FTSE 100 hits seven-week high despite slump in UK retail sales and US confidence - as it happened

Graeme Wearden

from on 2020-04-28 16:15 (#52RJX)

Rolling coverage of the latest economic and financial news, as UK retailers report cashflow problems and layoffs amid the pandemic

5.15pm BST

Time for a recap.

European stock markets have hit their highest levels in seven weeks, despite another torrent of bad economic data.

The @Conferenceboard consumer confidence index fell 31.9pts in April (sharpest decline since 1973) to lowest since 2014:

- present situation fell a record 90.3pt to 76.4: lowest since GFC

- expectations *improved* 7pt to 93.8 on hope of "re-opening" but income outlook worse pic.twitter.com/QU1585nWND

5.01pm BST

Earlier today, UK's financial watchdog fired a warning shot at Britain's banks not to pressure corporate clients to give them work in return for financial assistance in the crisis.

The FCA suspects that some banks have been demanding to take part in lucrative jobs such as share sales, in return for agreeing to emergency loans. Pretty unprofessional if so!

4.46pm BST

Europe's investors have shaken off the latest weak economic data, pushing shares higher across the region.

Trading has just ended, with Britain's FTSE 100 up 111 points of 1.9% at 5958, a seven-week high.

The FTSE 100 ($UKX) made its break today. That is the 'easy' part in the technical sense. The more significant struggle is finding follow through pic.twitter.com/qqbFEiFXiM

4.01pm BST

Interestingly.... the rally on Wall Street is somewhat fizzling out.

The Dow is now down 0.25%, while the tech-heavy Nasdaq index has dropped by 1%.

With the S&P 500 Index now up more than 30% from its low, the question arises if this is a bear market rally or a bull market correction. pic.twitter.com/bzd183V4I9

3.39pm BST

Here's a neat chart showing the recent divergence between the US stock market and consumer confidence.

Stocks and Consumer Confidence.

I'm sure it's nothing. pic.twitter.com/rL4zm3g0Tf

3.28pm BST

US economist David Rosenberg feels the plunge in US consumer confidence is rather at odds with the recent stock market rally.

The Conference Board confidence report showed that just 34% of consumers, that 70% chunk of GDP, believes that business conditions are "normal". That jives with an 18-year high 20x forward P/E multiple how, exactly? pic.twitter.com/9Hzgj2STb1

Given that tens of millions of people in the US have filed for unemployment benefits in April, I am amazed that the fall in consumer confidence is so small. https://t.co/RgIrRzQILT

3.26pm BST

There is one glimmer of hope in the US consumer confidence report -- Americans are a little less pessimistic than a month ago.

The 'future expectations' index, which asks people how they feel about the next six months, actually improved to 93.8 from 86.8 in March.

Consumer confidence suffers record drop in April, but Americans more hopeful of future: https://t.co/O5mgy6oxk4 pic.twitter.com/dbbJuD6gPu

3.19pm BST

Stock markets have actually pushed higher since the US consumer confidence figures were released.

The UK's FTSE 100 index is now up 124 points or 2% at 5969 points, on track to close at its highest level in seven weeks.

3.14pm BST

Roughly one in six Americans expect their income to decline over the next six months, today's consumer confidence report shows.

Without much surprise, big drop in US consumer confidence. The conference board index is out at 86.9 in April vs 87.9 expected and prior 120. The share of consumers expecting income to decrease over the next six months jumped to 18.5% vs prior 10.1%. pic.twitter.com/ptwV8N2QkL

3.11pm BST

Oof! US consumer confidence has plunged to its lowest level in nearly six years, as the Covid-19 pandemic spooks Americans.

The Conference Board's Consumer Confidence Index has slumped to 86.9 for April, the lowest since June 2014. That's down from 120 points in March -- a truly dramatic (but not unsurprising) slide.

Another worst ever. Largest two-month decline in Consumer Confidence on record (since 1967). pic.twitter.com/7B0DS6fLCj

#US #Consumer #Confidence Present Situation .... watch out below!!! April 75.4 vs. March 166.7 pic.twitter.com/QQBaewIU4F

2.43pm BST

Wall Street has hit a near seven-week high at the start of trading, matching the move in London today.

The Dow Jones industrial average has risen by 314 points, or 1.3%, to 24,448, its highest level since Wednesday 11th March (during the worst week of the 2020 crash).

U.S. markets open higher https://t.co/SHmYx47Ki7 pic.twitter.com/HMZaPwRzVS

2.42pm BST

America's trade deficit has widened, partly due to a collapse in sales of new cars and industrial equipment to overseas customers.

The Commerce Department has reported that the gap between the goods bought and sold by the US expanded by 7.2% last month to $64.2bn. Although Americans did buy less from abroad, that was more than countered by a drop in exports.

In March, goods imports dropped 2.4% to $191.9 billion after decreasing 2.5% in February.

There were sharp decreases in imports of consumer goods and motor vehicles and parts. Imports of food, industrial supplies and capital goods rose last month.

2.20pm BST

The volume of cargo being transported around the world by air tumbled by 15% in March, according to the International Air Transport Association (IATA), less than during the global financial crisis in 2008 when volumes fell by 23%.

Airlines suffering a 30% decline in passenger travel are quickly trying to repurpose passenger aircraft, or bring freight airplanes out of storage in order to fly goods including medical supplies and pharmaceuticals around the world, according to the industry body.

1.55pm BST

Sales at mining and construction equipment maker Caterpillar have been hit hard by the Covid-19 pandemic.

12.54pm BST

Here's our news story on April's retail sales figures:

12.52pm BST

The recent recovery in stock markets came after central banks and governments launched huge new rescue packages to help businesses and individuals survive the lockdown.

This video explainer runs through the various schemes, and explains the risks....

12.29pm BST

More gloom: The U.K. economy isn't expected to return to its pre-coronavirus peak until the end of next year.

The National Institute for Economic and Social Research has predicted that the UK economy will shrink by 30% during the lockdown, and not return to the levels of Q4 2019 until the last quarter of 2021.

11.52am BST

Despite all the bad news this morning, Britain's stock market has just hit its highest level in nearly seven weeks.

The FTSE 100 index of blue-chip shares is rallying hard, up 94 points or 1.6% at 5941 points.

"Further gains for the FTSE 100 look odd on a morning when major components like BP and HSBC report poor earnings, but for the most part the gainers in the index are those that will see an upturn in activity as lockdowns ease across most of the globe, if perhaps not yet in the UK.

This continues the theme from yesterday's session, when it seemed as if the whole world was looking to a post-coronavirus environment, when some semblance of normality may return."

11.39am BST

These charts from the CBI's 'distributive trades' survey show how retail sales slumped this month - both in stores (where open) and online.

11.17am BST

Newflash: UK retailers have suffered their joint-biggest ever fall in sales, after many were forced to shut their doors because of the pandemic.

A survey conducted by the CBI, which represents UK businesses, found that 71% of retailers saw a drop in sales this month, compared to a year ago. Just 16% saw a rise.

Retailers reported a steep drop in sales in the year to April - matching the decline in December 2008, marking the joint sharpest fall since the survey began in July 1983.

"It's no surprise that the lockdown is hitting retailers hard. Two fifths have shut up shop completely for now. And sales of groceries and other essentials also fell, suggesting households may have been dipping into stockpiles built up prior to the lockdown or tightening their belts more generally as incomes take a hit.

"Although the livelihoods of hundreds of thousands of employees in retail remain at risk, there are encouraging signs that the Government's Job Retention Scheme is providing genuine relief, with many opting for temporary rather than permanent lay-offs.

10.57am BST

A new report from Resolution Foundation shows that women, low-paid workers, younger employees and parents are being hit particularly hard by the Covid-19 pandemic.

They've calculated that women make up a majority of 'key workers', which means they run a greater risk of exposure to the virus as they're not isolating. Those key workers are often relatively lowly paid.

It should not be forgotten that this is the same cohort of adults who experienced the sharpest deterioration in cohort-on-cohort pay progress in the aftermath of the financial crisis.

Low-paid workers are bearing the biggest health and economic risks during the crisis as they are most likely to be continuing to work as key workers, or not working in shutdown sectors. They should be rewarded with better pay and security post-crisis https://t.co/uWmJ8i4htU pic.twitter.com/0utoCmkuAa

10.38am BST

UBS has slashed its forecast for the eurozone economy this year, and now sees an even deeper recession.

It now fears that euro area GDP will contract by 6.1% this year, compared with a previous forecast of a 4.5% decline. Italy and Spain will be hardest hit, predicts, given the scale of their lockdowns.

We believe the economic damage across European countries will vary according to (a) the length and strictness of the shutdown; (b) the relative exposure to the most affected (services) sectors; and (c) the size of the economic policy response.

We continue to project the largest decline in real GDP in Italy (-7.7%, revised from -5.0%) followed by +4.4% in 2021 (previously +1.9%). We expect Spanish real GDP to decline by 6.9% this year (previously -4.0%) and rise by 4.7% in 2021 (up from 2.5%). We have cut our 2020 GDP projection for Germany to -6% (from -4.7%) and now forecast 4.5% for 2021 (previously 1.8%). We expect French GDP to decline by 6.3% this year (revised from -4.3%), then grow by 3.9% in 2021 (up from 1.9%).

10.26am BST

A new global survey by Ipsos MORI has found that Britons are particularly reluctant for the Covid-19 lockdown to end before the virus is under control.

Just 22% of people in the UK agreed with the suggestion that the economy and business should be reopened even if the coronavirus was not contained. That's the lowest out of the 14 major countries surveyed.

"Our latest polling across 14 countries show that Britons are the most cautious when it comes to reopening the economy, being the least keen for businesses to reopen if the Coronavirus is not contained.

Furthermore, seven in ten Britons say that they will be nervous about leaving the house after the lockdown eases. These suggest that the turnaround in the economy might not be quite so fast as hoped for."

9.56am BST

BP's CEO Bernard Looney has warned that the oil giant will start to cut jobs around the world by the end of the year, as it tries to become more competitive.

The FT's Anjli Raval has the details:

Amid "exceptional level of uncertainty", Looney said BP expects oil demand to fall by 16m b/d in the second quarter #OOTT

BP will not make redundancies for three months given coronavirus uncertainty. BUT Looney said "there will be job cuts globally, towards the end of this year" with the pandemic accelerating a plan to drive down costs and reorganise the business under the new chief executive #OOTT

9.36am BST

Nicholas Hyett, equity analyst at Hargreaves Lansdown, has dug into BP's latest results to show how the oil price slump has hurt its finances:

"BP has stuck with its dividend despite the turmoil currently wracking oil markets. However that's coming at significant cost.

Net debt shot up some $6bn this quarter and the group's upper gearing limit is rapidly disappearing into the rear-view mirror. Negative free cash flow means the balance sheet would be deteriorating even without the dividend, and with a sizeable expense related to the Gulf of Mexico oil spill expected next quarter, things look set to get worse before they get better.

9.24am BST

Unemployment in Spain rate has risen, in another sign of the economic pain in Europe

The Spanish jobless rate rose to 14.41% in the first quarter of 2020, up from 13.78% in October-December.

#Espana #Desempleo

Spanish Unemployment Rate Q1: 14.41% (exp 15.65%; prev 13.78%) pic.twitter.com/bV3MemkBxQ

9.12am BST

Crude OIL

Yesterday -27%

Today -19%

Still 20 days to go for settlement date. Bull speculators are gone, too much risk. Bear speculators are in, looks too easy. USA will intimidate them, eventually pic.twitter.com/LKAUeHbi8o

9.08am BST

The US crude oil price is continuing to slide today.

A barrel of West Texas Intermediate for June delivery is now changing hands at just $10.58 per barrel, down $2.2 today. That contract expires in around three weeks - meaning anyone holding it has to actually collect the oil then.

We have become used to negative interest rates, but negative oil is hard to comprehend. Supply is exceeding demand to such an extent that storage tanks are full. Dumping is unacceptable and so those who own the excess had to pay others to take the nasty black stuff away from them.

There will be casualties, but it is too early to tell at the moment whether these will number countries, oil companies, banks or specialist funds. Suffice to say that this could be the shape of things to come.

8.55am BST

Charlie Kronick, oil finance analyst for Greenpeace UK, isn't impressed that BP is still paying shareholders a dividend.

He argues that BP should be investing more to fight the climate emergency, not giving shareholders a payout:

"Today as profits tumble BP is shaping the future of the company, but more importantly the future of the climate.

BP and the rest of the oil industry are still running the sector like a pyramid scheme, betting that demand will bounce back from every downturn and high dividends will distract investors from the underlying weaknesses of the business.

8.50am BST

Banking giant HSBC has also been hurt badly by Covid-19.

HSBC reported a 48% plunge in pre-tax profits in the last quarter, as it was forced to put $3bn aside to cover bad debts caused by the pandemic.

"The outlook for world economies in 2020 has substantially worsened in the past two months. The impact and duration of the Covid-19 crisis will likely lead to higher ECL [expected credit losses] and put pressure on revenue due to lower customer activity levels and reduced global interest rates."

8.41am BST

8.40am BST

UK high-street chain Marks & Spencer is shoring up its finances, after being hit hard by the Covid-19 lockdown.

We are planning for the Clothing & Home business to be severely constrained during lockdown and highly uncertain trading conditions in a prolonged exit period. In the absence of a clear basis for forecasting, our scenario planning and stress tests are based on materially subdued trading for the balance of 2020 in Clothing & Home.

M&S benefits from having a strong food business and the transition to Ocado supply is on track to proceed in September to form a multi-channel food operation. However, Food trading has been adversely affected by lockdown due to the closure of cafes and slowdown in travel and some city centre locations.

M&S has acted to address liquidity during coronavirus outbreak and after, including relaxation of banking covenants and likely no dividend. Also reports that food trading has been hit by 'the closure of cafes and slowdown in travel and some city centre locations'.

8.21am BST

Shares in BP have dropped 1.6% at the start of trading, down 5.1p to 308.7p.

That's despite relief that the firm is paying a dividend, and that its underlying profits were better than feared (although still down sharply, to $791m from $2.35bn a year ago).

8.03am BST

Some snap reaction to BP's results:

Oil major BP (BP.) reports 1Q loss of $4.365bn after taking inventory holding losses of $3.7 billion due to the sharp drop in oil prices at the quarter end. Underlying profit $0.8bn vs $2.4bn.https://t.co/2lpCcCVhpC

BP profit down from $2.4bn to $800m in Jan-Mar. Inventory holding loss down $3.7bn. An important source of dividends for retail investors and pensions.

7.59am BST

BP also warns that the coronavirus pandemic makes it very hard to forecast how the oil price will change:

Looking forward, there remains an exceptional level of uncertainty regarding the near-term outlook for prices and product demand, particularly while many economies remain under lockdown.

There is the risk of more sustained consequences depending on the efforts of governments and the public and private sectors to manage the health, economic and financial stability effects of the pandemic.

7.58am BST

Despite the slump in oil prices, and profits, BP is still paying a dividend for the last quarter.

Investors will get 10.5 cents per share, a relief when so many other FTSE 100 companies have suspended their dividend.

BP still paying dividends.

Q1 underlying replacement cost profit was $0.8bn (2019: $2.4bn)

Says it has $32bn of liquidity

7.44am BST

Just in: Oil giant BP has warned that it faces an unprecedented challenge, as it reports a slump in profits.

Bernard Looney, BP's chief executive officer, told shareholders that the COVID-19 pandemic had helped to create an exceptionally challenged commodity environment.

This extraordinary time for the world demands extraordinary responses.

And thankfully we are seeing that just about everywhere we look around the world. Our industry has been hit by supply and demand shocks on a scale never seen before, but that is no excuse to turn inward. BP, like many other companies, is stepping up and extending a helping hand to those in need.

#UPDATE British energy giant BP sees a $4.4-billion net loss in the first quarter as the #coronavirus pandemic crushes demand for oil.

BP reported profit after tax of $2.9 billion in the first-quarter of 2019 pic.twitter.com/xnJCtYd8nZ

7.24am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The oil price is crashing again, as weak demand leaves producers struggling to find anywhere to store crude.

European Opening Calls:#FTSE 5858 +0.18%#DAX 10686 +0.24%#CAC 4508 +0.07%#AEX 513 +0.17%#MIB 17396 +0.09%#IBEX 6752 +0.30%#OMX 1540 +0.04%#STOXX 2886 +0.13%#IGOpeningCall

"The market is very concerned of a repeat of negative pricing as the Cushing storage and delivery hub saturates"

Despite Saudi Arabia going ahead with production cuts before the official May 1st initiation #usoil tumbled 25% on Monday as #USO started offloading June future contracts.

The US Oil Funds decision to dump its entire exposure to the front month WTI Futures contract prompted another sell-off in crude prices, and further concern about global energy demand and supply capacity.

European Opening Calls:#FTSE 5858 +0.18%#DAX 10686 +0.24%#CAC 4508 +0.07%#AEX 513 +0.17%#MIB 17396 +0.09%#IBEX 6752 +0.30%#OMX 1540 +0.04%#STOXX 2886 +0.13%#IGOpeningCall

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