BA planes
BA planes
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11:21 AM

Rolls-Royce’s downgraded to ‘junk’ status by Moody’s

Rolls Royce
Rolls Royce

Rolls-Royce’s credit rating has been downgraded to “junk” status by Moody’s, which has cut its verdict on the engineer’s long-term senior unsecured bonds by two notches.

My colleague Alan Tovey reports:

The downgrade, which means the company’s bonds are no longer seen as being of investment grade, came as Moody’s warned about demand for Rolls’s jet engines and maintenance deals for them.

The bonds were reduced from a rating of Bas to Baa3, and Rolls itself was rated as Ba2, with a negative outlook.

A junk rating will make it harder and more expensive for Rolls to raise capital, with some investors banned from buying into the business.

Standard & Poor’s also rates the FTSE 100-listed engineer as junk, cutting its status two months ago.

Yesterday, The Sunday Telegraph revealed how Rolls is in talks with private equity firms about a sale of ITP, its Spanish offshoot which makes aircraft engine parts.

Rolls is also looking at other fundraising options including equity raises after the collapse in air travel caused by coronavirus saw it burn through £3bn of cash in the first half of the year.

Shares in Rolls-Royce were down almost 5pc at 254.0p in late morning trade. Prior to the pandemic they were trading at about 650p.

11:02 AM

IATA slams Spanish quarantine as ‘disproportionate’

The International Air Transport Association is not happy with the UK’s decision to quarantine arrivals from Spain…

10:44 AM

Sainsbury’s testing virtual queues to prepare for local lockdowns 

Sainsbury's
Sainsbury’s

Sainsbury’s is testing virtual queues before shoppers enter its shops as it gears up for local lockdowns. 

My colleague Laura Onita writes:

The supermarket chain will run the trial in London, Leicester and Newham for almost a month before it implements it elsewhere. 

Customers will be able to download an app on their smartphone and join a virtual queue from their car, home or a coffee shop without having to physically queue outside shops. 

Sainsbury’s said it will help it respond quickly if there is a local lockdown and the number of shoppers fluctuates widely.

Rival grocer Asda, which Sainsbury’s tried and failed to merge with last year, started testing virtual queues in May.  

10:24 AM

French jobless total drops in June

France saw a record drop in the jobless total last month as some jobseekers found part-time work, data from the country’s Labour Ministry showed.

The number of people out of work fell by 204,700 in June to 4,220,900, the ministry said.

The jobless total had jumped to a record 4,575,500 in April due to the coronavirus lockdown that began in mid-March, with most restrictions remained in place until May 11.

The ministry said the improvement in June was mainly due to some jobseekers being reclassified as partly active in the labour market because they had found part-time work.

09:56 AM

Amazon to create 1,000 new jobs in Ireland 

Amazon
Amazon

Tech giant Amazon said it will create 1,000 jobs in Ireland and open a new campus in Dublin as demand for its cloud services grows.

The new roles include a range of engineering roles, as well as security and big data specialists, and program and account managers.

Technical management and senior leadership positions in Amazon and Amazon Web Services are also being created, the firm said.

A new 170,000 square foot campus will be created in the capital and will open in 2022. 

 Mike Beary, country manager for Amazon Web Services Ireland, said: “We have seen a surge in demand for cloud services in Ireland and globally, and we are excited to add 1,000 highly skilled roles so we can continue to help our customers to innovate,”

09:32 AM

AstraZeneca to pay up to $6bn for cancer treatment 

Lab
Lab

Drugmaker AstraZeneca could pay up to $6bn (£4.7bn) for the global rights to a new Japanese cancer treatment.

Via PA:

The Anglo-Swedish pharmaceutical giant said it would pay $1bn up front to its new partner Daiichi Sankyo.

It has also promised to pay up to one billion dollars if the new treatment gets approval from regulators, and up to four billion (£3.1 billion) more if it sells as hoped.

The treatment, DS-1062, targets the Trop2 protein which is overproduced by most breast and lung cancers.

Honing in on the cells that produce too much of the protein allows the treatment to deliver selective chemotherapy to certain areas, rather than subjecting the whole body to the treatment.

The medicine has not yet been approved for use in any country, and its safety and efficacy have not been established.

“We see significant potential in this antibody drug conjugate in lung as well as in breast and other cancers that commonly express Trop2,” said AstraZeneca chief executive Pascal Soriot.

The deal will give AstraZeneca a slice of the global sales of the treatment, as the two companies have agreed to partner up to develop and then commercialise DS-1062.

09:16 AM

Market update: FTSE extends losses 

The FTSE 100 has continued to slide as investors mull worsening Sino-US relations and a raft of new virus outbreaks. 

Germany’s DAX remains in the green but has given back some of its earlier gains.

Here’s how things stand:

European market data - Bloomberg
European market data – Bloomberg

09:08 AM

Finance gender gap widens as female applicants to top job falls 

Female staff
Female staff

Women made up only a fifth of job applications to senior manager roles in the UK finance sector, highlighting sluggish progress on efforts to make the industry more diverse.

Bloomberg has the details:

A review of 4,044 individuals who applied to senior roles at firms including banks, insurers, fund managers, hedge funds and private equity in the year through March shows that 833 were women and 3,211 were men, according to law firm Pinsent Masons. The previous year women represented 26pc of applicants across a smaller set of firms.

The data underscores the finance sector’s longstanding and persistent gender gap. Recent legislation in the U.K. requiring big companies to disclose pay data has drawn further attention to the issue. One reason often cited for the lack of progress is that women, who are oftentimes the primary caregiver, favor flexibility. The coronavirus pandemic has seen thousands of City of London employees work from home for months boosting the case for diversity advocates.

“Women will be hoping that City employers are going to be much more receptive to flexible working requests and this won’t be used as an excuse for the low levels of women at senior levels,” said Elizabeth Budd, partner at Pinsent Masons.

08:53 AM

Ex-BEIS minister joins Provident Financial

Margot James
Margot James

Margot James, a former minister at the Department for Business, Energy & Industrial Strategy, has joined the board of doorstep lender Provident Financial as a non-exec director.

Ms James served as an MP from 2010 to 2019 and held a number of ministerial offices, including as Minister of State for the Department of Digital, Culture, Media & Sport. 

Patrick Snowball, Chairman of Provident said:

I am delighted to welcome Margot to the Board and look forward to working with her. Her appointment brings a great balance of skills and experience to the Board, with her wide ranging career as a commercial and entrepreneurial business owner and her work in the UK Government.

Margot’s experience of working in consumer policy, citizens advice and advising on labour markets will enable her to understand and promote the interests of our customers and wider stakeholders, as we seek to deliver our purpose of helping put people on the path to a better everyday life.

08:36 AM

JP Morgan: Risk of further lockdowns in Europe

Analysts have JP Morgan have warned there is a risk of further local lockdowns outside of Spain, particularly in France and Belgium.

In a note, Richard Vosser, James Gordon, Ashik Musaddi and M.W. Kim write:

The last week, July 20-July 26, has been the second bad week in a row for the new infection count across the EU 5, with cases increasing in all countries and by 50pc in aggregate to the highest level since the end of May. As well as the significant spike in Spanish infections, which have increased by further 83pc (after 106pc last week), there are now large spikes in France, Belgium and the Netherlands.

Although we aren’t classifying this re-acceleration in daily cases as a second wave, this is the second week in a row that cases have increased significantly across Europe and it is clear that there is the risk of further local lockdowns outside of Spain, at least in France and possibly Belgium.

08:14 AM

German business sentiment rises to highest level since 2018

Angela Merkel
Angela Merkel

German business sentiment beat expectations and rose to the highest level since 2018  in July, according to the influential Ifo institute.

The institute said the latest survey highlights the good start to the third quarter, adding that optimism is gradually returning.

The DAX is beating the gloom and pushed higher on the update, up 0.4pc.

07:58 AM

Travel stocks dive on quarantine fears 

Travel stocks are really struggling this morning after Spain was added to the UK’s quarantine list, raising fears that arrivals from other European destinations could be forced to self-isolate too.

Here is a list of the damage so far:

  • TUI -13.4pc

  • IAG -9.4pc

  • Ryanair -7.6pc

  • easyJet -12.4pc

07:36 AM

Hong Kong tightens public gathering limit to two 

Hong Kong
Hong Kong

The UK is not the only country reimposing some virus restrictions.

In Hong Kong, public gatherings are to be limited to two people, restaurants are to stop dine-in services and masks are to be made compulsory outdoors.

It comes after the city reported 103 local cases on Sunday.

07:25 AM

Ryanair slumps to £168m loss after ‘most challenging’ quarter  

Ryanair
Ryanair

Ryanair is the big corporate story this morning.

The Dublin-based carrier said it suffered its “most challenging” quarter as it slumped to a €185m (£168m) loss for the three months to June.

We report:

The low-cost carrier also warned that a second wave of coronavirus cases in Europe could prolong any recovery from the pandemic into next year. 

Europe’s biggest airline swung into the red after it was forced to ground 99pc of its fleet due to Covid-19. 

Restrictions saw the firm carry 500,000 passengers in its first quarter compared with 41.9 million in the same period last year, while revenue plummeted from £2.1bn to £113m.

The Dublin-based company said: “The past quarter was the most challenging in Ryanair’s 35-year history.

“Covid-19 grounded the group’s fleet for almost four months (from mid-March to end June) as EU governments imposed flight or travel bans and widespread population lockdowns.”

It added: “It is impossible to predict how long the Covid-19 pandemic will persist, and a second wave of Covid-19 cases across Europe in late autumn, when the annual flu season commences, is our biggest fear right now.”

07:18 AM

Europe opens mixed 

European equities have opened mixed, with travel and leisure stocks weighing down London’s FTSE 100 after the decision to add Spain to the UK’s quarantine list.

European market data
European market data

07:10 AM

Gold hits record high 

Gold
Gold

Gold has soared to an all-time high as worsening diplomatic tensions between the US and China push investors into haven assets.

The metal rose 1.6pc to a record high of $1,943 per ounce, surpassing its previous peak touched in September 2011.

Gold is also helped by aggressive monetary easing, which has taken place around the globe in the wake of the wake of the pandemic. 

06:22 AM

Agenda: Busy earnings week ahead 

Good morning. The FTSE 100 is set to start the week marginally in the green despite growing fears about a resurgence of coronavirus in Europe and the simmering tensions between the US and China.

Today also kicks off what will be a very busy week for earnings in Europe and the US.

5 things to start your day    

1) Airline regulators are expected to this week launch a crackdown on carriers which have failed to refund families for flights cancelled due to coronavirus, as the industry reels from new restrictions over Spain. The Civil Aviation Authority is understood to have drawn up a list of the worst culprits, with millions of customers still owed billions of pounds after being told they could not fly. 

2)  Europe’s recovery deal is already falling apart. The EU Recovery Fund was not designed for immediate liquidity problems, writes Ambrose Evans-Pritchard. Italy is already warning that the money will not come soon enough to avert an autumn liquidity squeeze. 

3)  Double-glazing salesmen say Rishi Sunak’s green homes giveaway has backfired and put more than 10,000 jobs at risk. The scheme was announced earlier this month but will not come into force until September, landing a massive blow on the industry because potential buyers are holding off until it starts, bosses said 

4)  Could live stream shopping change online retail for good? The shopping channel has been largely unaltered since it emerged in the heady consumerism of Eighties America, hooking in thousands of viewers desperate for everything from a new fridge to a necklace. Now, however, the digital world is finally catching up. 

5) Trade groups warn of Brexit paperwork pile-up. Ministers said earlier this year that about 50,000 more private sector staff would be needed to meet customs demand when Britain left the single market, although this could be lower if a trade deal was struck.

What happened overnight 

Asian stock markets were mixed and gold surged to a record price on Monday amid US-China tensions and concern a recovery from the coronavirus pandemic might be weakening.

Tokyo declined while Shanghai and Hong Kong swung between gains and losses. Australia advanced.

The Nikkei 225 in Tokyo fell 0.5pc to 22,629.30 while the Shanghai Composite Index was little-changed at 3,197.47. The Hang Seng in Hong Kong lost 0.1pc to 24,668.14.

The Kospi in Seoul advanced 1.1pc to 2,226.56 and Australia’s S&P-ASX 200 was off under 0.1pc at 6,022.90. New Zealand lost 0.4pc while Singapore and Jakarta advanced.

Gold jumped $30 to a record $1927.60 per ounce in a sign investors were looking for safe havens to park money.

Coming up today

Interim results

Ascential

Economics

Ifo business climate index (Germany)