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What to watch: Daily Mail profit dives, AA takeover bid disappoints, and stocks rise on vaccine hopes

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·6-min read
A woman reads a special edition of the Daily Mail newspaper, which displays a NHS coronavirus message on the front pages saying 'All in, all in together. Stay at home' and 'staying home for Britain' as the UK continues in lockdown to curb the spread of coronavirus.
A woman reads a special edition of the Daily Mail newspaper, which displays a NHS coronavirus message on the front pages saying 'All in, all in together. Stay at home' and 'staying home for Britain' as the UK continues in lockdown to curb the spread of coronavirus. Photo: PA

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Daily Mail profits dives

Profit fell sharply at DMGT (DMGT.L), the publisher of the Daily Mail and Metro newspapers, over the last year.

The company’s annual results, published on Monday, show pre-tax profit slumped 36% to £72m ($96.2m) in the 12 months to the end of September. Revenue fell 10% to £1.2bn.

DMGT has been hit hard by the COVID-19 pandemic, which has led to slumping newspaper sales and declining advertising revenues. The company also owns a property information service and an events business, both of which suffered during the first lockdown earlier this year.

“The pandemic has brought significant disruption and change to our markets but the strategic and financial actions we have taken have ensured that we coped well and remained on the front foot,” said chief executive Paul Zwillenberg.

DMGT increased its final dividend by 1% to 24.1p despite the drop in revenue and profits. Shares in the company rose almost 3%.

Watch: UK economy shrinks as new lockdown shuts down firms

AA takeover bid disappoints

Shares in the AA (AA.L) slumped on Monday after the breakdown group confirmed it was close to accepting a takeover offer.

The company said in a statement to investors that it had received a 35p per share offer for the whole company from TowerBrook Capital Partners (UK) and Warburg Pincus International.

It said its board “would be willing to recommend a cash offer” on the terms proposed, and that the company was in “advanced discussions” with the consortium.

Shares fell 2.8% to trade at 32.60p.

Stocks rise on vaccine hopes

European stocks gained ground in early trade on Monday, boosted by positive vaccine news from AstraZeneca (AZN.L) and the University of Oxford.

AstraZeneca on Monday said a vaccine it had developed with Oxford showed a 70% efficacy rate in large-scale trials. When two doses are applied, the efficacy rate rose to 90%.

The FTSE 100 (^FTSE) rose half a percent at the open, while the CAC 40 (^FCHI) was up 0.9% in France and the DAX (^GDAXI) rose 0.6% in Germany.

Stocks looked set for a higher open in New York later today. S&P 500 (ES=F) and Dow Jones (YM=F) futures were half a percent higher and Nasdaq futures (NQ=F) were up 0.3%.

Asian stocks rose overnight, with strong gains for mainland Chinese markets. The Shanghai Composite (000001.SS) rose 1% and the Shenzen Component (399001.SZ) rallied 0.7%. Elsewhere, the Hong Kong Hang Seng (^HSI) was up 0.1%, South Korea’s KOSPI (^KS11) surged 1.9%, and the ASX 200 (^AXJO) added 0.3% in Australia. Markets were shut in Japan for a national holiday.

Oil heads higher

Oil futures headed higher in early trade in London, as investors parsed more positive vaccine news and rising tensions in the Middle East.

Brent Crude (BZ=F) ticked 2.3% higher, while Crude futures (CL=F) were up 2% at 8.50am in London.

Hopes of an imminent vaccine are supporting the expectation of a pick-up in global travel, one of the biggest consumers of oil.

UK suffers from second lockdown

The UK’s economic recovery is facing a “double-dip” downturn as coronavirus lockdowns batter firms, a leading business survey suggests.

Industry data released on Monday points to the sharpest decline in private sector output since May as economic restrictions left firms reeling after four months of expansion. The fall was still less severe than expected by analysts, however.

Trade has taken the biggest hit for firms in services, which makes up four-fifths of the economy from cafes to shops to art galleries. But manufacturing activity continued to expand, smashing analysts’ predictions of decline to hit a three-month high.

The purchasing managers’ index (PMI) data, one of the most closely watched indicators on the health of the UK economy, shows overall activity declining for the first time in months.

Pound rises on Brexit deal hopes

The pound was rising on Monday morning on the back of a report claiming UK prime minister Boris Johnson is planning to once again personally intervene in Brexit talks.

Sterling was up half a percent against the euro and dollar in early trade in London, following a report in the Telegraph suggesting Johnson will this week make a “significant” intervention.

Johnson will reportedly speak directly to European Commission president Ursula von der Leyen in a bid to “clear away final barriers” to a trade deal. The Telegraph suggested next Tuesday is now the unofficial deadline for talks to conclude.

The pound was up 0.5% against the euro to €1.126 (GBPEUR=X) by 9am in London. Sterling was up 0.6% against the dollar to $1.337 (GBPUSD=X).

Cineworld pops after $450m lifeline

Cineworld (CINE.L) shares climbed as much as fifth on Monday after it announced that it had secured waivers for its debt covenants until June 2022 and $450m in new loans to weather the COVID-19 storm.

The cinema chain, which also owns Picturehouse and Regal, said the move will provide the group with “financial and operational flexibility until lockdown restrictions in key jurisdictions are eased and studios are able to bring their enhanced pipeline of major releases back to the big screen.”

It will also issue equity warrants worth around 11% of its share capital, adding that its debt measures have given the company over $750m of extra liquidity and reduced monthly cash spend to around $60m.

Cineworld also extended the maturity of its $111m incremental revolving credit facility from December 2020 to May 2024.

Second lockdowns hit European economies

Business activity in the 19-country eurozone declined significantly in November as a strong second wave of the coronavirus swept across Europe, and many countries rushed to impose tighter restrictions on business and social life.

IHS Markit’s Purchase Managers Index (PMI) Composite Output Index came in at a six-month low of 45.1 in November, down from 50.0 in October. Its Flash Eurozone Services PMI was 41.3, from 46.9 in October, also at a six-month low. The Eurozone Manufacturing PMI Output Index showed 55.5, from 58.4 in October.

Any reading above 50 signals growth.

Additional reporting by LaToya Harding, Jill Petzinger, Tom Belger, and Lucy Harley-McKeown.

Watch: Why UK tax hikes may seem inevitable