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What to Watch: Primark to reopen stores, grim UK and EU PMI data, Amigo faces probe

Tom Belger
·Finance and policy reporter
·4-min read
File photo dated 13/3/2020 of people in masks outside a Primark in Oxford Street in London. The owner of budget fashion firm Primark has said 68,000 staff have been furloughed across Europe amid the coronavirus lockdown as it revealed a �248 million hit for unsold stock as all its stores remain shut.
Primark has laid out its reopening plans. (PA)

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

Primark to reopen stores in England as lockdown eases

Shares jumped in Primark owner Associated British Foods (ABF.L) as the cheap fashion retailer announced plans to re-open its stores in England on 15 June.

‘Non-essential’ retail in England will be allowed to resume trading from that date, while car showrooms and outdoor markets were allowed to reopen today (1 June).

The company’s stocks were trading 7.5% higher in early trading on Monday. It said Primark was currently trading in 112 stores worldwide, representing just a third of its total retail space.

“Primark is now working to re-open all its stores in England on 15 June, following the recent announcement by the UK government,” it said in a statement. It said it was awaiting “further guidance” but anticipated opening in late June in the rest of the UK.

It predicted only around 10-20% of its sales could be in some way affected by social distancing rules, largely affecting only its busiest stores and average stores only at peak trading times.

UK factories ‘mired in deepest downturn in recent memory’

The UK manufacturing sector remained “mired in its deepest downturn in recent memory” in May, as the coronavirus crisis continued to dent output, new orders, and employment.

A closely watched survey by IHS Markit found that the sector’s purchasing managers’ index reading came in at 40.7, its seventh-lowest level ever.

The figure, up from a record low of 32.6 in April, indicates that the rate of collapse within the sector is nonetheless slowing.

PMIs are an indicator of private sector activity and are given on a scale of 1 to 100. Anything above 50 signals growth, while anything below means contraction.

Subprime lender Amigo faces watchdog investigation

Guarantor lender Amigo Loans (AMGO.L) is being investigated by the Financial Conduct Authority (FCA), the company said on Monday, as an increasingly messy dispute between the company’s board and founder continues to escalate.

Amigo said in a brief statement that the FCA last week opened a probe into “whether or not Amigo's creditworthiness assessment process, and the governance and oversight of this, was compliant with regulatory requirements.” The investigation covers lending from late 2018 to date. The FCA declined to comment.

Amigo is a subprime lender that gives people with poor credit ratings personal loans as long as they have a guarantor — a friend or family member who agrees to make repayments on their behalf if they can’t pay and fall behind.

Ted Baker raises £95m to survive crisis

Struggling fashion brand Ted Baker (TED.L) is raising £95m from investors to help it “navigate through the COVID-19 disruption and invest in its future”.

Ted Baker said on Monday it was seeking to raise at least £95m by selling new shares at a steep discount. The company will offer shares at 75p each, compared to Friday’s closing price of £1.58.

The proceeds of the new share issue, plus funds from the sale of Ted Baker’s headquarters, will be used to help pay down debt, invest in online, and fund working capital. Ted Baker’s stock dropped as much as 15% on the updates. The share price was down 8.7% by 9.50am UK time on Monday.

Markets rebound despite US unrest as fears ease over China tensions

European stock markets rebounded on Monday as fears eased over US-China tensions, despite the wave of unrest sweeping the US.

Expectations of a new round of bond-buying by the European Central Bank as it meets this week and reports of plans for new stimulus in Germany also lifted investors’ mood in Europe. The German newspaper Bild am Sonntag reported the government was working on a package worth up to €80bn (£72bn, $89bn).

The FTSE in London was trading 1.4% higher (^FTSE) and France’s CAC 40 (^FCHI) was up 1.5% in early trading. Markets were closed for a public holiday in Germany.

It came after Asian stocks hit a three-month high on green shoots in Chinese economic data and US president Donald Trump’s threats to China proving less severe than anticipated. Hong Kong’s Hang Seng index (^HSI) jumped 3.4% overnight, while China’s Shanghai Composite (000001.SS) rose 2.2% and Japan’s Nikkei 225 index (^N225) rose 0.8%.

US stocks also looked set to open slightly higher, with S&P 500 futures (ES=F) up 0.2%, Dow Jones futures (YM=F) up 0.4% and Nasdaq futures (NQ=F) flat. The stock rebound came in spite of a wave of protests and rioting in the US over the death of George Floyd.