The crop of bumper blue-chip results will continue on Wednesday, with Aston Martin Lagonda Global Holdings PLC (LON:AML), Barclays PLC (LON:BARC) and GlaxoSmithKline PLC (LON:GSK) among the big names delivering results and updates in the mid-week.
There will also be big news on the macro front with the latest interest rate decision from the US Federal Reserve.
Barclays kicks off for the banks
With Barclays PLC (LON:BARC) kicking off half-year results from the UK banks, second-quarter earnings from the US banks have set a likely tone, with higher provisions for coronavirus loan losses, lower loan margins offset for some by a strong investment banking performance.
The question will be the size of extra COVID-19 impairments for the London-listed lenders after the US main street banks took an additional US$33bn in charges to cover possible bad loans, the highest number since the wake of the (previous) financial crisis
Encouragingly, in the first quarter, the provisions by Britains big five banks of £7.5bn in the first quarter was well below the US$24bn absorbed by their US cousins.
However, as they were given leeway by the Bank of England with regards to the accounting for the potential losses, meaning they were not required to immediately book hefty losses, this could mean larger losses are coming down the line.
GSK checks its health
GlaxoSmithKline PLC (LON:GSK), the FTSE 100s third largest constituent, left its guidance unchanged for a reduction of 1-4% in earnings, as first-quarter results in April showed sales rose 19% thanks to strong demand for its Shringrix shingles treatment and increased demand for HIV and respiratory products.
However, the key focus is likely to be any news relating to the coronavirus pandemic and whether the company has managed to profit off higher demand for medicines, as well as updates on any coronavirus vaccine efforts following GSKs purchase of a £130mln stake in German biotech CureVac, alongside a £104mln payment to fund the companys research into the development of messenger ribonucleic acid (mRNA) vaccines.
Wizz Air update comes in for landing
The procession of airline updates will also continue on Wednesday with a trading update from Wizz Air Holdings PLC (LON:WIZZ), the budget carrier focused on Central and Eastern Europe.
Investors may be bracing for the update somewhat following Mondays news from rival Ryanair Holdings PLC (LON:RYA), which dived to a €185mln loss in the first quarter of its financial year as most of its fleet was grounded by coronavirus restrictions.
There may also be some knock-on effects from the UK governments decision to reimpose quarantine restrictions on travellers returning from Spain, which could potentially upend any summer recovery for the airline.
Aston Martin still in for repairs
The auto industry is another that had been stuck on the hard shoulder during the pandemic, with Aston Martin Lagonda Global Holdings PLC (LON:AML) also punctured by problems all of its own.
The luxury carmaker has had a mixed year so far, having already tapped investors for over half a billion pounds in a rescue deal led by billionaire Lawrence Stroll to help support the business and tide it over as a restructuring is attempted.
In June, 500 job cuts were announced production was slashed of front-engine sports cars, with COVID-19 disruption meaning lower retail and wholesale sales in the second quarter compared to the first, while both retail and wholesale average selling prices are being affected by de-stocking.
Analysts at Deutsche Bank have forecast a drop in wholesale volumes on the back of dealer closures, late reopening and also inventory clearing.
As a result, the bank predicted that losses for Astons second quarter “should come in slightly above £80mln” alongside negative free cash flow due to a forecast cash burn of £350mln.
One silver lining is the DBX, the companys first sport-utility vehicle, which began rolling off the production line in early July.
Nexts retail reveal
Giving a reading of the UK consumers spending on clothing, retail bellwether Next PLC (LON:NXT) will deliver a trading update on Wednesday, following a bruising few months that saw its sales fall by 38% between late January and late April, worse than its stress testing had anticipated as the pandemic forced it to shutter all its stores.
The update will provide a better picture of how the firm will fare across the rest of the year, having previously forecast a worst case scenario that will see sales drop 40% or 35% in a more median outcome.
Meanwhile, investors are likely to turn their attention to the companys balance sheet, particularly how the companys cash reserves have held up during the lockdown period as well as whether it may need to borrow from the governments coronavirus corporate financing facility.
Fed chair Jerome Powell has stressed that the central bank is not going to be in a rush to raise interest rates from their record-low of 0.25%, nor are he and his Federal Open Markets Committee intending to take rates into negative territory.
Although the FOMC meeting may be the highlight of the weRead More – Source