Budget day could be in 2022 as Rishi Sunak avoids naming day

Liam Roche
-
0
Budget day could be in 2022 as Rishi Sunak avoids naming day

In recent years budgets have been postponed until March due to unprecedented events

Rumours are circulating that chancellor Rishi Sunak will delay his budget until 2022.

The speculation came after Sunak asked the Office for Budget Responsibility (OBR) to prepare an economic forecast to be put to parliament at the end of October.

It is customary for the OBR’s release to come with a budget or spending review, however, Sunak did not announce either.

It was reported earlier in July that Rishi Sunak is considering delaying the budget until the spring, as there will be a clearer picture of the UK’s economic outlook.

This is especially true at the present time as the furlough scheme is set to end, while inflation and tax breaks are on the horizon, meaning there will be a great day of economic upheaval.

Since 2017 yearly budget are supposed to take place in October or November to allow time to implement tax changes before the new tax year begins in April.

More recently budgets have been postponed until March due to unprecedented events including elections and the coronavirus pandemic.

Soggy end to July for the markets across the world

Liam Roche
-
0
Soggy end to July for the markets across the world

Friday appears to be a downbeat finish to the week and month for markets in the UK and abroad, as the FTSE 100 gave away 0.8%, falling to 7,022 points.

“It’s looking like a soggy end to July both in meteorological terms and with the markets as so-so numbers from Amazon and a sell-off in Asia linked to Covid concerns had a dampening effect on sentiment,” says AJ Bell financial analyst Danni Hewson.

Disappointing results from highly rated testing specialist Intertek and IAG, as well as a downbeat reaction to Natwest’s latest numbers, did little to lift the mood.

“The mining sector also slumped and investors continued to fret about the Chinese crackdown on its technology sector, despite Beijing’s efforts to dial back some of its recent rhetoric. There was talk about targeted rather than broad-based action,” said Hewson.

“As the flood of corporate updates on both sides of the Atlantic slows to a stream and then a trickle, we enter the summer lull for the markets – although this can be a dangerous time for equities.”

“With experienced investors away from their desks on holiday and trading volumes lower, it sometimes doesn’t take much for a market correction to begin and with Covid-19, inflationary pressures and regulatory crackdowns all in the background, there are a plenty of a potential catalysts for a sell-off.”

FTSE 100 Top Movers

Pearson (2.36%), the only company to get beyond a decimal place at the time of writing, along with Segro (0.96%) and Sage Group (0.92%), are leading the way on the FTSE 100 during the morning session.

At the bottom end, Intertek (-7.53%), IAG (-3.35%) and Weir Group (-2.97%) are dragging on the FTSE 100.

IAG

IAG, the owner of British Airways, confirmed on Friday that it fell to a €2bn (£1.7bn) H1 loss as travel restrictions continue to work against the airline.

The FTSE 100 firm flew at a capacity of 21.9% during Q2, while it is expecting this figure to rise to 45% for the coming quarter.

Natwest

NatWest will return more than £3bn to shareholders via dividends and share buybacks over the coming years, as the FTSE 100 bank swung into the black on the back of the brightening outlook of the UK economy. 

The banking giant made a £1.6bn profit before tax for the three month period to June, swinging from a £1.3bn loss for the same period a year ago, surpassing analyst forecasts.

Cineworld secures £143m loan ahead of a busy period of film releases

Liam Roche
-
0
Cineworld secures £143m loan ahead of a busy period of film releases

The loan provides ‘operating flexibility‘ says Cineworld CEO

Cineworld (LON:CINE) confirmed on Friday that it will receive £143m in loans to help secure its finances as the company looks ahead to a busy period of film releases for the remainder of 2021.

The FTSE 250 company’s loan was agreed with already existing lenders and will mature in May 2024.

The cinema chain also said it agreed amendments to covenants on some of its existing debt facilities, including reducing the minimum liquidity requirement and relaxing limitations on the use of cash, as well as other modifications that will provide further support as its cinemas restart trading.

It is the most recent portion of fundraising after Cineworld secured $203m via the US CARES Act in May and raised $213m though a convertible bond in March.

Cineworld said these measures will boost its balance sheet as it recovers from the impact of repeated closures during lockdown.

Cineworld said that its trading has continued to improve as its cinemas began reopening in April.

“The additional liquidity announced today provides the group with significant operating flexibility now that cinemas have opened across the world,” said chief executive Mooky Greidinger.

“We are monitoring the evolution of the virus and its potential impact on our business, but we are very excited about the potential of the unprecedented slate of films in the second half of 2021 (mainly in the fourth quarter). We remain confident in the prospects for our business and continue to look forward to welcoming our customers back to the best place to watch a movie.”

The Cineworld share price is down by 1.17% during the morning session on Friday.

NatWest to payout £3bn to investors as UK bank records profit

Liam Roche
-
0
NatWest to payout £3bn to investors as UK bank records profit

UK government set for bumper payout from NatWest

NatWest will return more than £3bn to shareholders via dividends and share buybacks over the coming years, as the FTSE 100 bank swung into the black on the back of the brightening outlook of the UK economy.

The banking giant made a £1.6bn profit before tax for the three month period to June, swinging from a £1.3bn loss for the same period a year ago, surpassing analyst forecasts.

As a result Natwest will pay investors dividends worth £347m, valued at 3p per share.

The UK government retains a 54.7% holding in Natwest, as the bank was bailed out on the back of the 2008 financial crisis. This means that at least half of the payout will go to government coffers.

Improving economic forecasts allowed Natwest to make a profit and reduce the stack of cash it set aside in the event of loan defaults by £605m.

Analysts expected the bank to release £84m, after it had initially put aside £2.1bn two cover any potential bad debts.

Natwest, Barclays and Lloyds have now reduced the size of their reserves against bad loans by a total of £1.7bn, while HSBC, is set to report its Q2 earnings on Monday.

“These results have been driven by good operating performances across the group, underpinned by a robust loan book and a strong capital position,” the chief executive of Natwest, Alison Rose, said. “While we see the potential for a more rapid recovery, we will continue to take an appropriate and conservative approach as the government schemes wind down and the economy reopens”.

NatWest will soon be able to buy back some of the government’s shares, after the UK government said it would begin selling them on the open market.

IAG makes £1.7bn loss in H1 as airline expects to double its capacity over next period

Liam Roche
-
0
IAG makes £1.7bn loss in H1 as airline expects to double its capacity over next period

IAG will not provide a profit guidance because of the uncertainty surrounding restrictions

IAG, the owner of British Airways, confirmed on Friday that it fell to a €2bn (£1.7bn) H1 loss as travel restrictions continue to work against the airline.

The firm flew at a capacity of 21.9% during Q2, while it is expecting this figure to rise to 45% for the coming quarter.

Despite the loss being significant, it is half the level of the loss recorded by IAG in 2020, when the pandemic first impacted flights.

Chief executive Luis Gallego praised the UK government’s decision to exempt vaccinated travellers from the EU and US from needing to quarantine on arrival in the UK.

IAG, however, said it would not provide a profit guidance because of the uncertainty surrounding travel restrictions.

As H1 finished, ending on 30 June, the FTSE 100 company had €10.2bn of liquidity after spending previous facilities and issuing €1.2bn of senior unsecured bonds and €825m of convertible bonds, both oversubscribed.

British Airways will defer its monthly pension deficit contributions for £450m between October 2020 and September 2021, as it secured a new revolving credit facility.

“Our focus is on ensuring our operational readiness, so we have the flexibility to capitalise on an environment where there’s evidence of widespread pent-up demand when travel restrictions are lifted,” said chief executive Luis Gallego.

“We welcome the recent announcement that fully vaccinated travellers from amber countries in the EU and the US will no longer have to quarantine upon arrival in the UK. We see this as an important first step in fully re-opening the transatlantic travel corridor.”

The IAG share price is down by 3.33% during the morning session on Friday.

Fresnillo share price bounces as miner reasserts guidance

Liam Roche
-
0
Fresnillo share price bounces as miner reasserts guidance

Fresnillo Share Price

The Fresnillo share price (LON:FRES) is up by 6.55% over the past five days as the FTSE 100 company divulged some positive news. The move comes on the back of a sustained downturn in the Fresnillo share price, particularly since November 2020 onwards.

This was in part down to the fact that interest in precious metals cooled following an upturn on the back of the pandemic-induced stock market crash. While the debate will go on about the place precious metals have in the modern world economy, this article will look at some recent news regarding Fresnillo, and what it could mean for its share price going forward.

Guidance

Fresnillo yesterday reaffirmed its annual outlook after the FTSE 100 company saw improvements in its silver output during Q2.

The precious metals miner said it is on course to meet its guidance for the current year of between 675,000 and 725,000 ounces of gold and between 53.5m to 59.5m ounces of silver.

“We remain on track to meet our full year targets and our production guidance for 2021 is unchanged, though we remain vigilant around the continued evolution of the pandemic and its potential future effect on our operations, in particular the implementation of any future new work restrictions,” said chief executive of Fresnillo Octavio Alvidrez.

RBC Capital Forecast

RBC Capital Markets, the global investment bank, upgraded its rating for the Fresnillo share price to ‘outperform’ from ‘sector perform’, it was revealed this month. RBC’s change in outlook came about as it considers the market to have reset following weak Q1 silver production and lower guidance.

RBC is expecting to see a growth phase from Fresnillo, as its Juanicipio project has been accelerated.

“With the shares underperforming peers and trading at the low end of its historical multiple ple range, we upgrade our recommendation,” RBC said.

Anglo American share price: CEO hints at more to come beyond dividend

Liam Roche
-
0
Anglo American share price: CEO hints at more to come beyond dividend

Anglo American Share Price

The Anglo American share price (LON:AAL) is up by 4.91% during the afternoon session on Thursday as rising commodity prices helped the miner record its best H1 profits in its over 100-year history. Today’s movement is a continuation of a mini-surge over the past five days which has seen the FTSE 100 mining company add 11.03%.

Looking back over the past five years, Covid aside, it has been smooth sailing for the Anglo American share price, which is up by 296.23% over the time period. However, investors will do will to remember the cyclical nature of mining stocks. After all, the Anglo American share price has not reached its high of around ten years ago, when it was above 3,300p.

Results

Anglo American, whose portfolio spans diamonds, platinum, copper, iron ore & more, reported profits before tax of $10.1bn for six months ending in June. This figure is up from $1.7bn compared to the same period a year ago.

“The first six months of 2021 have seen strong demand and prices for many of our products as economies begin to recoup lost ground, spurred by stimulus measures across the major economies,” said Anglo chief executive Mark Cutifani.

Among the main factors in improving Anglo American’s profit were iron ore, the commodity used to make steel, as well as the London-listed company’s platinum-group metals (PGM). The average market prices for Anglo’s commodities rose by 62% in H2, compared to a year ago.

The subsequent cash generated from those sectors enabled Anglo to reduce its net debt to $5.6bn, down from $7.6bn. In addition, Anglo was able to make a substantial payout to shareholders.

Dividend

Following its record half-year profits, Anglo American is to return $4.1bn to its shareholders.

Anglo declared a $2.1bn ordinary dividend, as well as confirming it will return an additional $2bn of “excess cash” to shareholders via a $1bn special dividend and a $1bn share buyback.

“The share buyback should tell you that we don’t think this is as good as it gets,” said Mark Cutifani, which could be music to the ears of investors.

Federal Reserve will wait longer before slowing its support for the US economy

Liam Roche
-
0
Federal Reserve will wait longer before slowing its support for the US economy

Fed Chairman Jerome Powell said risks to economic outlook remain

The Federal Reserve said on Wednesday that the economy is making forward progress thanks to the continued vaccine roll-out.

Continuing to toe the line that inflation is mostly transitory, the Fed also kept its interests rates close to zero.

The US central bank said that risks to the economic outlook remain, despite positive data regarding jobs and the strength of the economy.

Hinesh Patel, portfolio manager at Quilter Investors, believes that the Fed must act sooner or later if inflation continues to rise:

“Jerome Powell and co. like where the economy is heading and seem content to wait until the data becomes even clearer and as such will continue to sit on their hands for just a while longer yet,” said Patel.

“Unfortunately for them there is very little they can do just now. The effects of this pandemic, and the subsequent recovery, have been felt very differently by varying groups of the population. So far it has been a two-speed recovery with low-income workers continuing to be adversely affected. With so many still relying on government support and not yet back in work or seeking employment, Powell will keep the spending taps on to support the wider economy.”

A time will come when the market will need to see a clearer plan for the reduction in quantitative easing, according to Patel.

“Inflation is a beast that can quickly get out of control and if the Fed has to act harsher than it would have done if it did so previously volatility would ensue.”

“With the recovery well under way and vaccination remaining a priority, the US arguably doesn’t need easing at their current levels. Powell obviously doesn’t want to act too early or make a misstep, but communicating further under what conditions tightening would take place may go some way to placating markets that are worried about price rises getting out of control,” Patel added.

AstraZeneca receives boost from Covid vaccine

Liam Roche
-
0
AstraZeneca receives boost from Covid vaccine

AstraZeneca acquires rare medicines business Alexion

AstraZeneca (LON:AZN) saw its revenues surge during H1 thanks to its development of new medicines and sales of its coronavirus vaccine.

The pharmaceutical company made $1.2bn in sales from the vaccine over the six month period ending in June, rising from $275m in Q1.

It has been suggested that the Astrazeneca vaccine is superior to its rivals in combatting the pandemic as it is more affordable and easier to use. AstraZeneca and it has supplied 1bn doses to 170 countries so far.

$572m of vaccine sales during H1 came from Europe, while $455m came from emerging markets. The FTSE 100 company pledged to produce the vaccine on a not-for-profit basis during the pandemic.

In non-vaccine news, AstraZeneca acquired rare medicines business Alexion, an addition to its expanding cancer medicines unit.

With Alexion taken into account, AstraZeneca expects its total revenue to rise by over 20% this year, excluding sales from the vaccine.

The AstraZeneca share price is up by 0.21% just before lunchtime on Thursday.

Sheena Berry, equity research analyst at Quilter Cheviot, commented on the pharma company’s results:

“AstraZeneca’s core business continues to generate good growth with sales up by a quarter on the month. Even without factoring in the revenue from the Covid-19 vaccine, sales of other pharmaceutical lines increased by 12% to $7.3bn, 2% higher than expectations,” said Berry.

“Demographic trends and the swelling middle classes in emerging markets continue to act as a big tailwind for the pharmaceutical business, with EM sales up 31% and sales in China up 12%.”

“AstraZeneca has updated its guidance following the completion of the Alexion acquisition last week. Alexion specialises in orphan drugs to treat rare diseases, and offers both margin expansion and Improved cash generation for the wider group.”

“AstraZeneca has increased revenue guidance from the low-teens to the low-twenties percentage, excluding any contribution from the Covid-19 vaccine, but it seems likely this may prove to be a conservative estimate.”

Positive momentum for UK banks continues with Lloyds results

Liam Roche
-
0
Positive momentum for UK banks continues with Lloyds results

Lloyds resumes dividend as profits bounce back

Lloyds (LON:LLOY) confirmed on Thursday that it swung to a H1 profit, as well as announcing an interim dividend.

The news comes as the FTSE 100 bank is being supported by a surge in home buying and an improving economic outlook in the UK.

Lloyds’ update closely follows that of rival Barclays, which posted positive earnings results yesterday for much of the same reasons.

“Put Lloyds results together with Barclays’ from the day before and you have the beginning of a trend in UK banking,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

“Massive swings in the level of bad loan provisions is flattering the bottom line, leading to a huge leap in profits for Lloyds this quarter. We expect that trend to continue for much of this year, assuming the outlook for the UK economy continues to brighten, but come 2022 the tailwind will have blown itself out – it will be up to banks to make their own weather.”

Lloyds made a profit before tax of £3.9bn for the six month period ending in June, which surpassed the average analyst forecast by £0.8bn.

Over the same period a year ago the banking giant made a H1 loss of £602m, having set aside billions as an insurance against bad loans caused by the pandemic.

Lloyds also confirmed a 0.67p interim dividend, while its share price rose by 0.79% to 47.15p per share. Since the turn of the year the Lloyds share price is now up by 35.33%.

Rob Murphy, Managing Director, Edison Group, also commented on Lloyds’ results.

“Today’s announcement that Lloyds had acquired Embark, a retirement platform business will help accelerate business momentum. This acquisition emphasises the Group’s continued commitment to expand its presence in the retirement and estate planning markets.”

“The past six months have identified the Group’s resilience, and with lockdown finally having eased, it comes as no surprise that guidance for the year has now been updated as the positive momentum looks set to continue. Following a string of new hires at the top of the business and with the Group now awaiting the arrival of its new CEO in August, the company looks to have settled on a senior leadership team. The combination of this and an impressive first half to the year, the outlook for customers, investors and other key stakeholders looks positive,” Murphy said.

1...923924925...1,823Page 924 of 1,823