FTSE 100 selloff pauses despite Donald Trump Covid-19 election struggles as Standard Chartered joins HSBC in flagging return to dividend payments

·3-min read
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Banking giant Standard Chartered today gave some support to the embattled FTSE 100 of leading shares after its strong profits led it to say it would consider resuming dividend payouts.

The index crashed yesterday alongside all global markets as the Covid-19 infection figures rose and lockdowns spread across Europe.

Germany's new restrictions particularly shocked investors, leading to the Dax index falling harder than others.

US stocks fell even further as Covid cases surged in the Midwest - seen as crucial battlegrounds in the election. Markets are likely to surge if Donald Trump wins next week.

However, the pace of the falls was likely to ease today as bargain hunters come into the market, possibly picking up shares in the banking sector, where dividends were put on pause at regulators' insistence early on in the pandemic.

Standard Chartered today reported better-than-expected profits of $745 million for the third quarter and said its provisions for losses on bad loans were lower than most analysts had expected. Standard Chartered is largely focused on Asia, where, chief executive Bill Winters said, markets were starting to come out of recession. The bank's strong capital position meant it would consider resuming dividend payments to shareholders.

The bank's shares have fallen 45% over the past year but were likely to rise today.

Asian stocks generally put the brakes on the wave of selling from yesterday, triggering hopes European shares would stage a bounceback. The FTSE 100 was expected to open flat, or down one point at 5581 with the Dax gaining 43 to 11,603 and the Dow Jones Industrial Average up 286 at 26,805 according to trading figures from the London Capital Group platform.

There was little else to cheer on financial markets as Covid-19 infections spread rapidly, with the UK's rate of infection - the R number - estimated at 1.6 despite the UK's efforts to keep it below 1. Little wonder data from restructuring experts Begbies Traynor found more than half a million companies were in "significant distress" in the three months to September

However, it was not all bad news. The Pfizer-backed vaccine could be ready to distribute before Christmas, the drugmaker's chief executive Albert Boula said, in what could be a gamechanger for the global economy. The UK has bought doses for 20 million people.

In the meantime, LCG's Jasper Lawler said, lockdowns have rendered the current company earnings season "obsolete."

"Expectations were so low going into Q3 results season that companies have beaten estimates by the widest margin in history. But those record beats can just be thrown in the rubbish bin if new lockdown restuctions mean the results cannot be extrapolated into Q4 and 2021."

Later today will provide the third quarter GDP figures from the US and an interest rate decision from the Bank of Japan. Profit figures tonight from Apple, Amazon, Alphabet and Facebook will be key to how markets finish the week tomorrow.

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