What to watch: Ladbrokes and Primark count cost of lockdown, Ryanair slumps to loss, oil under pressure

·Senior City Correspondent, Yahoo Finance UK
·4-min read
A pedestrian wearing a face mask walks past a Primark clothes store in Nottingham, central England as the city moves into Covid-19 Tier 3 restrictions on October 29, 2020. (Photo by Darren Staples / AFP) (Photo by DARREN STAPLES/AFP via Getty Images)
A pedestrian wearing a face mask walks past a Primark clothes store in Nottingham, central England as the city moves into Covid-19 Tier 3 restrictions on October 29, 2020. Photo: DARREN STAPLES/AFP via Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Ladbrokes and Primark count cost of lockdown

Primark and Ladbrokes have both warned that England’s second lockdown is likely to cost them tens of millions of pounds in lost business.

Associated British Foods (ABF.L), the owner of Primark, said it will be temporarily closing stores around Europe due to pandemic-related lockdown restrictions, a move which will lead to a loss of sales of £375m ($483m).

Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia are temporarily closed, representing 19% of its total retail selling space.

Meanwhile, GVC (GVC.L), the parent company of betting shops Ladbrokes and Coral, said the lockdown could dent profits by £34m as it is forced to shut its bookmakers.

Shares in both companies fell in early trade.

Ryanair slumps to loss

Ryanair (RYA.L) has posted its first losses over the summer in decades, as passenger numbers plummeted amid the pandemic.

The company’s shares slid 2.3% on Monday as it revealed a first-half loss of €197m (£178m, $229m). It had made €1.15bn profit a year earlier. Revenue nosedived by 78% to €1.18bn.

Chief executive Michael O’Leary used the publication of its half-year report to attack on the UK government over its handling of the pandemic.

Calling for a better test-and-trace system including passenger tests within 32 hours of departure, he said the new lockdown in England was a “cover up for political mismanagement which the Johnson government continues to deliver.”

Winners and losers in the stock market

Investors shuffled their holdings on Monday to reflect England’s looming second lockdown, creating winners and losers on the stock market.

Traders bought stock in supermarkets and takeaway businesses, but sold sectors like travel and High Street retail.

The buying and selling came as investors reacted to the UK prime minister’s announcement of a second lockdown over the weekend.

Shares in online supermarket Ocado (OCDO.L) leapt to the top of the FTSE 100 on Monday, benefiting from a multi-million pound M&A deal and as investors reasoned that another lockdown would lead to booming orders. Just Eat Takeaway (JET.L) benefited from similar logic. The stock rose 3.5%.

Essential retailers like supermarkets rose. Sainsbury’s (SBRY.L) and Tesco (TSCO.L) both gained over 2%.

At the other end of the table, travel firms like British Airways-owner IAG (IAG.L) and Premier Inn-owner Whitbread (WTB.L) were both in the red. The new UK rules require Brits to stay within their local areas and avoid international travel unless essential for work. Travel restrictions hit oil prices, which fell to five-month lows.

Retailers with large store estates that will now be shut suffered. JD Sports (JD.L) was the biggest faller on the FTSE 100, down 5.5% in early trade.

The FTSE 100 (^FTSE) initially opened lower but was trading up half a percent after an hour of trade, in-line with a wider bounce back for markets across Europe.

The DAX (^GDAXI) rose 0.3% in early trade in Frankfurt, while the CAC 40 (^FCHI) added 0.1% in Paris, and the IBEX 35 (^IBEX) rose 0.2% in Madrid.

The positive open followed the worst week for global stock markets since March.

The more domestically-focused FTSE 250 (^FTMC) was down 0.6% by 9.20am in London, reflecting concerns about how the UK economy will cope with another lockdown.

Oil under pressure

Oil futures dropped sharply on Monday morning as investors reasoned that a wave of second lockdowns sweeping Europe would mean lower demand for fuel than previously expected.

Brent (BZ=F) and crude futures (CL=F) fell 4% in early trade to hit five-month lows. Brent futures were changing hands for just shy of $37 (£29) a barrel, while crude futures were near $34.50.

The price slump came as traders reacted to mounting restrictions on movement across much of Europe. Over the weekend, the UK joined Germany, France and Belgium in announcing in a second national lockdown to curb the spread of new COVID-19 infections.

UK manufacturing losing momentum

UK manufacturing growth had begun “losing momentum” even before the prime minister announced new restrictions for England.

Makers of consumer goods saw output decline last month, blaming local lockdowns and falling demand among households as coronavirus infection rates have risen.

The latest data came from IHS Markit’s purchasing managers’ index (PMI) for manufacturing, a survey closely followed by investors and economists as a sign of the health of the UK economy.

The headline reading last month came in at 53.7, down from 54.1 in September but 0.4 percentage points higher than flash estimates had suggested last week.

Additional reporting by Saleha Riaz and Tom Belger

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