What to watch: EasyJet and Carnival drop out of FTSE 100, ECB in focus, and car companies cut jobs

Airline easyJet has introduced new safety and wellbeing measures for customers and crew, which includes enhanced aircraft cleaning and a requirement for passengers and crew to wear face masks when travelling, at Gatwick Airport. (PA)

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

EasyJet and Carnival drop out of FTSE 100

EasyJet (EZJ.L), cruise operator Carnival (CCL.L), and British Gas-owner Centrica (CNA.L) have all officially been relegated from the FTSE 100 to the FTSE 250.

The quarterly index reshuffle took effect on Thursday, confirming that the heavyweight stocks had been downgraded following a bruising period. Engineering firm Meggitt (MGGT.L) was also relegated.

EasyJet and Carnival have been battered by the COVID-19 pandemic, which has brought international travel to a halt and devastated holiday stocks as a result.

Centrica, meanwhile, has been struggling with customer losses at British Gas and plummeting oil prices.

Meanwhile, B&Q-owner Kingfisher (KGF.L), Ladbrokes owner GVC Holdings (GVC.L), boiler fixing service Homeserve (HSV.L), and cyber security company Avast (AVST.L) have all been promoted to the FTSE 100.

ECB in focus

The European Central Bank (ECB) is set to publish its latest interest rate and policy decisions later on Thursday, with the market expecting hundreds of billions of euros of additional stimulus spending.

The ECB is widely expected to announce an expansion of its COVID-19 support package. Deutsche Bank forecasts a doubling of the Pandemic Emergency Purchase Programme (PEPP) to €1.5tn (£1.3tn, $1.7tn) and an extension of the minimum net asset purchase period until mid-2021. 

“The general consensus is that while interest rates will be left on hold, the ECB will increase the current program by another €500-€750bn, as well as extending the horizon of the current program beyond October, with the latest macro-economic projections likely to make for grim reading,” said Michael Hewson, chief market analyst at CMC Markets.

The ECB interest rate decision is due at 12.45pm UK time with a press conference following at 1.30pm.

Stocks slip ahead of ECB, US jobless numbers

Stocks slipped ahead of the ECB meeting.

The FTSE 100 (^FTSE) opened down 0.4%, the DAX (^GDAXI) slipped by 0.7%, and the CAC 40 (^FCHI) fell 0.5%.

“Equity markets are in a mild phase of consolidation ahead of the ECB meeting,” said Sebastien Galy, a senior macro strategist at Norwegian bank Nordea.

“We expect a bit of volatility around the ECB announcement but a positive development for credit, which should feed into the European stocks especially financials for the periphery.”

US futures were pointing to a lower open later today in New York. S&P 500 futures (ES=F) were down 0.3%, Dow Jones futures (YM=F) were 0.2% lower, and Nasdaq futures (NQ=F) were off 0.1%.

The latest US jobless claim numbers are due this afternoon. Economists are expecting the data will show a further 1.8m Americans registered for unemployment benefits over the last week.

Overnight in Asia, Japan’s Nikkei (^N225) rose 0.3%, while the Hong Kong Hang Seng (^HSI) slipped 0.2% and the Shanghai Composite (000001.SS) closed down 0.1%.

Car companies cut jobs

Car manufacturer Aston Martin (AML.L) and dealership Lookers (LOOK.L) have both announced job cuts amid a slump in demand for vehicles.

Aston Martin said on Thursday it was starting consultations on cutting 500 jobs as part of plans to save £10m in costs. It comes shortly after the arrival of a new chief executive who is hoping to turnaround the struggling business.

Lookers, meanwhile, said it was cutting 1,500 jobs and closing 12 dealerships in a bid to save £50m a year. Looker said the cuts were “necessary in the current environment to sustain and protect” the business.

News of the redundancies came as new data pointed to a historic slump in car sales. Data from the Society of Motor Manufacturers and Traders (SMMT) showed new car sales fell by 89% in May, with just 20,247 new cars registered last month. Sales are down 50% so far this year.

Shares in Aston Martin dropped by 9.5% on the news, while Lookers rose 10%.

Construction slump eases

The sustained downturn in activity in the UK’s construction sector due to the coronavirus pandemic eased last month, as firms gradually reopened construction sites across the country.

A closely watched survey by IHS Markit found that the sector’s purchasing managers’ index reading came in at 28.9 in May, the second-lowest since the financial crisis.

The figure, up from 8.2 in April, nonetheless indicates that the rate of collapse within the sector is slowing.

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LVMH pauses Tiffany’s deal

Luxury fashion conglomerate LVMH (MC.PA) on Thursday indicated that it was hitting the brakes on its $16.2bn (£13.1bn) takeover of famed US jeweller Tiffany and Co (TIF), noting that it was “not considering buying Tiffany shares on the market.”

The statement comes after fashion trade publication WWD reported that the board of LVMH — the parent of brands like Louis Vuitton, Christian Dior, and Givenchy — had raised concerns about the deal amid the coronavirus pandemic and the civil unrest in the US in the wake of George Floyd's death.

Citing “recent market rumors,” LVMH on Thursday seemed to confirm uncertainty about the deal, which was originally announced in November.