NatWest sets aside £2bn for bad loans, BT profits slide in first quarter

London open

The FTSE 100 is expected to open 36 points higher on Friday, having closed down 2.31% at 5,989.99 on Thursday.

Stocks to watch

NatWest said it had set aside an extra £2bn for bad loans in the second quarter as it swung to a first-half loss due to the Covid-19 pandemic. The impairment loss is up from £802m in the first quarter. NatWest, formerly RBS, reported a £770m operating loss compared with a £2.6bn profit a year ago. It guided for a full-year impairment charge in the range of £3.5bn - £4.5bn.

BT posted a decline in first-quarter profit as revenue was dented by the coronavirus pandemic. In the three months to the end of June, reported pre-tax profit fell 13% to £561m as revenue dropped 7% to £5.2bn, “primarily due to the impact of Covid-19”, including reduced BT Sport revenue and a reduction in business activity in its enterprise units.

Glencore reported a 15% fall in coal production in its first half on Friday, to 58.1 mt, as a number of its operations were temporarily suspended in the second quarter due to government lockdowns. The FTSE 100 miner said own sourced copper production was 11% lower year-on-year at 588,100 tonnes, while own sourced zinc production was in line with the first half of last year at 550,100 tonnes.

Transatlantic airline group IAG posted a second quarter operating loss before exceptional items of €1.36bn as the Covid-19 pandemic led to a 95.3% drop in passenger capacity. The carrier also announced that it will tap financial markets for €2.75bn in fresh equity with its largest shareholder, Qatar Airways Group, which owns 25.1% of the company, having already indicated its full support for the decision. Cash at period end stood at €6,016m, having reduced by €667m since end of year 2019, on top of a further €2.1bn in committed and undrawn general and aircraft facilities.

Newspaper round-up

A slew of England’s biggest businesses are set to defy the government’s push to get workers back into offices in August, a Guardian analysis shows, with many big businesses sticking to home working arrangements or delaying a partial return until September at the earliest. Law firms, insurers, energy providers and tech firms are among those reacting cautiously to the change in government advice, which means from Saturday employers can decide whether staff can safely come back to offices. Some companies, such as Google and NatWest Group, are allowing workers to stay at home until 2021 amid signs of a permanent shift in working culture. – Guardian

Sky has reported a $750m (£575m) plunge in revenues as more than 200,000 customers switched off in the three months to the end of June while key programming such as Premier League football was off air during the coronavirus pandemic. Sky, which is owned by US pay-TV giant Comcast, reported a 15.5% year on year fall in revenues from $4.8bn to $4bn in the period as coronavirus impacted sports fixtures, subscriber viewing and advertising. - Guardian

Silicon Valley giants Amazon, Apple and Facebook enjoyed a dramatic boom during the worst months of the pandemic, posting rises in quarterly profits last night that will add fuel to claims they are becoming too dominant. Shares in the companies jumped in after-hours trading as they revealed that rises in online shopping and internet use during lockdowns meant soaring revenues in the three months to the end of June, despite wider economic pain. – Telegraph

The Covid-19 pandemic is threatening delays and further cost increases in the construction of the Hinkley Point C nuclear plant, the developer EDF has warned. A slowdown in work at the Somerset site has increased the risk that Britain’s first new nuclear plant in a generation will not be ready to generate power by December 2025 as planned, the French energy giant said. – The Times

US close

Wall Street closed mostly lower on Thursday, after an epic plunge in second-quarter gross domestic product and another week's worth of jobless claims figures.

The Dow Jones Industrial Average ended the session down 0.85% at 26,313.65 and the S&P 500 was off 0.38% at 3,246.22, while the Nasdaq Composite was 0.43% firmer at 10,587.81.

During the session, the Dow did manage to recover some of its earlier losses, after it opened down 457.83 points, more than reversing the gains recorded on Wednesday after the Federal Reserve vowed to maintain its current stimulus measures.

Overnight, the Fed kept the US interest rate in a range between 0% and 0.25%, stating that while the economy had somewhat recovered of late, activity and employment remained "well below their levels at the beginning of the year".

Chairman Jerome Powell also said the central bank would keep an accommodative stance until the economy had fully "weathered" the effects of the coronavirus storm.

As far as the new day's trading was concerned, market participants digested news that economic activity in the US collapsed during the second quarter, even if at a marginally slower than expected pace.

Preliminary data from the Department of Commerce showed that gross domestic product fell at a quarterly annualised pace of 32.9% over the three months to June - slightly ahead of consensus estimates for a 34% drop.