EasyJet reduces cash burn, Apollo could join Fortress bid for Morrisons

London open

The FTSE 100 is expected to open 33 points higher on Tuesday, having closed down 2.34% at 6,844.39 on Monday.

Stocks to watch

Budget airline easyJet said it had reduced cash burn amid continuing Covid restrictions as it reported a £318m third quarter loss. The loss for the three months to June 30 compared with a loss of £346.8m last year. EasyJet said cash burn came in at £55m a week while revenue rose to £212.9m from £7.2m in 2020. It added that it planned to fly up to 60% of 2019 fourth quarter capacity in the next three months.

Apollo Global Management is in talks with Fortress Investment Group to join its bid for Morrisons and said it would not make an offer for the supermarket group on its own. The US private equity group said on 5 July it was considering a bid after Morrisons' board recommended a £6.3bn offer from Fortress, a group of investors led by Softbank. Bidding was triggered by a £5.5bn proposal from rival US buyout firm Clayton, Dubilier & Rice. Apollo said it was in discussions "which may result in funds managed or advised by Apollo forming part of the investment group led by Fortress for the purposes of the Fortress offer. As a consequence of these discussions, Apollo confirms that it does not intend to make an offer for Morrisons other than as part of the Fortress offer."

Anglo American reported a 134% increase in rough diamond production in its second quarter on Tuesday, which it put down to planned higher production in response to the ongoing recovery in consumer demand. The FTSE 100 mining giant said platinum group metals production was ahead 59%, with Mogalakwena production increasing by 11%, as Covid-19 lockdowns had a “relatively lower” impact compared to a year ago. Iron ore production was up 6%, driven primarily by Kumba, and copper production advanced 2% due to strong plant performance at Los Bronces.

Newspaper round-up

Britain’s digital finance industry, more commonly known as the fintech sector, has hit a multibillion-pound peak of investor interest. Banking app Revolut confirmed last week that it had raised another $800m from big investors including the Softbank Vision Fund, pushing the bank’s valuation to $33bn (£24bn). It came just weeks after Wise, the forex transfer business, listed on the London Stock Exchange at nearly £9bn. - Guardian

David Cameron’s intensive text message lobbying of ministers and high-ranking civil servants on behalf of Greensill Capital showed a “significant lack of judgment”, an official parliamentary inquiry has found. The Treasury select committee said it was inappropriate of the ex-prime minister to send 62 messages to former colleagues pleading for them to help the bank, in which Cameron held a “very significant personal economic interest”. - Guardian

Motorists face soaring repair costs from a Brussels crackdown on unbranded car parts, one of the world’s biggest distributors has said. Andy Hamilton of Euro Car Parts warned that drivers risk being forced to spend an extra £100 a year if the Government does not step in to overrule new the European Union legislation. - Telegraph

A FTSE 100 chemicals giant is seeking to win taxpayer backing for a factory to build components for hydrogen-powered cars, in another potential boost for Britain’s car industry. The Business Secretary, Kwasi Kwarteng, met with Johnson Matthey in May about financial support for a plant to make vehicle parts including membrane electrode assemblies (MEAs). - Telegraph

The healthcare technology company founded by Lord Drayson is exploring a potential dual-listing in the United States amid pressure from an activist investor. Sensyne Health — whose shares on Aim, the London Stock Exchange’s junior market, remain below their float price — said that it was considering listing on the Nasdaq index and that such a move would “complement” its primary London listing. Sensyne, which is based in Oxford, also said that it remained committed to having its headquarters in Britain. - The Times

US close

Equities closed deep into negative territory on Wall Street on Monday, with investors focusing on rising Covid-19 case numbers globally and the effect that might have on government bids to reopen economies.

At the close, the Dow Jones Industrial Average was down 2.09% at 33,962.04, while the S&P 500 lost 1.59% to 4,258.49 and the Nasdaq Composite was off 1.06% at 14,274.98.0

It was the worst day for the Dow in more than three months.

“Concerns about how robust recovery really is has sent the oil price under $70 a barrel, in marked contrast to the $100 that was being discussed as a real possibility for this summer,” said AJ Bell financial analyst Danni Hewson.

“The OPEC+ spat resolution will have played a part but Delta is destructive and US markets aren’t immune either.

“Investors appear to be flocking to the safe haven of government bonds with yields plummeting to levels last seen back in February, and Wall Street has followed the trajectory of European markets.”