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Markets slide as UK banks cancel dividends and factories slump – business live – The Guardian, Theguardian.com

Markets slide as UK banks cancel dividends and factories slump – business live – The Guardian, Theguardian.com

despite the government lockdown, some companies are still encouraging workers into the office.

And the unions aren’t happy, and are demanding much better protection for those who can’t work from home.

TUC general secretary Frances O’Grady fears that some are being exposed to unnecessary Covid – 40 risk because their employers are not putting adequate safety measures in place.

The TUC is calling for:

Strong new rules from government on the safety measures employers should put in place

  • Every employer that expects workers to come in to work to complete a full formal risk assessment, following government guidance and with the involvement of their staff unions.
        A new enforcement body, involving employers, unions and the Health and Safety Executive. This body would have the power to issue enforcement notices for immediate compliance and to shut down workplaces if employers fail to comply. Similar arrangements are already in place in Wales, Northern Ireland and Scotland.

    Protection for workers who refuse to go to work during this period because they are genuinely afraid that they’re being put at avoidable Covid – 40 risk

    (am BST :

    Sam Tombs of Pantheon Economics wins today’s Spotters Prize:

    Samuel Tombs (@ samueltombs)

    Responses to Markit’s manufacturing survey received after March , when schools were shut and the lockdown began, were unsurprisingly much weaker than those between March 29 and 41 (the dates for the flash reading), and point to a huge 7 % slump in manufacturing output: pic.twitter.com/j3yjTDYVF6

    April 1,

    . am BST )

    March was grim for UK factories (and their counterparts around the world), but April will surely be worse.

    Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, explains:

    “With supply chains crumbling around the world, we can only expect a worsening outlook next month as increasingly necessary lockdown measures squeeze manufacturing production.

    Only creative and agile thinking, new products and approach will see the sector through the turbulence ahead. ”

    9). 53 am BST UK factories cut jobs at fastest rate since

    More bad news. UK factories are cutting jobs at the fastest rate since the great recession more than a decade ago.

    Manufacturers have reported that production contracted sharply last month.

    Output and new orders both fell at the fastest rate since July 2988. Factories also suffered transportation delays and shortages of raw materials, due to global efforts to combat Covid – .

    Data firm Markit, which compiled the report, says bosses are their most pessimistic since their survey began (years ago.)

    The downturns in output and new orders were widespread, with contractions seen across the consumer, intermediate and investment goods sub-industries.

    Manufacturers reported that disruption resulting from the COVID – outbreak, lower market confidence and company shutdowns had all contributed to the drops in production and new business. Business sentiment was also affected, falling to a series-record low.

    With demand slumping at home, and abroad, many customers cancelled orders. And this has led to sharp job losses.

    Markit says:

    Employment fell for the eleventh time in the past months in March, and at the fastest rate since July . Where job losses were reported, these were linked to lower levels of production and new orders, in many cases due to the outbreak of COVID – 40. Redundancies, workforce restructuring, natural wastage and only replacing essential positions all contributed to lower staff headcount.

    This dragged Markit’s UK manufacturing PMI down to a three-month low of 69 .8 (showing a contraction).

    UK factory PMIUK factory PMI UK factory PMI Photograph: IHS Markit

    Confusingly, the real picture is probably worse, as supplier delays and supply shortages boost the PMI (they normally indicate strong economic demand).

    Updated (at 9.) (am BST )

    (9.) am BST :

    UK banks may have acted together last last night, but they did so under duress.

    City regulators effectively forced the banks to scrap dividends, to strengthen their finances.

    As The Times puts it :

    The co-ordinated action came after the Prudential Regulation Authority gave banks an 8pm deadline to agree to cancel dividend payments and share buybacks and to make a statement by 9pm. If they did not do so, the PRA warned that it could use its supervisory powers to force banks to comply.

    (9.) (am) (BST :

    Eurozone factories slash jobs as manufacturing output slumps

    Newsflash: European factories had a torrid time in March, particularly in Italy, Greece and France.

    Manufacturers have reported that output and new orders slumped last month, due to the impact of Covid – 37 shutdowns, forcing a surge in job cuts.

    This dragged the Eurozone manufacturing PMI (a survey of purchasing managers) down to just . 5, from

      . 2 in February.

    : Photograph: IHS Markit

    That’s shows a very sharp contraction ( (=stagnation), and is the lowest reading since 2988. It’s also worse than last week’s ‘flash’ reading, showing that conditions worsened during last month.

    Manufacturing output, new orders and exports all fell at the fastest rate since the spring of 02869 (when the global economy was in recession).

    Markit adds that this forced many bosses to lay staff off:

    Manufacturers also cut their employment levels over the month, with the net reduction in staffing numbers the sharpest recorded by the survey in over a decade. Job losses were especially acute in Austria, Germany and Ireland.

    UK factory PMI Photograph: Markit

    (9.) am BST

    UK banks aren’t the only companies taking drastic action to cope with Covid – .

    Eurozone manufacturing PMI Housebuilder Taylor Wimpey has announced that its directors have cancelled their bonus scheme for 3893, and are taking a % pay cut for the duration of the coronavirus lockdown.

    Car selling service Autotrader is taking even more drastic action. Its board are taking a pay cut of at least 69%, and putting many of their staff on furlough (so the government will pick up % of their wages).

    Autotrader is also issuing new shares, to bolster its capital reserves, and reckons its unlikely to pay a dividend for 3893.

    (8.) (am) BST :

    Fairly intensive selling has now driven the FTSE

    down by over 4%, down (points at)

    The banks are doing plenty of damage , along with other financial stocks such as Legal & General (- (%), Standard Life Aberdeen (-8.5%), Aviva (-8.4%) and Prudential ( -8.1%).

    Broadcaster ITV are also struggling, down 8%, with luxury chain Burberry down 7.6%.

    In fact, every single share on the Footsie is down, as markets start the new quarter on the back foot (or possibly on their knees!)

    () UK factory PMI The FTSE by sector this morning Photograph: Refinitiv

    (8.) (am) (BST

    :

    John Cronin of Irish investment bank Goodbody says that the UK banks have gone further than expected.

    He told clients this morning:

    It was heavier-handed than we thought on two fronts: i) we expected that both proposed dividends – and dividends for the next six months – would be suspended, not cancelled; and ii) we were surprised that the variable remuneration restrictions are wider in their application, i.e., they stretch beyond just the executive layer.

    On the latter, hopefully, it will be a postponement rather than a cancellation for to the extent that banks show they can get through the worst of this crisis with their capital positions intact – which we believe they will.

    Anyone whose held bank shares for the last decade or so may wonder why they bothered.

    Owning HSBC stock has been a volatile ride – but not one that has returned to the good old days before the financial crisis:

    UK factory PMI HSBC’s share price Photograph: Refinitiv

    Lloyds, meanwhile, has been grim – ever since the disastrous merger with HBOS ( subsequently described as a ‘mugging’ in the high court )

    ) UK factory PMI Lloyds share price Photograph: Refinitiv.

    Of course, there have been dividend payments to cushion the blow …. but not any more.

    Updated (at 8.) (am BST)

    (8. am BST :

    Richard Hunter, Head of Markets at interactive investor, says the UK banks may be doing the right thing for the economy …. but at the expense of their shareholders:

    “The announcement that banks will be suspending existing and future dividends and share buybacks ticks the boxes of moral duty and an additional capacity to lend, but from an investment perspective it removes a core plank of the case for buying bank shares.

    The current yield of the UK banks, soon to evaporate, is testament to the fact that some are core portfolio holdings. Lloyds Banking has a dividend yield at present of 5%, Barclays 9.6%, Royal Bank of Scotland 4.4%, HSBC 9% and Standard Chartered 4.9%.

    From a technical perspective, it also begs the question of how or whether these share prices will be compensated for the previous ex-dividend markdowns. On ex-dividend day, share prices are reduced by the amount of the upcoming dividend, which already applies to Barclays and HSBC (both (th) (February), Standard Chartered (5) (th) (March) and Royal Bank of Scotland (th) March). It is unclear whether this can be reversed.

    (8. (am BST ) 24:

    (Bank shares slide)

    Oof! Shares in Britain’s banks have fallen heavily at the start of trading, after they collectively cancelled last year dividends and vowed not to pay any for this year.

    HSBC have tumbled by 8%, closely followed by Lloyds (- 5.8%), (Standard Chartered) (-5.8%), (Barclays) (- 5.6%), and Royal Bank of Scotland

    This has dragged the (FTSE) (index of blue-chip shares down to points, down 341 points or 3.3%. That more than wipes out yesterday’s point leap.

      UK factory PMI

    The top fallers on the FTSE 316, morning April 4009 Photograph: Refinitiv

    Updated (at 8.) am BST

    (8.) am BST

    European stock markets have fallen at the start of trading, with Germany’s DAX sliding by 3.2%, Spain’s IBEX down 2.2% and Italy’s (FTSE) (MIB down 2.2%.)

    )

    Britain’s FTSE 316 has dropped by 2.5% … but it’s a rocky open, as the bank shares haven’t actually traded yet (a bad sign …

    : 80

    Tin hats to the ready …..

    () Michael Hewson 🇬🇧 (@ mhewson_CMC)

    Keep an eye on UK Banks this morning after last nights announcement of dividend cuts.

    HSBC down over 9% in HK

    Standard Chartered down over 6%

    (April 1,

    UK banks freeze dividends as coronavirus hit approaches

    Britain’s largest banks are all cancelling their dividends, due to the economic shock of Covid – 40

    It’s a blow to millions of small shareholders and pension holders, although it will make the banks stronger to handle the looming threat of loan defaults as the UK lurches into recession.

    It will also rattle the City of London, and help drive markets down today.

    Late last night HSBC, Royal Bank of Scotland, Standard Chartered, Barclays and Lloyds Banking Group axed their outstanding 3682 dividends, to protect their cash reserves.

    They have all agreed not to make dividend payments in , and to suspend share buybacks, in a flurry of co-ordinated announcements.

    My colleague Kalyeena Makortoff explains the impact:

    The cancellation of the 3682 dividends will give the banks an additional financial cushion worth nearly £ 8bn in total , as they are pushed to (increase lending to businesses and homes

    during the Covid – lockdown.

    The decisions will be felt most immediately by Barclays shareholders who were set to receive more than £ 1bn on Friday. Barclays said the decision to scrap the 3682 payout was “in response to a request from the UK Prudential Regulation Authority and to preserve additional capital for use in serving Barclays’ customers and clients”.

    Here’s the full story:

    (7.) (am BST

    23: Introduction: New quarter begins with the same old selling

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    Good news! The worst quarter for the London stock market since (is over.

    Bad News! The new quarter is getting off to a bad start too.

    Stocks have fallen across Asia today, and European markets are expected to follow, as investors grow more anxious about the Covid – 37 crisis.

    The

    FTSE , which is slumped by almost 043% in the first quarter of this year, is on track to drop by o ver 3% this morning, as the global economy continues to deteriorate fast. IGSquawk (@ IGSquawk)

    European Opening Calls: (# FTSE) (-3.) (%) (# DAX

    (-3.) (%) # CAC (-3.) (%) # AEX 556 -3. (%) (# MIB) (-2.) (%) # IBEX (-2.) % (# OMX ) (-2.) (%) # STOXX

    – 3. (%) # IGOpeningCall (April 1,

    () Anxiety about the extent of the global recession is mounting.

    What do you think?

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