FTSE higher on mixed corporate news higher WTI prices

Mixed corporate news, a gradual reopening of more US states and countries across Europe and a 14% jump in WTI prices helped the FTSE open higher Wednesday. The day ahead will be one of the busiest for the US reporting season with Facebook, Tesla and Boeing all turning in their numbers.

Volatile trading helps offset bank loan losses

Following in the steps of other major European banks Barclays has announced a sharp increase in provisions for bad loans as it braces for a slew of retail and corporate defaults. Worryingly, first-quarter credit impairment charges rocketed up to £2.1bn, far above the £920m pegged by analysts. However, the bank still reported a profit of £605m as a massive increase in its trading revenue made up for some of the corona-induced losses.

A move by British Airways parent IAG showed a major weakness in the government-planned support scheme for businesses. Though there is significant cash available to help businesses hit by coronavirus to keep staff in the short term, the government may not be able to continue financing those firms for as long as it will take for them to recover. IAG is about to cut 12,000 jobs, after it already furloughed 22,000 staff earlier in April, arguing that the industry will take years rather than months to recover. Shares in IAG dropped 3.6% Wednesday bringing the total decline for this year to 65%.

WTI shoots up, Brent crude notches slightly higher

In what looks like a speculative move ahead of the release of the US stock data later Wednesday, WTI prices shot up over 14% to nearly $14/bbl overnight. Investors’ mood has been boosted by the much faster lifting of the lockdowns across the US states which was initially expected to take at least another two weeks rather than days after the White House published its guidelines for reopening. Brent crude is also notching higher but at a far less dramatic pace, although a similar process is taking place across Europe.