UK TOP NEWS SUMMARY: Stockpiling Sees UK Grocery Sales Surge In March

(Alliance News) - The following is a summary of top news stories ...

Alliance News 31 March, 2020 | 11:39AM
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(Alliance News) - The following is a summary of top news stories Tuesday.

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COMPANIES

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Grocery sales in the UK grew at their fastest pace in a decade over the past 12 weeks as consumers stocked up ahead of lockdown measures made to contain the spread of Covid-19, according to data from Kantar. Many shoppers in the UK controversially engaged in hoarding amid concerns about food shortages caused by the virus pandemic. During the 12 weeks to March 22, sales rose 7.6% to GBP28.98 billion from GBP26.93 billion a year prior, according to data from Kantar. J Sainsbury booked the largest sales growth, rising 7.4% to GBP4.42 billion but its market share was stagnant at 15.3%. Tesco's market share fell to 26.8% from 27.3% despite sales rising 5.5% to GBP7.76 billion. Walmart's Asda had a 4.9% annual sales rise to GBP4.36 billion, but its market share slipped to 15.0% from 15.4%. At Wm Morrison Supermarkets, sales rose 4.6% year-on-year to GBP2.89, with market share down at 10.0% from 10.3%.

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Royal Dutch Shell said it expected to post an impairment charge in the first quarter due to the recent collapse in oil prices, but has seen minimal disruption from the coronavirus outbreak. Shell warned it expects to take post-tax impairment charges in a range of USD400 million to USD800 million in the first quarter, following a slump in oil prices caused by the Covid-19 pandemic and a price war between Russia and Saudi Arabia. The Anglo-Dutch oil major said the impairment guidance was based on changes to its oil price outlook for 2020. Earlier this month, Shell suspended its share buyback in light of the coronavirus outbreak, but pledged not to cut its dividend. However, the company said Tuesday that disruption from Covid-19 has been minimal so far.

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WPP joined the growing list of companies looking to preserve cash, as the ad agency pulled its dividend and suspended its share buyback due to Covid-19 uncertainty. In light of the coronavirus outbreak, WPP said its GBP950 million buyback scheme and 2019 final dividend will be suspended given uncertainty it will have on the business. The move aims to save around GBP1.1 billion in total. In terms of trading, WPP said 2020 has started well with strong business momentum, including key account wins and good customer retention.

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Imperial Brands said it has seen no material impact on performance to date from Covid-19 pandemic, and current trading remains in-line with expectations. "Our operations benefit from a diversified supply chain and factory footprint, which is prioritising the manufacture of major product lines to build contingency stocks. Our distribution business, Logista, which serves Italy, France and Spain has increased the levels of finished goods stock in its regional distribution hubs and continues to deliver product to retailers," the Davidoff cigarette maker said. The FTSE 100-listed company also said that it has secured a new EUR3.5 billion multi-currency revolving credit facility from a syndicate of 20 banks.

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Severn Trent said there has been no material change to current year business performance since its trading update in January. The utility, which ends its financial year on Tuesday, said it has a robust financial liquidity position extending out to early 2022 to manage through current uncertainty and remains on track to deliver at least GBP25 million of net customer outcome delivery incentive outperformance payments for financial 2020, as previously guided. The FTSE 100-listed company has enacted incident management and business continuity plans throughout its business in response to the virus outbreak, it said. UK government restrictions on movement are likely to have a material impact on many of the business customers of its joint venture company, WaterPlus, Severn Trent warned however.

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Flutter Entertainment noted approval of its proposed merger with peer Stars Group by the UK Competition & Markets Authority. The UK regulator said that although both companies compete strongly, the presence of other competitors like bet365 and William Hill means the merger will not worsen the offering to people who choose to bet online. FTSE 100-listed Flutter welcomed the phase one merger clearance, but said the merger is still subject to approval by both Flutter shareholders and Stars group shareholders at general meetings scheduled for April 21 and April 24, respectively.

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Johnson & Johnson announced it has identified a lead vaccine candidate for Covid-19, with first batches potentially available in early 2021. Chair & Chief Executive Alex Gorsky said human clinical studies of the vaccine candidate should start by September 2020, with the first batches of the vaccine possible "available for emergency-use authorisation in early 2021 - a substantially accelerated time frame in comparison to the typical vaccine development process".

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MARKETS

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London shares were higher with Imperial Brands, WPP, Flutter and Shell among the blue chip risers. The pound was down against the dollar after lacklustre UK GDP data. Oil prices surged after positive PMI data from China. US stock market futures were pointed higher.

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FTSE 100: up 1.3% at 5,637.85

FTSE 250: up 2.7% at 15,024.64

AIM ALL-SHARE: up 2.4% at 679.76

GBP: down at USD1.2347 (USD1.2404)

EUR: down at USD1.0972 (USD1.1042)

GOLD: down at USD1,601.72 per ounce (USD1,619.47)

OIL (Brent): up at USD27.11 a barrel (USD22.09)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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A mounting death toll from the coronavirus outbreak has the US poised to overtake China's total of 3,300 deaths. Hard-hit Italy and Spain have already overtaken China and account for more than half of nearly 38,000 Covid-19 deaths worldwide, according to figures from Johns Hopkins University. But the World Health Organisation warned that while attention has shifted to epicentres in western Europe and North America, the pandemic is far from over in Asia. In Japan, the countdown clocks were reset and ticking again for the Tokyo Olympics after organisers announced new dates following the postponement from this summer. The clocks read 479 days to go, with the games now scheduled to kick off on July 23, 2021. In New York City, Governor Andrew Cuomo and health officials warned that the crisis unfolding there is just a preview of what other US communities could soon face. New York State's death toll climbed by more than 250 people in a day on Monday to more than 1,200, most of them in the city.

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The UK economy flatlined on a quarterly basis in the final three months of 2019, the Office for National Statistics said. The gross domestic product second estimate showed that the UK economy had no growth at all in the fourth quarter of 2019 from the third quarter. The reading was in line with the previous estimate and consensus forecasts of 0.0% growth. On an annual basis, the UK's annual economic growth was confirmed at 1.1% in the fourth quarter of 2019, unchanged from the previous reading. The figure was in line with market expectations.

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Consumer confidence in the UK weakened at the start of March, even prior to the full impact of the Covid-19 health crisis, research firm GfK said. The firm's overall consumer confidence barometer declined by two points to negative 9 from negative 7 in February. This still was better than the score of negative 13 recorded in March 2019, which was just ahead of the first expected Brexit date. However, the survey on which the recent index is based was carried out in the first two weeks of March, before UK Prime Minister Boris Johnson imposed restrictions on movement in the country to slow the spread of the new coronavirus. "While we have a long way to drop before we match the devastating numbers seen in July 2008, when the overall index score crashed to -39 points, we are likely to suffer further deterioration now that we are in lockdown in Britain," commented Joe Staton, client strategy director at GfK.

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The eurozone's inflation rate slumped sharply in March, data from Eurostat showed. Flash figures anticipate the annual inflation rate for the bloc to be just 0.7% in March, down from 1.2% in February. FXStreet consensus had pencilled in an inflation rate of 0.8%.

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Chinese factory activity saw surprise growth in March as businesses grind back to work following a lengthy shutdown but analysts said the economy faces a challenging recovery as external demand is devastated by coronavirus, while the World Bank warned growth could screech to a halt. But on Tuesday, the manufacturing purchasing managers' index came in well above expectations, hitting 52.0 for March, according to the National Bureau of Statistics. That is well above the 35.7 from the month before and beat forecasts of 44.8 in a Bloomberg survey. Anything above 50 is considered expansion. The NBS said the number "reflects that over half of surveyed companies had improvements in their resumption of work and production from the month before". However it added that "it does not represent that our country's economic operations have returned to normal levels". Non-manufacturing PMI came in at 52.3, also well above analyst predictions.

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The coronavirus pandemic's economic fallout could cause China's growth to come to a virtual standstill and drive 11 million more people in East Asia into poverty, the World Bank warned. The pandemic is causing "an unprecedented global shock, which could bring growth to a halt and could increase poverty across the region," said Aaditya Mattoo, World Bank chief economist for East Asia and the Pacific. Even in the best-case scenario, the region will see a sharp slowdown, with China's growth slowing to 2.3% from 6.1% in 2019, according to a report on the pandemic's impact on the region.

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