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London pre-open: Stocks seen up as investors eye Johnson speech

By Michele Maatouk

Date: Tuesday 30 Jun 2020

London pre-open: Stocks seen up as investors eye Johnson speech

(Sharecast News) - London stocks were set to rise at the open on Tuesday despite ongoing concerns about the coronavirus pandemic, with Prime Minister Boris Johnson set to announce a £5bn boost to infrastructure spending.
The FTSE 100 was called to open 20 points higher at 6,245, following a positive close on Wall Street.

CMC Markets analyst Michael Hewson said: "Last night's rebound in US markets came about despite a warning from the WHO that the epidemic was running out of control and a continued rise in infection rates across a number of US states. There was also some concerns about second waves in China and South Korea, however these infection spikes came from a fairly low base.

"The reality is that Covid-19 is here for the foreseeable future and while an increase in infections is not particularly desirable, as long as it doesn't translate into a higher fatality rate then the worst that can happen is likely to be localised lockdowns.

"This appears to be playing out here in the UK with the city of Leicester set to be excluded from the grand re-opening on the 4th July, with non-essential shops to close from today, over concerns about a big rise in infection rates there. Chancellor Rishi Sunak will then follow that up with a budget statement next week.

"Prime Minister Boris Johnson will also be making a speech later today, where he will outline a £5bn accelerated infrastructure spending plan, with a more detailed 'new deal' plan to be published in the autumn."

In corporate news, Shell said it expected to take a $20bn - $27bn hit to second quarter pre-tax profits from impairments after revising its outlook for commodity prices and margin outlook amid the Covid-19 pandemic.

The company said it expected a Brent oil price of $35 a barrel for 2020, rising to $40 in 2021, $50 in 2022 and $60 the following year and the long term in 2020 real terms.

Production was expected to be between 2,300 and 2,400 thousand barrels of oil equivalent per day.

"Although this production range is higher compared with the outlook previously provided, it has had a limited impact on earnings in the current macro environment," Shell said in a trading update.

InterContinental Hotels said revenue per available room (revpar) fell 75% in the second quarter but that the trend was improving and 90% of its hotels were now open.

Revpar declined 82% in April, 76% in May and 70% in June with the improvement mainly in China and franchised hotels in the Americas.

The FTSE 100 group said the pace of reopenings had accelerated with about 10% still shut.


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