UK TOP NEWS SUMMARY: May UK Manufacturing Activity Improves Slightly

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

Alliance News 1 June, 2020 | 11:21AM
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(Alliance News) - The following is a summary of top news stories Monday.

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COMPANIES

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Associated British Foods said it expects to reopen all of its Primark stores in England on June 15, following the recent announcement by the UK government on the opening of all other non-essential retail stores by that date. As at Monday, fashion retailer Primark is trading in 112 stores, which represents 34% of the brand total selling space. By June 15, Primark anticipates having 281 stores opened around the world, which represents 79% of total selling space. Trading in the 112 stores has been regarded as both "reassuring and encouraging", with consumer demand strong for children's leisure and nightwear, alongside summer products. AB Foods said it is awaiting further guidance for the stores in the rest of the UK, and expects openings in late June. Looking ahead, AB Foods said it is too early to resume earnings guidance for the remainder of its financial year.

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AstraZeneca said Brilinta has received US approval as a treatment to reduce the risk of stroke, as it reported progress in the EU for its Lynparza cancer drug. The FTSE 100-listed pharmaceutical company said Brilinta - or ticagrelor - was approved by the US Food & Drug Administration as a treatment to reduce the risk of a first heart attack or stroke in high-risk patients with coronary artery disease. The approval from the regulatory body was based on results from the phase three THEMIS trial which showed Brilinta plus aspirin reduced the relative risk of cardiovascular death, heart attack, or stroke by 10%, compared with aspirin alone in patients with coronary artery disease and type-2 diabetes at high-risk of a first heart attack or stroke. Separately, Astra said Lynparza - or olaparib - has been recommended for marketing authorisation in the European Union for the 1st-line maintenance treatment of patients with germline BRCA-mutated metastatic pancreatic cancer.

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The UK Financial Conduct Authority has outlined the insurers who will be taken to task in its Business Interruption policy court case. Previously, the watchdog has written to insurance firms, telling them how it expects them to handle claims by small and medium enterprises against business interruption cover during the Covid-19 pandemic. The FCA has sought a court declaration to resolve the contractual uncertainty around the validity of many BI claims. The regulator said it is looking to "achieve clarity". Interim Chief Executive Christopher Woolard said: "The court action we are taking is aimed at providing clarity and certainty for everyone involved in these BI disputes, policyholder and insurer alike. We feel it is also the quickest route to this clarity and by covering multiple policies and insurers, it will also be of most use across the market." As part of this process, the FCA has contacted 56 insurers and reviewed over 500 relevant policies.

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Ted Baker announced a GBP95 million fundraise and a swing to a loss on expenses, including a substantial charge relating to inventory. The luxury fashion retailer reported a GBP79.9 million pretax loss for its year ended January 25 after a GBP30.7 million pretax profit the year before. Ted Baker explained that this was: "Due to the group booking GP84.6 million of non-underlying expenses, mainly comprising total charges of GBP45.8 million related to inventory, GBP16.2 million related to impairment of store assets, GBP7.6 million related to losses on the disposal of the Asian business and GBP6.5 million for legal and professional costs". Ted Baker separately announced plans to raise GBP95 million through a placing and open offer, as well as a firm placing which are all underwritten. It may also raise up to an additional GBP10 million through a subscription offer that is not underwritten. All shares will be issued at a price of 75 pence each.

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MARKETS

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London shares were higher amid relief US President Donald Trump held off unveiling severe measures against China over its security law proposal for Hong Kong. AB Foods was the best blue-chip performer up 7.5%. US stock market futures were pointed lower.

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FTSE 100: up 0.9% at 6,130.03

FTSE 250: up 1.1% at 17,230.51

AIM ALL-SHARE: up 0.6% at 880.13

GBP: up at USD1.2993 (USD1.2330)

EUR: flat at USD1.1113 (USD1.1117)

GOLD: up at USD1,736.18 per ounce (USD1,732.75)

OIL (Brent): up at USD37.80 a barrel (USD35.72)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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The UK manufacturing sector rebounded in May but Covid-19 continues to severely hamper the sector, data from IHS Markit showed. The IHS Markit/CIPS purchasing managers' index rose to 40.7 in May from a record low of 32.6 in April. May's flash reading had been 40.6. Though an improvement, the reading remained well below the no-change mark of 50, meaning the UK manufacturing sector continued to contract in May - though at a more moderate rate than in April. "The headline index is at its seventh-lowest level ever and at depths unseen outside of the current pandemic and the global financial crisis of 2008-09," IHS Markit noted. Rates of contraction in output, new orders and new export business were among the sharpest in the survey's history across consumer, intermediate and investments goods. However, the rates of decline lessened from the survey records of the prior month.

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The manufacturing sector in the euro area remained in sharp contraction territory in May with Germany in particular still struggling, data from IHS Markit showed. There was, however, a "noticeable easing" in May's downturn compared to the previous month. The IHS Markit Eurozone Manufacturing PMI in May rebounded from historical lows in April to 39.4 from 33.4. Despite being generally looser across the region compared to April, government restrictions designed to limit the spread of the global coronavirus disease continued to severely hamper the sector, IHS Markit said. After April's "extreme" and survey-record contractions, both production and new orders placed with euro area manufacturers fell at noticeably slower rates in May, IHS Markit said. However, the net reductions remained severe, in line with ongoing restrictions in place on economic activity.

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Beijing warned Washington of retaliation after President Donald Trump announced restrictions on Chinese students in the US in protest over a new national security law in Hong Kong. Trump said Friday that the US would ban some Chinese graduate students and start reversing Hong Kong's special status in customs and other areas, as Beijing moves ahead with a plan to impose a controversial security law. The US president said the Chinese government had been "diminishing the city's longstanding and very proud status". But China reacted angrily to the moves on Monday, saying it was "detrimental to both sides". "Any words and actions that harm the interests of China will be met with counter-attacks on the Chinese side," said foreign ministry spokesman Zhao Lijian at a regular briefing, without providing details. He said Washington's measures "seriously interfere in China's internal affairs and undermine US-China relations".

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Police fired tear gas outside the White House late Sunday as major US cities were put under curfew to suppress rioting as anti-racism protestors again took to the streets to voice fury at police brutality. With the Trump administration branding instigators of six nights of rioting as domestic terrorists, there were more confrontations between protestors and police and fresh outbreaks of looting. Violent clashes erupted repeatedly in a small park next to the White House, with authorities using tear gas, pepper spray and flash bang grenades to disperse crowds who lit several large fires and damaged property. Local US leaders appealed to citizens to give constructive outlet to their rage over the death of an unarmed black man in Minneapolis, while night-time curfews were imposed in cities including Washington, Los Angeles and Houston.

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The European Central Bank could announce Thursday hundreds of billions of euros in new bond-buying to keep fighting the pandemic crisis, analysts predict, as EU governments prepare to wrangle for months over a joint response. While some policymakers have urged abandoning the ECB's self-imposed limits on buying government debt to stoke growth and inflation, the meeting is also the first since a ruling by Germany's Constitutional Court urging restraint of the central bank's powers. "At a minimum, we think (governors) will add a further 500 billion euros" (USD557 billion) to the 750-billion-euro Pandemic Emergency Purchase Programme (PEPP) decided in March," Capital Economics analyst Andrew Kenningham said. If the ECB keeps up its present pace of buying government and corporate debt, "the total envelope will be exhausted by early October", he added.

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Britain partially reopened schools on Monday and allowed the most vulnerable to venture outdoors despite warnings that the world's second worst-hit country is moving too quickly out of its coronavirus lockdown. A death toll that now officially stands at 38,489 has piled political pressure on Prime Minister Boris Johnson, who was elected in December with a big majority. Johnson spent much of the past week stamping out a scandal sparked by his chief adviser's decision to drive to a picturesque castle with his family while everyone was under orders to limit outdoor exercise to an hour a day. Dozens of members of Johnson's own party joined a failed effort by the opposition to get Dominic Cummings fired for undermining the government's public message on health.

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Directors of public health have warned they are "increasingly concerned" the government is making the wrong judgment by easing lockdown restrictions far too quickly. The Association of Directors of Public Health said new rules, including allowing groups of up to six people to meet outdoors and in private gardens, were "not supported by the science". It said pictures of crowded beaches and beauty spots over the weekend showed "the public is not keeping to social distancing as it was" and the NHS test and trace programme "is currently far from being the robust operation that is now urgently required as a safeguard to easing restrictions".

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