What to watch: ECB meeting, WPP falls to a loss, and Rolls-Royce loses £4bn

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·5 min read
Former ECB headquarter in the city center of Frankfurt am Main, win estern Germany. Photo: Yann Schreeiber/AFP via Getty Images
Former ECB headquarter in the city center of Frankfurt am Main, win estern Germany. Photo: Yann Schreeiber/AFP via Getty Images

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

ECB meeting

All eyes will be on the European Central Bank (ECB) this lunchtime as its governing council delivers its latest verdict on monetary policy.

The ECB is expected to leave interest rates and policy instruments unchanged but investors will be listening closely to a press conference after the initial announcement. Financiers are looking for more clarity on the ECB's approach to rising government bond yields and how that will impact the central bank's policy.

"Maintaining loose financial conditions will be the crux of today's meeting," said Tim Vollans of Macrodesiac.

"Nothing has excessively changed (taking a broad perspective) but the speed of the rise in yields has led to hyper-vigilance and an awareness that things could change.

"The ECB will want to push back against further increases in long-end yields and the press conference questions will probably focus on this point."

ECB staff will also publish their latest projections for eurozone growth, which could show upgrades to expectations.

The euro was up 0.2% against the pound (GBPEUR=X) and up 0.3% against the dollar (EURUSD=X) ahead of the announcements.

WPP falls to a loss

Advertising giant WPP (WPP.L) has slumped to an annual loss after COVID-19 hit revenues.

WPP reported a pre-tax loss of £2.7bn last year, compared to a profit of £1.2bn in 2019. Revenue fell 9% to £12bn.

"2020 was a tough year for everyone, including our people who faced the personal and professional challenges of COVID-19," chief executive Mark Read said in a statement.

"WPP's performance has been remarkably resilient, thanks to these efforts and the demonstrable value of what we do for our clients. While revenue was significantly impacted as clients reduced spending, our performance exceeded our own expectations and those of the market throughout the year."

Shares rose half a percent.

Rolls-Royce loses £4bn

Engineering giant Rolls-Royce (RR.L) has posted a mammoth £4bn ($5.6bn) loss for 2020 after the COVID-19 pandemic devastated its aviation business.

Rolls-Royce, which makes and services engines for aeroplanes, said it made an underlying loss of £3.95bn last year as revenue dropped by almost a third to £11.7bn. The company recorded a loss of £3.1bn on a reported basis and made an operating loss of £2.1bn.

Chief executive Warren East said 2020 was "an unprecedented year" and the impact of COVID-19 was "felt most acutely by our Civil Aerospace business." The grounding of planes around the world led to plummeting demand for both new engines and the servicing of existing ones, which is where Rolls-Royce makes most of its money.

Despite the large annual loss, revenue was slightly ahead of City forecasts and analysts were buoyed by the forecast of a return to free cash flow. Shares rose over 3% to top the FTSE 100 (^FTSE).

Morrisons counts COVID costs

Supermarket Morrisons (MRW.L) revealed in its preliminary results that it will incur £290m ($404.6m) of COVID-19 related costs.

Morrisons posted profit before tax and exceptional items of £201m, compared with analysts' average forecast of £200m and £408m made in 2019-20. While its like-for-like sales rose 8.6% over the year, direct pandemic costs of £290m cratered its profit.

John Lewis loses half a billion

UK high street retailer John Lewis has warned it may have to close more stores as it reported a record loss of £517m ($721m) on Thursday.

The company said high street store closures due to pandemic restrictions, along with restructuring and redundancy costs, means it is considering shutting down more stores permanently in 2021.

The company, which runs as a partnership, giving each employee part-ownership of the firm, recorded a loss before tax of £517m in 2020, down from a profit before tax of £146m in 2019.

Chairman Sharon White said that “regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain. We are currently in discussions with landlords and final decisions are expected by the end of March.”

WATCH: Markets one year after COVID pandemic was declared

Markets quiet ahead of ECB

European stocks opened higher ahead of the latest European Central Bank (ECB) policy meeting later today.

France's CAC 40 (^FCHI) opened up 0.2% on Thursday, Italy's FTSE MIB (FTSEMIB.MI) jumped 0.9% in Milan and the IBEX (^IBEX) gained 0.5% in Spain. The DAX (^GDAXI) was down 0.1% in Germany.

The FTSE 100 (^FTSE) rose 0.1% in London. Mining stocks rallied in early trade after a sell-off on Wednesday.

Futures were pointing to a higher open on Wall Street later today. S&P 500 futures (ES=F) were up 0.7%, Dow Jones futures (YM=F) were 0.3% higher and Nasdaq futures (NQ=F) were up 1.8%.

Asian markets rallied overnight. Japan's Nikkei (^N225) rose 0.6%, the Hong Kong Hang Seng (^HSI) rallied 1.4%, and the Shanghai Composite (000001.SS) gained 2.4%. South Korea's KOSPI (^KS11) rose 1.8%.

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