Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
EasyJet and Wizz air revenue plummets
EasyJet said revenue was down 88% in the three months to 31 December, while passenger numbers fell by 87%. The airline is burning £40m a week even after cutting 1,400 jobs. EasyJet warned it expects to fly “no more” than 10% of its capacity in the first three months of 2021. Shares sunk 2%.
Hungary’s Wizz Air said its revenues were down 76% in the three months to 31 December. Passenger numbers declined by 77%. Despite the performance, shares held up and rose 1.5%.
The bleak revenue and passenger numbers prompted wider weakness in the sector. Shares in British Airways-owner IAG (IAG.L) fell 1.1%, travel agent TUI (TUI.L) dropped 0.5%, and engine maker Rolls-Royce (RR.L) declined by 1.9%.
European stock markets opened lower on Thursday, as a sell-off on Wall Street overnight prompted weakness in equity markets globally.
The Dow Jones (^DJI) closed down 2% on Wednesday, its biggest one-day fall since October. The slump came after a downbeat assessment of the economy from the US Federal Reserve and amid a highly unusual battle between retail investors and hedge funds in parts of the market.
Amateur investors congregating online on the Reddit forum WallStreetBets are waging a war against hedge fund short sellers. The days-long battle has been fought in old school stocks such as retailer GameStop (GME) and cinema chain AMC (AMC), prompting huge volatility in their prices. GameStop surged 134% on Wednesday alone, while AMC gained 300%.
The hedge fund “squeeze” prompts sophisticated investors to cash out “more profitable positions to fund the losses,” Michael Hewson, chief market analyst at CMC Markets, said.
The sell-off spread to Asia and Europe, with indexes falling across the board globally.
Japan’s Nikkei (^N225) fell 1.5%, South Korea’s KOSPI (^KS11) fell 1.7%, and the Australian ASX 200 (^AXJO) dropped 1.9%. In China, the Shanghai Composite (000001.SS) fell 1.9%, the Shenzen Component (399001.SZ) lost 3.2%, and the Hong Kong Hang Seng (^HSI) shed 2.6%.
Shares in drinks giant Diageo (DGE.L) leapt on Thursday as it hiked its dividend and reported unexpectedly resilient revenues, despite the pandemic hammering sales to venues.
One of the world’s biggest spirits and beer producers, Diageo said its underlying sales were up 1% to £4.5bn. Sales fell 4.5% on a reported basis, however, because of “unfavourable” exchange rates. Profits slid 8.3% to £2.2bn.
It said it had seen growth across most categories, including tequila, gin, Canadian whisky, US whiskey and liqueurs. Beer sales declined 11%, hit by curbs on trade.
In its interim first-half results for the last six months of 2020, Diageo said sales in North America, its largest market, had been particularly strong and ahead of expectations.
The company announced its interim dividend would be increased by to 27.96p per share. Shares rose 3.6% to top the FTSE 100.
Mixed performance from Big Tech
Several of the US’s biggest tech companies reported earnings overnight, with a somewhat mixed performance.
Apple (AAPL) beat analysts’ forecasts with record sales numbers after the closing bell on Wednesday, powered by iPhone 12 sales.
Facebook (FB) reported better-than-expected fourth quarter earnings but warned there was “significant uncertainty” in it advertising business. The stock dropped 3.5% in after-hours and was still under pressure in the pre-market on Thursday.
Tesla (TSLA) missed forecasts on earnings per share and the stock was down over 6% in the pre-market on Thursday morning.
Fresh US unemployment figures will also be published at 8.30am ET/1.30pm UK. Preliminary fourth quarter GDP data is due at the same time, with economists forecasting growth of 3.9%.
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