Barclays takes £3.7bn hit, Aveva revenue falls as it shifts business model

London open

The FTSE 100 is expected to open nine points lower on Wednesday, having closed up 0.4% at 6,129.26 on Tuesday.

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Barclays Bank took a £3.7bn hit in coronavirus-related charges as interim profits more than halved and it warned of headwinds continuing into 2021. Pre-tax profits fell to £1.2bn from £3bn a year earlier, with net operating income down 20% to £7.8bn. The bank on Friday said that second-half impairment charges were expected to remain above the level experienced in recent years, but below the interims “assuming no change in macroeconomic forecasts”. It added that a decision on any dividend payments would be made at full year results.

French pharmaceutical giant Sanofi and GlaxoSmithKline have agreed to provide the UK with as many as 60.0m doses of their Covid-19 vaccine candidate, subject to final contract. The vaccine candidate employs a combination of Sanofi's recombinant protein-based technology and GSK's pandemic adjuvant technology. Both firms also reiterated their commitment to making both drugs available globally.

Aveva said on Wednesday that its subscription revenue grew 30% in the first quarter, while as expected, its maintenance revenue was broadly flat and perpetual licences and services reduced “substantially”. The FTSE 100 company said that was partly due to its ongoing transition to a subscription business model, and partly due to disruption caused by Covid-19. Overall group organic constant currency revenue was 3.5% lower.

Newspaper round-up

The government should prepare to step in with targeted emergency support to help people and businesses that would be hardest hit by a second surge in coronavirus infections, a group of MPs has warned. Sounding the alarm over the uneven impact of the Covid-19 crisis, the commons business committee said there were major gaps in the financial support package rolled out by the government – especially for women and freelance and agency workers. – Guardian

The energy regulator has vowed to crack down on “unscrupulous” brokers that have overcharged charities, community sports clubs, and care homes for their energy by hiding their inflated commission charges. Ofgem set out the plans to help prevent more than a million microbusinesses from being ripped-off by unregulated energy brokers after finding that some were paying thousands of pounds more than they needed to. – Guardian

Bank dividend payments could be restarted within months in a boost to millions of small investors battered by the coronavirus meltdown. Lenders were forced to halt shareholder pay-outs following heavy pressure from the Bank of England after the pandemic struck - but Threadneedle Street has said it will consider plans to dole out cash from January onwards as an economic recovery begins. – Telegraph

Chinese state-backed media have put further pressure on HSBC over allegations that the bank had a hand in the arrest of a senior Huawei executive. Meng Wanzhou, the finance chief of the telecoms company, was arrested in Canada in December 2018 and is fighting extradition to the United States. She is accused of bank fraud for misleading HSBC about Huawei’s relationship with a business operating in Iran, a country subject to American sanctions. – The Times

The funding gap in the universities’ pensions scheme has ballooned to £20 billion, raising the prospect of fresh strikes by academics over potential increased member contributions. The scheme’s deficit rose from £5.7 billion to £12.9 billion in the 12 months to March 31, according to its latest accounts. It then rose to £20 billion at the end of June, the Universities Superannuation Scheme warned. – The Times

US close

Wall Street stocks closed lower on Tuesday amid stimulus headlines and another slab of corporate earnings.

At the close, the Dow Jones Industrial Average was down 0.77% at 26,379.28, while the S&P 500 was 0.65% softer at 3,218.44 and the Nasdaq Composite saw out the session 1.27% weaker at 10,402.09.

The Dow closed 205.49 points lower on Tuesday, reversing gains recorded in the previous session as market participants prepared for a week full of major corporate earnings.

The Republican Party's coronavirus relief plan was in focus at the open on Tuesday after Senate Majority Leader Mitch McConnell unveiled the bill overnight.

The new legislation will offer relief for unemployed Americans and include another direct payment to individuals of as much as $1,200, as well as more Paycheck Protection Program, small business loan funds and other provisions.

McConnell said the bill would set federal unemployment insurance at 70% of a worker's previous wages, replacing the $600 per week which was set to stop being paid this week.