easyJet Share News (EZJ)

(Alliance News) - A double-whammy of rising Covid-19 infections in the US and a brewing US-EU trade dispute ensured stocks in London opened lower on Thursday.

Rightmove was the worst performer in London's blue-chip index after a rating downgrade from Berenberg, while Royal Mail slumped as it revealed shareholders will have to wait until the 2022 financial year to get another payout.

The FTSE 100 index was down 76.14 points, or 1.2%, at 6,047.55 early Thursday. The mid-cap FTSE 250 index was down 293.41 points, or 1.7%, at 16,857.42. The AIM All-Share index was down 0.5% at 882.08.

The Cboe UK 100 index was down 1.5% at 10,216.93. The Cboe 250 was down 2.0% at 14,388.34, and the Cboe UK Small Companies down 0.9% at 9,390.75.

"Persistent bad news on coronavirus cases and mounting trade tensions on White House's plans to impose USD3.1 billion in new tariffs on European and British imports battered the market mood and brought investors to realize profits and walk away," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

The number of new coronavirus infections in the US is approaching record daily levels, with more than 35,900 cases recorded in the past 24 hours, according to a tally by Johns Hopkins University.

That brings the number of cases in the country to nearly 2.4 million, the tracker from the Baltimore-based university showed at 8:30 pm local time Wednesday, after several days in which the number of cases has surged.

Nearly half of the 50 US states have seen an increase in infections over the past two weeks, with some - such as Texas and Florida - posting daily records.

The Hopkins tracker also showed Wednesday that 756 people had died of Covid-19 in the past 24 hours. That brings the death toll to 121,932 in the world's leading economic power, by far the most bereaved by the pandemic on the planet.

Some US officials who loosened restrictions on business, dining, public gatherings and tourism are now urging residents to again stay home.

Disneyland, near Los Angeles, delayed its planned July 17 reopening without announcing a new date for the world's second-most visited theme park, while Apple and Nike have closed stores that had recently reopened.

Also weighing on markets was the US Trade Representative saying it is considering levying taxes of up to USD3.1 billion on European products over the fairness of subsidies to Airbus.

The USTR document listed products from France, Germany, Spain and Britain, ranging from olives to decaffeinated coffee, as possibly subject to the new tariffs. The proposed measures would be "very damaging", said a European Commission spokesman.

Swissquote's Ozkardeskaya said: "Investors are caught between a rock and a hard place on the back a rapidly rising flow of bad global news and thin summer liquidity makes the trading conditions choppier."

In mainland Europe, the CAC 40 in Paris was down 1.0%, while the DAX 30 in Frankfurt was 0.4% lower early Thursday.

In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.2%. Financial markets in Hong Kong and Shanghai were closed on Thursday for the Dragon Boat Festival holiday.

In London, BAE Systems was down 1.1% after saying the Covid-19 pandemic has dented trading in the second quarter.

At its UK-based Air and Maritime sectors, second-quarter disruptions have particularly hit cost recoveries and sales volumes, offset somewhat by a strong underlying operational performance and cost-control measures. The US-based Controls and Avionics business "has been and is expected to be impacted for the near-term", especially in the commercial aftermarket and product delivery lines.

Demand remains high, though, with order intake in line with BAE's original expectations for the year.

Sales for the half-year are expected to be broadly stable year-on-year, but profit is expected to fall 15% due to cost under recoveries in the period, significantly reduced volumes in higher margin commercial work, and the sales mix.

"As we return towards full operational tempo we expect the business performance in the second half to be much stronger than in the first half, assuming no new significant Covid-19 related disruptions," said BAE.

Rightmove was down 5.4% after Berenberg cut the property portal to Sell from Hold. Intercontinental Hotels Group fell 2.6% after Jefferies cut the Holiday Inn owner to Hold from Buy.

In the FTSE 250, Royal Mail was down 9.8%. The postal operator reported a slump in full-year profit, announced plans to cut 2,000 management jobs and said it is targeting the restart of dividends in the 2022 financial year.

Revenue for the financial year that ended in March was GBP10.84 billion, up 2.5% from GBP10.58 billion the year before, which comprised 53 weeks. However, pretax profit slumped to GBP180 million from GBP241 million as operating costs rose 3.7% to GBP10.62 billion.

Profit was also hit by a GBP51 million regulatory fine and a GBP91 million impairment charge, which was up from GBP68 million the year before.

To save costs, Royal Mail is to cut around 2,000 UK management roles and this, along with targeting flat non-people costs, is expected to deliver an annual operating profit benefit in the 2022 financial year of GBP330 million.

Looking out, the postal operator continues to expect UKPIL to be "materially" loss-making in the financial year ahead, while GLS profitability may potentially be reduced.

The year's dividend per share of 7.5 pence reflects the board's decision not to recommend a final dividend, against a total payout of 25p the year before. Royal Mail does not expect to pay a dividend in the financial year ahead, but it is targeting the restart of payouts in the 2022 financial year.

John Moore, senior investment manager at Brewin Dolphin, said: "Not long after completing a root and branch transformation programme, Royal Mail is undertaking another one. It is perhaps best explained by today's statement: Royal Mail needs to reflect the fundamental changes in its markets – which have been accelerated by Covid-19 – and has been too slow to do so in the past."

easyJet slumped 5.5% to 699.88 pence after raising GBP419 million by placing 59.5 million shares at 703.00p each, a 5% discount to Wednesday's closing price.

Late Wednesday, setting out its plans to raise between GBP400 million to GBP450 million through a share placing, easyJet said its interim loss widened due to charges related to hedge ineffectiveness and discontinued hedge accounting for jet fuel, despite an increase in revenue.

For the six months to the end of March, easyJet reported a widened pretax loss of GBP353 million, compared to GBP272 million the year before.

Sterling was quoted at USD1.2432 early Thursday, flat on USD1.2427 at the London equities close on Wednesday.

In the UK, the government is due to publish the latest data from its coronavirus test and trace service as the prime minister continues to defend it from criticism.

The Department for Health & Social Care is expected to release figures for England on Thursday the NHS Test and Trace Service between June 11 and 17, its third week of operation.

The euro traded at USD1.1235 early Thursday, down from USD1.1263 late Wednesday. Against the yen, the dollar was quoted at JPY107.08, up versus JPY106.44.

Gold was quoted at USD1,766.22 an ounce early Thursday, lower than USD1,775.65 on Wednesday. Brent oil eased to USD39.90 a barrel early Thursday from USD40.44 late Wednesday.

The economic events calendar on Thursday has first-quarter US GDP readings, jobless claims and personal consumption expenditure figures at 1330 BST.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.