COVID-19 Trumped

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Friday, 1 May: Well hopes that the new month may reverse the wobbles markets felt towards the end of last month didn’t last long, as London markets opened with returning tariff war fears between the world’s two largest economies. As we wrestle with the most uncertain time in living memory we’ve been reminded that Trump, one of the most unpredictable leaders in living memory can still dictate headlines when he wants. The tariff and tit-for-tat trade blows between the two have at times consumed markets but have obviously taken a backseat during the last few weeks, but Trump justified reignition through China’s handling of the COVID-19 pandemic, claiming to have evidence claiming the Wuhan lab to the contagion.

The FTSE 100 has closed the day 2.3% lower, capping off a miserable week for the index. The FTSE 250 also disappointed, ending -1.9%. Probably helping losses were the fact volumes were very low due to Labour Day. In company specific news, RBS was the latest bank to update the market, with nothing new in comparison to other banks that have reported this week. RBS has suffered a huge hit to operating profit in the first quarter to the end of March, almost halving to £519m. Shares topped the FTSE today, partly due to the fact this was higher than the market expected and there was no real surprises either. An £800m provision has been established to deal with credit losses, this was in fact higher than analysts had anticipated. Overall RBS retains very good financial health, with the dividend suspension only building this further. Shares closed +2.4%.

The airline industry once again littered news headlines today. Ryanair has warned that 3,000 jobs will go to deal with the impact of COVID-19, which is around 15% of its workforce. They incurred a net loss of €87m in Q1 and expect this to be worse in Q2. O’Leary has assured that people wanting cash refunds will receive them but, these may take up to 6 months to be received. He has also taken aim at flag-carrier airlines for being subsidy junkies, claiming it gives these an unfair competitive advantage as well as the fact they have disregarded the law in relation to state-aid. Ryanair fortunately entered the crisis with huge cash reserves of c.€4bn but the tone has recently soured as the crisis horizon looks ever further away. Shares in Ryanair closed -6.4% and Easyjet was hit as a knock-on result, with their shares down 5.8%. Also, Wizz Air have resumed some flights from Luton airport with new restrictions and guidelines in place and Heathrow has also announced that passenger numbers during April were 97% lower.

Greggs…. Oh how we miss you. Just when we thought we’d meet again we’re left steak bake-less and cold again, mouths salivating in despair. The group did plan a small amount of stores to reopen on a trial basis but they’ve now scrapped this plan over fears of a huge rush from customers. The disadvantage of being so popular and almost considered a staple in the North East. These stores will now open for staff and trial new working guidelines, but in June they do hope to have just under a third of stores re-opened, with all stores aiming to come back to coincide with the end of the Government’s furlough scheme expiry. Hang in there people, they’ll return. On a similar note, McDonald’s have also announced they will reopen for delivery only from a select number of stores. That number being 15, which is hardly going to satisfy a nation’s lust for a breakfast muffin or Big Mac but at least we’ll all have beach ready bodies for the beaches we won’t get to.    

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