Ocado raises just over £1bn, TalkTalk pulls guidance
London open
The FTSE 100 is expected to open 114 points lower on Thursday, having closed down 0.1% at 6,329.13 on Wednesday.
Stocks to watch
Online retailer Ocado on Thursday said it had successfully raised just over £1bn to exploit the rapid change in internet grocery shopping habits sparked by the coronavirus crisis. Investors handed Ocado £657m through a placing and £350m via a debt issue of unsecured bonds due to mature in 2027. The company on Wednesday cited industry data from Nielsen revealing online penetration of the UK grocery market had almost doubled to 13% in recent months compared with 7% before the pandemic broke out.
Telecoms group TalkTalk pulled guidance and set aside £15m for bad debts in 2021 in response to the coronavirus crisis but reported a rise in core earnings on the back of more reliable fibre internet connections. The company on Thursday reported a 9.7% rise in earnings before interest, tax, depreciation and amortisation to £260m. It also declared a final dividend of 1.5p a share. TalkTalk added that it would be cutting back on the use of third party customer service call centres after lockdowns forced closures during the pandemic and the company was forced to move to online contact. “We will not be returning to pre-Covid-19 contact centre agent levels, further supporting our cost reductions,” the company said.
Unilever plans to unify its legal structure as a UK Plc to become a simpler company more able to make acquisitions and disposals in the wake of the Covid-19 crisis. The Anglo-Dutch company will make the change through a cross-border merger between Unilever Plc and Unilever NV. Shareholders of the Dutch NV company will receive one Plc share for each of their shares. The FTSE 100 consumer goods maker said there would be no change to operations or staffing levels in the UK or the Netherlands or the manufacture or supply of products after the unification.
Newspaper round-up
Britain’s housing market remains depressed despite a pick-up in enquiries from people looking to buy, but estate agents are expecting a sharp increase in demand for homes with gardens over the next two years because of the Covid-19 pandemic. Despite estate agents being allowed to reopen in England on 13 May following an eight-week shutdown, sales and house prices continued to fall across the UK in May, according to a monthly survey of surveyors and estate agents from the Royal Institution of Chartered Surveyors (Rics). – Guardian
British Airways is to put some of its renowned art collection up for sale in an attempt to raise cash as it prepares to lay off thousands of staff. The airline has called in art valuers and is planning to auction off at least 10 major pieces, some valued at more than £1m. BA’s art collection includes works by British artists including Damien Hirst, Peter Doig, Anish Kapoor, Chris Ofili and Tracey Emin. Some have been displayed at the firm’s Waterside headquarters near Heathrow, but many of the 1,500 artworks in the collection have been on the walls of its executive lounges. – Guardian
Manufacturer Johnson Matthey is cutting 2,500 jobs and halving its dividend as it reels from the impact of coronavirus. The redundancies announced alongside its annual results represent more than a sixth of the FTSE 100 company’s workforce going over the coming three years. The industrial business produces catalytic converters that are used in about one in three cars worldwide. – Telegraph
The failure of a shopping centre in Berkshire could become a blueprint for regenerating town centres. A developer has submitted a planning application for a £400 million scheme to demolish and rebuild the Nicholsons shopping centre in Maidenhead. The centre fell into receivership in 2018 and was bought for around £25 million a year ago by Areli Real Estate, run by Rob Tincknell — who spent a decade overseeing the redevelopment of Battersea Power Station in south London — with backing from Tikehau Capital, a French investment firm. – The Times
Wizz Air has handed its management share bonuses potentially worth millions of pounds, despite making a thousand staff redundant, using the government’s furlough scheme and borrowing hundreds of millions from the Bank of England’s emergency funding line. The airline allotted almost 200,000 share options to bosses as part of their long-term incentive plans. The final number of shares they will be able to cash in depends on the company’s performance over the next three years. – The Times
US close
US stocks turned in a mixed performance on Wednesday following an update on the state of the nation's economy from the Federal Reserve.
At the close, the Dow Jones Industrial Average was down 1.04% at 26,899.99 and the S&P 500 was 0.53% weaker at 3,190.14, while the Nasdaq Composite saw out the session 0.67% firmer at 10,020.35.
The Dow Jones closed 282.31 points weaker on Wednesday, continuing on with the blue-chip index's losses in the previous session that halted its milt-day rally amid heightened concerns around another spike in Covid-19 cases and trade tensions between the US and the EU.
The key event on Wednesday's agenda was an update from the Federal Open Market Committee, which started its two-day policy meeting on Tuesday.
The FOMC said it expects the US economy to shrink by 6.5% this year, leading it to keep interest rates close to zero into 2022.
The central bank's move came amid a struggling economy as a result of the Covid-19 pandemic. However, the Fed anticipates that the US economy will return to growth in 2021, with unemployment falling to 9.3% and GDP increasing 5%.
"The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," it said on Wednesday.