UK TOP NEWS SUMMARY: North East England Braces For Virus Restrictions

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

Alliance News 17 September, 2020 | 10:54AM
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(Alliance News) - The following is a summary of top news stories Thursday.

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COMPANIES

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John Lewis Partnership said it will pay no bonus for the first time since 1953 as it swung to a first half loss after losing GBP200 million in sales and booking chunky impairments due to Covid-19 lockdowns. In the six months to July 25, the department store chain and supermarket operator actually posted a 1.1% annual rise in total trading sales to GBP5.57 billion from GBP5.51 billion. Total trading sales include valued added tax, the partnership noted. Revenue was also higher, up 2.7% annually, at GBP4.92 billion from GBP4.79 billion, though John Lewis was unable to stave off a bruising swing to a pretax loss of GBP635 million from a profit of GBP192 million. Sharon White, who joined as chair of John Lewis back in February, said the Waitrose grocery unit saw "surging demand" during the initial lockdown. The John Lewis department store chain meanwhile, booked GBP471 million in branch impairments during the period. In the John Lewis department store unit alone, like-for-like sales were down 9.5% year-on-year with total trading sales 9.7% lower.

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Next posted a swing to loss for the first half of financial 2020, predicting a drop in sales for the full year but raising its profit guidance as it reported better-than-anticipated sales since the re-opening of stores. For the six months ended July 25, Next posted a pretax loss of GBP16.5 million, swinging from a profit of GBP327.4 million the year prior. This was as revenue dropped 26% to GBP1.29 billion from GBP2.01 billion. Excluding the impact of IFRS 16, an accounting rule related to leases, Next posted a pretax profit of GBP9.0 million, dropping from GBP319.6 million a year prior. Full price sales were down a third on last year, though Next highlighted that sales in the last seven weeks have been up 4% on a year ago. In the last thirteen weeks, since stores reopened, brand full price sales have "been much better" than anticipated, down 2% on last year. For the rest of the year, full price sales are expected to be down 12%. Pretax profit is guided for GBP300 million, up from GBP195 million given in July's trading statement.

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Contracts-for-difference trading provider IG Group Holdings said it performed "very strongly" in the first quarter. Net trading revenue of GBP209 million in the three months to August 31 was up 62% on GBP129.1 million a year ago, the company said, driven by continued high levels of trading activity from existing clients and a 50% rise in total active clients to 201,500. By divisions, the company's Core Markets unit recorded GBP170.8 million revenue in the quarter, up 56% on the prior year. The revenue growth was attributed to a particularly strong performance of the company's retail client base in UK and Europe. The Significant Opportunities portfolio recorded GBP38.2 million revenue, up 94% on the prior year. The unit remains on track to deliver on its medium-term target of GBP100 million in revenue growth by the end of financial 2022.

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Trainline said ticket sales were sharply lower over its first half due to government measures to curb the spread of Covid-19, though sales did improve as the second quarter progressed. The train and coach ticketing platform recorded revenue of GBP31 million for the six months to August 31, just 24% of the prior year's level. By division, the core UK unit generated GBP25 million in revenue, down 78% year-on-year, while the International unit saw a 57% revenue slump to GBP6 million. Trainline noted a tough first quarter, which saw net ticket sales at just 9% of the same period a year ago, but this stepped up to 30% in the second quarter and exited in August at 42%. Overall, net ticket sales for the first half amounted to GBP358 million, just 19% of the prior year's level. Over the first half of the year, Trainline said it outperformed its expectations for operating cost savings.

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MARKETS

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London stocks were down Thursday morning after markets signalled disappointment at the US Federal Reserve's meeting on Wednesday. Focus is now set on the Bank of England, which releases its own policy decision at midday - with analysts expecting no change, but dovish comments. Wall Street is pointed to a broadly lower start, with the Dow Jones called up 0.1% but the S&P 500 and Nasdaq both seen 1.1% lower.

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FTSE 100: down 1.0% at 6,020.59

FTSE 250: down 0.6% at 17,685.24

AIM ALL-SHARE: down 0.2% at 972.32

GBP: lower at USD1.2962 (USD1.2996)

EUR: lower at USD1.1788 (USD1.1843)

GOLD: lower at USD1,938.20 per ounce (USD1,969.00)

OIL (Brent): firm at USD41.96 a barrel (USD41.90)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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UK Prime Minister Boris Johnson has warned actions to stop a second surge of coronavirus must be "tough now" in order to "protect" Christmas. His words came as stricter new measures are set to be announced for the North East of England, including a 10pm curfew on pubs and restaurants. The PM said people have to be "both confident and cautious" and that it is "crucial" the country does not re-enter "some great lockdown again that stops business from functioning". He told The Sun: "Christmas we want to protect, and we want everyone to have a fantastic Christmas. But the only way to make sure the country is able to enjoy Christmas is to be tough now. So if we can grip it now, stop the surge, arrest the spike, stop the second hump of the dromedary, flatten the second hump." He spoke as people in the North East await an announcement on Thursday on new measures which are expected to come into effect from midnight.

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The eurozone was confirmed in annual deflation in August, according to figures from Eurostat on. The annual inflation rate was minus 0.2% for August, in line with the flash figure reported at the start of the month. The inflation rate for July had been 0.4%. Month-on-month, prices fell 0.4% in August, in line with July's print. Separately, Eurostat showed eurozone construction rose 0.2% month-on-month in July, far slower than the 5.1% rise reported for June. Annually, construction fell 3.8%.

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The European Central Bank said it was granting a further temporary relief to big banks to help them cope with the impact of the coronavirus pandemic, easing requirements on the capital they are required to hold until mid-2021. "The situation brought about by the coronavirus (Covid-19) pandemic has affected all euro area economies in an unprecedented and profound way," said the bank's governing council in a statement. "This situation has resulted in an ongoing need for a high degree of monetary policy accommodation, which in turn requires the undeterred functioning of the bank-based transmission channel of monetary policy."

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Hurricane Sally lumbered ashore near the Florida-Alabama line on Wednesday, killing at least one person, swamping homes and forcing the rescue of hundreds as it pushed inland. The death happened in Orange Beach, Alabama, according to Mayor Tony Kennon, who also told The Associated Press that one person was missing. Moving at just 3 mph, the storm made landfall at 4.45 am local time close to Gulf Shores, Alabama. Sally cast boats onto land or sank them at the dock, flattened palm trees, peeled away roofs, blew down signs and knocked out power to more than 540,000 homes and businesses. A replica of Christopher Columbus's ship the Nina that had been docked at the Pensacola waterfront was missing, police said. By the afternoon, authorities in Escambia County, Florida said at least 377 people had been rescued from flooded areas.

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US Federal Reserve Chair Jerome Powell said Wednesday the outlook for the US economy remains "highly uncertain", but he expects a quick recovery. Speaking at a press conference following the Federal Open Market Committee decision, Powell said the central bank's rates will remain "highly accommodative" to aid economic growth. The policy-setting Federal Open Market Committee left its benchmark rate unchanged in the range of 0% to 0.25%, as widely expected, and intends to keep the benchmark lending rate low until maximum employment is achieved even if inflation rises above 2%. "We expect to maintain an accommodative stance of monetary policy until these outcomes, including maximum employment, are achieved," Powell said. The Fed explains that is sees maximum employment as a "broad-based and inclusive goal" and does not see a high level of employment as "posing a policy concern" unless accompanied by "signs of unwanted increases in inflation or the emergence of other risks that could impede the attainment of our goals".

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