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FTSE 100 slides on weak factory data, bank dividend halt
By Sruthi Shankar and Devik Jain
1 April 2020, 3:23 am ·3-min read
Traders looks at financial information on computer screens on the IG Index trading floor
(Reuters) - London's stock markets tumbled on Wednesday as banking shares dived after suspending dividend payments, while plunging factory activity in Britain and elsewhere underlined the severe economic impact of the coronavirus pandemic.
Shares of Barclays <BARC.L>, HSBC <HSBA.L>, Lloyds Banking Group <LLOY.L>, Royal Bank of Scotland <RBS.L> and Standard Chartered <STAN.L> dropped between 5% and 12%, dragging the FTSE 100 <.FTSE> lower by 3.8%.
The lenders said on Tuesday they would halt dividends, bowing to pressure from the regulator, to save their capital as a buffer against potential losses from the virus outbreak.
"We worry that the move undermines confidence in the regulatory framework and raises cost of capital," BofA Global Research's Rohith Chandra-Rajan wrote in a client note, adding he expected no payouts from domestic UK banks until 2021.
Commodity miner Glencore <GLEN.L> fell 3.7% as it delayed its $2.6 billion dividend pay out for this year and said there could be material disruption to production due to the coronavirus.
The FTSE 100 recorded its worst quarter since 1987 on Tuesday amid growing evidence of pain for businesses and economic growth from the pandemic that led to a 27% increase in the number of deaths in Britain on Tuesday.
Despite policymakers injecting trillions of dollars into the global economy, the blue-chip index is down about 29% from its Jan. 17 peak, while an index of mid-cap shares <.FTMC> are more than 34% below all-time highs.
Factory activity data from the UK echoed that of Asia and Europe, with output from Britain's manufacturing sector in March shrinking at the fastest pace since the euro zone debt crisis.
Wall Street also dropped as data showed new factory orders slumped to an 11-year low last month, adding to woes after U.S. President Donald Trump warned the country faced a tough two weeks ahead in its battle against the coronavirus. [.N]
"What the market really wants to see is the number of cases and deaths starting to come down in Europe and the United States and the impact of the lockdown on companies," said Roland Kaloyan, head of European equity strategy at Societe Generale.
"It is not so well known. Two-thirds of European companies have not changed or withdrawn guidance."
Companies listed on the pan-European STOXX 600 <.STOXX> are expected to report a 21.9% decline in earnings in the second quarter, according to Refinitiv data, down from a 14.9% drop forecast the week before.
Oil major BP Plc <BP.L> fell 3.1% after rating agency Moody's cut its outlook to "negative". The company also slashed its 2020 spending plan by 25% and will reduce output from its U.S. shale oil and gas business in the wake of a collapse in oil prices.
Online car market place Auto Trader <AUTOA.L> dropped 11% after saying it would sell new shares worth 5% of its capital to shore up its finances and liquidity position.
(Reporting by Devik Jain and Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Ken Ferris)
JPMorgan's New Singapore Home Struggles to Find Tenants
(Bloomberg) -- Three years ago, it was touted as a development that would rejuvenate Singapore's central business district. But an upcoming building in the city-state could have fallen victim to the pandemic, which has upended the office market as work from home remains a long-term arrangement for some companies.CapitaSpring, a 51-floor integrated development with JPMorgan Chase & Co. as an anchor tenant, has only managed to secure about 38% out of 647,000 square feet (62,600 square meters) of net lettable area. That's low considering it's 75% completed. Typically at that stage, buildings would have leased out more than half of their space.And in another sign that the health crisis has hit the commercial property sector, CapitaSpring's completion has been pushed back to the second half of the year from the first half. It's the only premium Grade A office development in the city's central business district that's scheduled to finish this year.CapitaLand Ltd., which jointly owns the building with CapitaLand Integrated Commercial Trust and Mitsubishi Estate Co., said that after including leases which are in advanced negotiations, the development is on track to get more than 60% commitments by completion. To date, committed office tenants are mainly from the legal as well as the banking and financial services sectors, CapitaLand said in a statement on Tuesday. About 10% of the office space in the building is set aside for flexible workspace. JPMorgan became its first anchor office tenant in 2018, and the bank will take up seven floors.The setback reflects how the pandemic has battered Singapore's commercial property sector. While tech behemoths are expanding, banks such as Citigroup Inc. and Mizuho Financial Group Inc. are cutting back office space in part due to the success of working from home, with such arrangements potentially to be long term.Rents FallPrime grade office rents in the Raffles Place and Marina Bay precincts contracted about 10% in 2020, according to Knight Frank. Early termination of spaces continued to rise in the fourth quarter of last year to an estimated 330,000 square feet from 260,000 square feet in the third quarter.And the prospects aren't bright this year. Knight Frank expects office rents in the city-state to decline by around 5% in 2021 before bottoming out and recovering next year, it said in a quarterly report published on Monday. That's not taking into account if new virus strains could result in subsequent lockdowns. The property consultancy firm foresees lower net new demand for office space given that some companies have adopted a rotational remote working approach."The rethinking of traditional office space usage in an age of flexible work arrangements, and the casualties of the Covid-19 pandemic as the government withdraws business support measures, will likely add to contractionary pressures for office space," Knight Frank said in its report.DBS Group Holdings Ltd. and United Overseas Bank Ltd., two of Singapore's largest banks, have allowed employees to work remotely on a permanent basis, part of the major work-culture changes triggered by the pandemic.In contrast to the office sector, Singapore's residential housing market is holding up. Home sales rose the most in six months in December, signaling the market has weathered the recession. Authorities may be considering another round of measures to cool residential prices, according to market analysts.(Updates with flexible workspace reference in the fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The Grammy-winning singer sparked speculation with a post on Instagram.
(Bloomberg) -- Gold steadied as investors awaited commentary from Treasury Secretary nominee Janet Yellen on the dollar and stimulus when she testifies on Capitol Hill a day ahead of Joe Biden's inauguration as president.Yellen's Senate confirmation hearing is likely to feature foreign-exchange policy, and will also serve as the first congressional forum where lawmakers will vet Biden's $1.9 trillion Covid-19 relief plan, parts of which have already drawn opposition. Earlier, the Wall Street Journal reported Yellen is expected to affirm the U.S.'s commitment to market-determined exchange rates."No doubt Yellen will lean to the dovish side when it comes to any comments on fiscal policy," said John Feeney, business development manager at Guardian Vaults, a Sydney-based bullion dealer. "Depending on how convincing that will be, we could see gold react positively, but the question would be how much the market has priced that in already."Bullion has fallen about 3% this year as benchmark Treasury yields and the greenback climbed on forecasts that coronavirus vaccines and stimulus packages will aid the economic recovery. In Asian trade on Tuesday, a gauge of the currency slipped after climbing over the past two weeks."Gold, along with other commodities, are all in a wait-and-watch mode for more clarity in possible policy changes under the Biden administration," said Madhavi Mehta, an analyst at Kotak Securities Ltd. "A bigger fiscal stimulus package and a market driven approach on the U.S. dollar has been factored in but there are lots of uncertain factors such as tax hikes and U.S.-China relations. Meanwhile, there is also wariness about the impact of higher stimulus and the improving U.S. economic outlook on inflation as well as interest rate hike expectations."Spot gold declined 0.1% to $1,839.70 an ounce at 5:01 a.m. in London, after rising 0.7% on Monday. Silver fell, while palladium and platinum gained. The Bloomberg Dollar Spot Index dropped 0.1%.Traders are also monitoring President Donald Trump's last full day in office, when he may issue a slew of pardons. Biden's swearing-in at the U.S. Capitol on Wednesday will come amid an unprecedented level of security given the still-simmering threats of violence in Washington.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Food parcels are distributed by charity groups in Tokyo to help the the growing number of Japanese pushed into poverty by the coronavirus pandemic.
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