- In MARKETS, MACRO & OIL NEWS, Asian markets weaken again, PM Modi unveils a stimulus package for India, Sunak extends furlough and Saudi Aramco suffers
- In CONSUMER & RETAIL NEWS, UK consumer spending takes a hit, Landsec makes a painful portfolio revaluation, TM Lewin gets snapped up, Morrisons sees sales rise and AO.com is doing brisk trade
- In INDIVIDUAL COMPANY NEWS PLUS COOL STUFF, Uber eyes a takeover of Grubhub, Toyota is downbeat on the future and then we see a coronavirus-zapping robot as well as good news for cinema fans
- AND FINALLY, I bring you some virtual escape rooms and the most incredible skateboard trick…
MARKETS, MACRO & OIL NEWS
So Asian markets weaken again, Modi unveils a stimulus, Sunak prolongs furlough and Saudi Aramco suffers from the weak oil price…
Asia stocks dented by pandemic fears and US-China tension (Financial Times, Hudson Lockett) shows general market weakness in Asia as confidence has been dented by rising US-China tension, fears of a second wave of infections in China and South Korea as well as Anthony Fauci, senior member of Donald Trump’s coronavirus task force, warning that lifting lockdown too early could result in “suffering and death”. Fortunately, Modi unveils $266bn stimulus package to revive Indian economy (Financial Times, Amy Kazmin) was something to cheer in the region as India’s Prime Minister announced the package – which is equivalent to about 10% of India’s GDP – in a TV address yesterday. Details are to be announced by his finance minister Nirmala Sitharaman over the next few days starting from today.
Meanwhile, Furlough extended to October at £100bn cost (Daily Telegraph, Tim Wallace, Simon Foy and Lizzy Burden) shows the UK chancellor providing some relief to employers and employees alike, but it will come at a cost. Let’s hope that this will be enough to get people back to work and earning while minimising risk.
Then in Saudi Aramco reports 25% dip in profits after oil market collapse (The Guardian, Jillian Ambrose) we see that even the world’s most profitable company isn’t immune to buffeting as it announced a big fall in profits due to weak oil price (which, TBF, it was responsible for!). Many analysts are saying that oil demand will take ages to recover to 2019 levels and, in the meantime, there is just tons of oil sloshing around in storage facilities and tankers parked in various parts of the world to soak up what demand there is at the moment. * SO WHAT? * Saudi Arabia said on Monday it would make additional cuts of 1m barrels of oil per day, but TBH this sounds to me like a token effort. IMO, China needs to start to recover properly before anyone can really get even mildly excited about oil because China obviously has scale and a proper pick-up in domestic production will help supply chains around the world get back to some form of normality.
CONSUMER & RETAIL NEWS
UK spending takes a dive, Landsec revalues, TM Lewin gets snapped up, Morrisons has strong sales and AO.com does a roaring trade…
Spending collapses in April despite online sale rise (The Guardian, Richard Partington) cites the latest data from the British Retail Consortium (BRC) which says that sales fell by almost a fifth last month versus April last year – the sharpest drop since records began in 1995. * SO WHAT? * Clearly this is hardly surprising considering that options for consumers have been severely restricted of late, but online retailing obviously saw a massive rise and could potentially change consumer behaviour permanently (I would have thought this will be particularly true for older people who have been slower to embrace online shopping). In addition to the BRC’s figures, Barclaycard (which is the UK’s biggest credit card provider and handles almost 50% of all credit card and debit transactions) published data which showed that sales had fallen by 36.5% in April versus the previous year. I think it would be fair to say that no-one will be surprised by this, but the speed of any improvement will correlate closely with how quickly business are opened up. Confidence over job security is pretty fragile at the moment and so I don’t expect to see much in the way of frivolous spending.
Shopping centres owner Landsec cuts value of portfolio by £1.2bn (The Guardian, Julia Kollewe) shows that the property company has cut the value of its portfolio by almost £1.2bn (or 9%) to take into account current market conditions. The company added that it expects more
business failures and higher vacancy rates, especially in leisure and retail. It does not expect the economy to recover to pre-coronavirus levels until 2022 at the earliest.
On a slightly more positive note, Shirtmaker TM Lewin collared by private equity (Financial Times, Jonathan Eley) shows that SCP Private Equity has just bought the UK menswear chain from Bain Capital as a going concern for an undisclosed sum. It will fold it into Torque Brands, a collection of niche brands with global appeal. Bain acquired TM Lewin in a management buyout in 2015. * SO WHAT? * Clearly there is some interest in brands and private equity firms can pick up good assets for decent prices at the moment.
Morrisons sales up as it doubles online delivery slots during lockdown (The Guardian, Sarah Butler) shows that the grocer is on track to achieve £1bn in annual sales by next spring as the momentum for online shopping continues. However, the company said that the immediate outlook for sales was uncertain and that a near-40% drop in fuel sales and closure of in-store cafés has hit profits.
Talking about online, AO thrives in new world of shopping online (The Times, Ashley Armstrong) highlights AO World’s success in the coronavirus environment. Chief exec John Roberts said that sales have actually been so strong that it is like “Black Friday every day” with frenzied demand for office equipment, laptops and chest freezers. * SO WHAT? * It’s good to see some companies do well in these difficult times. Interestingly, rival Dixons Carphone said recently that it had actually been able to claw back two thirds of shop sales online, so you would have thought that this would give management ample excuse to cut the number of stores.
INDIVIDUAL COMPANY NEWS PLUS COOL STUFF
Uber is hungry for Grubhub and Toyota gets pessimistic but then there are coronavirus-zapping robots and some interesting potential developments for cinemas…
Uber places Grubhub deal on the table (The Times, James Dean) highlights talks between the two regarding a $6bn all-share deal. * SO WHAT? * Grubhub is one of the biggest food delivery services in the world and a combination with Uber Eats could be interesting. Many think that there are too many players in the food delivery sector and that consolidation was likely. You may recall that Uber tried to buy Deliveroo in 2018 but it all collapsed because neither side could agree a price. I imagine that the price for Grubhub will now be quite reasonable given current circumstances!
Profits will fall by 80% Toyota warns (The Times) shows that the Japanese carmaker is painting a gloomy picture of the impact of the coronavirus and has cut its forecasts accordingly. Toyota’s president, Akio Toyoda, said he thought the effect from the coronavirus on sales would be more severe than that felt following the 2008 financial crisis. * SO WHAT? * Clearly things are tricky. However, I
really do wonder whether things will be that bad. Certainly the prospects for the next year or so are likely to be poor, but I really think that the key is a vaccine/cure. IF we get one soon-ish, I believe that economies will pick up at a rapid pace because businesses can get back to full capacity. Unfortunately, until then, things are likely to go sideways at best.
I really wanted to include UV light robot destroys coronavirus in 2 minutes (Financial Times, Junishi Oshita – great surname 😁) because the prospect of a coronavirus-zapping robot sounds brilliant, no? The machine, made by Texas-based Xenex Disinfection Services, announced a successful test of its LightStrike robot which emits light that renders pathogens too damaged to function. It has been proven to work on multi-drug resistant bacteria and the Ebola virus – and has now been shown to deactivate the coronavirus in just two minutes! Wow!
Then there’s good news for all you cinema fans out there in Vue aiming to screen films again by July (Daily Telegraph, Hannah Uttley), with social distancing measures in place – but it could be even better in the US in Coming Soon: theaters go back to the future with $2 retro blockbusters (Wall Street Journal, R.T. Watson) where cinemagoers may be tempted back by the prospect of watching classics on the big screen! This is one way to get punters back in as many “modern” releases have been shelved. Will the UK get this I wonder?? What movie would you like to see on the big screen again? For me, it would be Top Gun 👍
And finally, in other news…
I thought I’d bring you a few ideas for if you want something fun to do “virtually” if you have had enough of pub quizzes in You can now play virtual escape rooms online with your friends during lockdown (The Mirror, Paige Holland https://tinyurl.com/yacfnyfk). However, I think the star of the show today is the kid in Skateboarder, 11, makes history by landing 1080-degree spin (SkyNews, https://tinyurl.com/yd7qucua). Wow!
Some of today’s market, commodity & currency moves (as at 0754hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!
|FTSE 100 *
|Dow Jones *
|S&P 500 *
|Oil (WTI) p/b
|Oil (Brent) p/b
|Gold Per t/oz
(markets with an * are at yesterday’s close, ** are at today’s close)