The dividend nail
Fiona Cincotta April 1, 2020 10:15 AM
Banking stocks are attracting by far the highest volume on the FTSE this morning after stopping or delaying their dividends.
Banking stocks are attracting by far the highest volume on the FTSE this morning, as they do most mornings, but today the volume is about 50% higher after banks decided to stop or delay dividend payments in order to preserve cash to handle the crisis. The volume in Lloyds shares has nearly doubled as the bank lost 6% in value, and Barclays, HSBC and Royal Bank of Scotland are following in short succession.
Barclays bank may be one to watch the most closely as the bank is already trading ex-dividend. It was due to pay out shareholders on Friday.
The merciless flow of negative coronavirus news is also eroding the rest of the FTSE 100-listed firms. Even supermarkets like Tesco are clocking significant losses now that the early panic buying has turned from a flood into a trickle.
Carnival’s bold bond plan lifts stock
The only stock still trading in the black is cruise operator Carnival after the company made a bold decision to raise $3bn in three year bonds in order to keep afloat. Although the US and the UK offer fairly substantial rescue packages to companies who have been hit as badly by the coronavirus as Carnival – the Diamond Princess was quarantined off the coast of Japan shortly after the outbreak of the virus in China – the cruise operator will fall through the administrative cracks as it is incorporated in Panama.
Brent drops on supply data
Now we have it in black and white. Saudi Arabia’s promise to pump more oil because of a disagreement with Russia over trying to control declining oil prices has materialised in March and the country together with other United Arab Emirates produced an additional 90,000 bbl of oil a day. With this additional production - which is also likely to be matched by Russia - it will be difficult for oil prices to move any higher from current levels while the coronavirus is in full swing.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.