Friday, July 10, 2020

Airbus Dips as H1 Deliveries Slide to 16-Year Low

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News shaping
the markets today

     

What’s happening: Shares of Airbus plummeted 4% on Thursday after the European aircraft maker’s deliveries for the first half of the year tumbled to a 16-year low.

What happened: The covid-19 pandemic has caused widespread devastation in the global aviation industry, forcing carriers to ground most of their flights.

Travel restrictions by countries around the world and the closing of facilities have forced Airbus to halt production and layoff 11% of its workforce. The France-based company expects its business to be under severe pressure over the next couple of years.

Why it matters: Airbus announced numbers of its aircraft orders and deliveries for the first half of 2020. Deliveries rebounded 50% in June, from May’s lows, and climbed to their highest level since the coronavirus outbreak in Europe in March. Despite this, June’s growth rate proved insufficient to prevent the H1 deliveries from tumbling to a 16-year low.

Deliveries climbed to 36 planes in June, from 24 in May and 14 in April. However, for the first half of 2020, deliveries were down by 49% to 196 aircraft, from 389 planes a year ago.

Airbus recorded zero orders for a second consecutive month as airlines struggle to survive the covid-19 onslaught. Gross orders remained at 365 jets this year, while net orders (excluding cancellations) declined to 298.

The aircraft giant had announced plans last week to eliminate 15,000 jobs after cutting build rates in April due to the coronavirus crisis, which led to a worker strike for the first time in around 12 years.

Management also projected an average decline in its business of a whopping 40% over the next two years.

What to watch: With some rebound in June deliveries following some recovery in travel demand, investors expect the aircraft maker’s business to recuperate through the rest of the year. Airbus is unlikely to return to normal growth in a hurry. Shares of the Toulouse, France-based company have declined 50% this year and most analysts consider the stock highly undervalued and have “Buy” ratings.

The Markets Today

     

The Canadian dollar will be in focus today, ahead of employment data from the country.

Context: The loonie retreated versus the US dollar on Thursday, after surging to a two-week high initially in the session.

Details: The loonie initially spiked against the greenback as the market tone remained positive after the US released stronger-than-expected data on initial jobless claims. Although 1.31 million people filed for jobless benefits last week, this was much lower than the expectations of 1.375 million.

The USD/CAD forex pair managed to recover later in the session as the greenback gained ground versus a basket of major currencies with crude oil also coming under pressure.

The mood of the market changed later as investor focus shifted to the rising covid-19 cases in the US, with more than 60,000 new infections on Wednesday. Renewed concerns over a potential lockdown pushed investors towards safe-haven options, supporting the US dollar.

Meanwhile, Canada’s finance department projected the country’s budget gap to reach C$343.2 billion in fiscal 2020-21. This will be Canada’s largest deficit since World War II.

The Canadian dollar also came under pressure after WTI crude oil declined below the $40 level on Thursday, as crude is one of Canada’s main exports.

The USD/CAD closed at $1.3586 on Thursday, with the forex pair rising by 0.3% to $1.3631 during the European session.

What to watch: Investors await employment change and unemployment rate data from Canada. The Canadian economy is expected to add 700,000 jobs in June, versus 290,000 jobs in May. The unemployment rate, which increased to 13.7% in May, is projected to decline to 12% in June.

Markets will continue to assess the coronavirus figures, with total cases surging to 12,270,170 globally.

Other Markets: European indices were trading lower at 8:30am GMT, with the FTSE 100, French 40 and Dax 30 index down by 0.7%, 0.7% and 0.5%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

India’s foreign exchange reserves, industrial production and manufacturing production as well as the US producer prices and Baker Hughes crude oil rigs.