The UK economy will not recover its end-2019 activity levels until the end of 2021 according to the Bank of England's latest forecasts which push out the forecast recovery by up to six months from previous estimates. The Bank, which held interest rates at 0.1 per cent, also predicted that unemployment figures will hit 7.5 million by the end of this year and inflation will track around 0.25 per cent through the rest of this year.
London equities reacted to the Bank's announcement by selling down with the FTSE100 and FTSE250 off sharply - the blue chips had given up 1.5 per cent by 10am. Lower down the value scale, small caps proved more resilient. Also weighing on sentiment among investors was yet more notable dividend cuts, this time from commodities giant Glencore and broadcaster ITV. Overnight Asian markets also gave up some of their recent gains as eyes turned to attempts in the US to agree a budget for an economic support package. US shares remained in vogue though with the S&P500 closing higher again while gold is still rising, setting a new intra-day record high yesterday.
UK Company Announcements
| Glencore (GLEN) | The dividend decision deferral announced in April has turned into a cancellation. The mining and trading company will not pay 20c (15p) per share 2020 dividend in light of its net debt rising, saving $2.6bn. |
| ITV (ITV) | Pre-tax profits nosedived 93 per cent in the first half, as the broadcaster grappled with a slump in advertising and production revenues. Chief executive Carolyn McCall described the period as “one of the most challenging times in the history of ITV”. |
| Aviva (AV.) | The insurer said that it was looking to narrow its geographical channels after it incurred losses as a results of Covid-19 - the group posted a 12 per cent drop in first half operating profits to £1.2 billion. |
| GlaxoSmithKline (GSK) | The US Food and Drug Administration (FDA) has approved 'Blenrep' - GSK's treatment for patients with relapsed or refractory multiple myeloma. The group said that this marked its fifth major medicine approval in 2020. |
| Serco (SRP) | Revenue jumped by almost a quarter in the six months to 30 June, to £1.8bn, aided by last year’s acquisition of the Naval Systems Business Unit. Underlying operating profit surged by 53 per cent to £77.6m with the margin expanding by 0.9 percentage points to 4.3 per cent. |
| Spirent Communications (SPT) | The telecoms testing provider hiked its interim dividend up 12 per cent to 2.17 cents per share, as operating profit almost doubled in the first half. |
| Vitec (VTC) | The broadcast and photographic equipment provider swung to an adjusted pre-tax loss in the first half of £4.4m, as demand was pummeled by the suspension of television productions and the cancellation of sports events. |
| Mondi (MNDI) | The paper and packaging manufacturer has reinstated its dividend, making an interim payout of 19¢ along with a 29.75¢ dividend for 2019. Half-year pre-tax profits fell by a quarter to €466m. |
| Synthomer (SYNT) | Synthomer swung into an interim pre-tax loss of £4.7m, driven by a net charge of £63.1m in 'special items' that included restructuring and integration costs related to its OMNOVA acquisition, which it completed in April. Synthomer has lifted its synergy target for the acquisition from $30m to $40m. |
| Hammerson (HMSO) | The group has announced a rights issue to raise £552m and the sale of almost all its 50 per cent stake in its European VIA Outlets, in the hope of generating £274m in proceeds. The retail landlord reported a 44 per cent decline in net rental income over the first half. |
| Convatec (CTEC) | The suspension of elective surgeries during lockdown put a dent in the advanced wound care division's HY revenues, but continence and critical care saw heightened demand relating to the coronavirus pandemic. The group has maintained its full-year outlook |
