vistry.
The countrywide lockdown has worked in favour of online trading platform IG Group which saw a 23% jump in trading over the last quarter as housebound workers tried their hand out at investing.
Oil companies results
Oil majors Shell and BP are due to report results next week and if the numbers from Italian oil-and–gas major Eni are anything to go by they are unlikely to be pretty. Eni reported a loss of nearly €3 billion as it aligned the book value of its inventories to the new market prices, a process both Shell and BP will also have to go through. They will also comment on demand prospects for the rest of the year which is unlikely to be positive while the virus is gripping large parts of the globe.