A potent mix of resurgent coronavirus worries and trade war fears is weighing heavily on investor sentiment and sent gold soaring to a new record high this morning.
After a downbeat session in Asia overnight, the FTSE100 was down 0.4 per cent in early trading with the mid cap FTSE250 following suit. Both were weighed down by a sell off amongst travel stocks reacting to the UK government’s rapid weekend imposition of quarantine rules on travellers arriving from Spain in reaction to a renewed spike in coronavirus cases there. EasyJet led the way with shares down 13 per cent in early trading while Iberia and British Airways owner International Consolidated Airlines was down more than 9 per cent and Ryanair, which also published Q1 trading figures, was off 7 per cent.
UK Company Announcements
| Ryanair (RYA) | Ryanair warned that a second wave of coronavirus in Europe in late autumn was currently its "biggest fear", on the day that airline shares slumped in response to quarantine measures imposed on travellers from Spain. A €185m Q1 loss was slightly lower than the €200m figure predicted in May. |
| AstraZeneca (AZN) | A $6bn (£4.7bn) oncology deal with Japanese pharma group Daiichi Sankyo will see AstraZeneca collaborate on the development and commercialisation of Daiichi's 'DS-1062' cancer treatment. |
| Rolls-Royce (RR.) | Rumours continued to swirl over the weekend that Roll’s is gearing up to sell its Spanish subsidiary, ITP Aero, to private equity. Talks over a €1.5bn (£1.4bn) disposal to Indra Systems collapsed last year and the price tag today would likely be lower. Meanwhile, Moody’s has downgraded Roll’s credit rating to ‘junk’ status. While a sale would relieve some pressure, a potential multi-year commercial aerospace downturn keeps us wary. |
| Signature Aviation (SIG) | Like-for-like revenue fell by 31 per cent at constant currencies in the six months to 30 June. US flying activity recovered from a 77 per cent year-on-year decline in April to a 32 per cent shortfall in June. With $321m (£250m) of its revolving credit facility undrawn, the group has secured covenant waivers for the December and June test dates. |
| Kainos (KNOS) | The IT provider expects revenue and adjusted profits to be well ahead of consensus forecasts for the full year ended in March 2021. Management has announced a special dividend of 6.7p per share. |
| Headlam (HEAD) | Headlam shares surged 9 per cent after a trading update revealed that the floorcovering specialist's July revenues are currently ahead of those recorded last year, with operations nearly back to normal following a turgid few months of trading. |
| Indivior (INDV) | Shares in the pharma group are up by over two-thirds since Friday afternoon. Indivior has agreed to resolve criminal charges and civil complaints tied to opioid addiction treatment 'Suboxone' in the US. We moved to 'hold' ahead of Thursday's results. |
With Covid-19 cases still surging in the US and fears of a resurgence in cases in China and Hong Kong as well as across continental Europe, further travel restrictions in the near future threaten to hit sentiment further. With such uncertainty on the rise, investors have reached for the insurance offered by gold which rose more than 2 per cent to a new high this morning of $1944.71.
Gold's surge
Neil Wilson is on holiday until Tuesday 11 August
