Lloyds Bank increases bad debt provision, AstraZeneca maintains full-year guidance

London open

The FTSE 100 is expected to open 12 points higher on Thursday, having closed up 0.036% at 6,131.46 on Wednesday.

Stocks to watch

Lloyds Bank increased its provision for bad debts by £2.4bn in the second quarter as it braced for a “significant deterioration” in the economic outlook amid the coronavirus pandemic and swung to a heavy first-half loss. That took impairment charges to £3.8bn in the first half, up from £579m in 2019, with the bank forecasting a full-year figure of between £4.5bn - £5.5bn. The lender booked a pre-tax loss of £602m compared with a profit of £2.9bn a year ago. Net income fell 11% to £5.4bn.

AstraZeneca reported a 12% improvement in its total revenue on Thursday, to $12.63bn (£9.75bn), with growth across all three of its therapy areas and in every region. Core earnings per share was up 24% for the six months ended 30 June, or ahead 26% at constant exchange rates, at $2.01. The FTSE 100 drugmaker left its guidance for the year unchanged, with total revenue expected to increase by a “high single-digit to a low double-digit” percentage, and core earnings per share set to rise by a “mid-to-high teens” percentage.

Newspaper round-up

The government is expanding its Covid-19 rescue loan scheme to cover small businesses on the edge of collapse, a move that Labour warned would come too late for many troubled firms. With less than a week before the furlough scheme covering 9 million employees is cut back, plunging more employers into debt, the Treasury said it would use a change in EU state aid rules to allow firms previously locked out of the coronavirus business interruption loan scheme (CBILS) to access government funds. – Guardian

British negotiators in the trade and security talks with the EU have only started to engage with the most contentious issues “in the last week or two” after pressure from business groups, the European commissioner for trade has said. In an interview with the Guardian, Phil Hogan, who oversees the EU’s negotiations, said there had been “a change of attitude” by Downing Street in July as they realised time was running out but that the talks were “not as advanced as we would like”. – Guardian

Car production in the UK plunged to a near 70-year low in the first half of 2020, with just 381,357 vehicles rolling off lines at car plants. Factory stoppages and lower demand caused by dealers being forced to shut because of the Covid-19 lockdown, combined with weakening consumer confidence, drove the 48pc decline on the previous year, according to data from the Society of Motor Manufacturers and Traders (SMMT). – Telegraph

Unsecured creditors of Monsoon Accessorize are owed more than £132 million after its founder bought it back out of administration in a pre-pack rescue deal. The administrator’s proposals, filed at Companies House, show that creditors include landlords, suppliers and local authorities. FRP was appointed administrator to the fashion chain in June after stores were closed because of the pandemic. – The Times

The economy is on track to grow by 5 per cent in July as growth picks up from its lockdown lows, according to analysis of real-time data by Jefferies bank. The investment bank’s composite index of several up-to-date activity indicators, from energy use to traffic congestion to online searches, edged up to 58 per cent of pre-coronavirus levels in the past week, from 57 per cent the week before. – The Times

US close

US stocks closed slightly higher on Wednesday as market participants digested the latest from the Federal Reserve, as it stood pat on interest rates late in the day.

The Dow Jones Industrial Average ended the session up 0.61% at 26,539.57, the S&P 500 added 1.24% to 3,258.44, and the Nasdaq Composite was 1.35% firmer at 10,542.94.

At the open, the Dow was 38.84 points higher, cutting into some of the losses recorded in the previous session amid stimulus headlines and another slab of corporate earnings.

The Federal Reserve kept its interest rate target on hold at between 0% and 0.25%, as expected, but it did acknowledge the recovery in the US in its rhetoric.

In its statement, it replaced “the virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses” with “economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year.”