What to watch: Oil climbs ahead of OPEC+ meeting, Revolution Bars seeks £15m, and US unemployment rate in focus

The sun sets behind an idle pump jack near Karnes City, Texas. (Eric Gay/AP)
The sun sets behind an idle pump jack near Karnes City, Texas. (Eric Gay/AP)

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

Oil climbs ahead of OPEC+ meeting

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Oil prices climbed on Friday ahead of a meeting of OPEC+ members to discuss production.

Members of the oil cartel and allies including Russia are set to meet on Saturday to discuss their production plans in the coming months.

The group have slashed supply in May and June to try and support prices, which were in free-fall due to collapsing demand caused by the pandemic.

Analysts now expect the oil production nations to extend those supply cuts to July and potentially beyond to prevent a recovery for the ailing US shale oil market.

“The key question for oil markets is what price does OPEC+ (Saudi Arabia and Russia) want to support, to draw on bloated global inventories, maximize revenue, but not over-stimulate non-OPEC (US shale) production,” said Shin Kim, head of supply and production analytics at commodities house S&P Global Platts.

“All eyes are on the OPEC+ meeting. We expect an agreement to rollover current quotas (no reduction in cuts) through 3Q.”

Brent futures (BZ=F) were were trading 1.5% higher at $40.59 a barrel on Friday morning, while crude futures (CL=F) were up 1.1% to $37.82 per barrel.

Revolution Bars seeks £15m

Bar owner Revolution (RBG.L) is asking investors for £15m ($19m) to help it through the current COVID-19 crisis.

The company will use the funds to pay down debts and emerge from lockdown in “a position of strength” after shutting all 74 of its sites.

Revolution has also announced plans to delist from the London Stock Exchange’s main market in favour of a listing on its junior market AIM.

“The UK Government’s current guidance is that pubs and bars will be closed until at least July 4,” the. company said in a statement.

“Based upon this guidance, the board have assumed in their ‘base case’ scenario that the group will be able to reopen its estate in August 2020.

“The group will make some changes to its operating model, assuming current social distancing, and anticipates a gradual recovery in customer numbers.”

Shares plummeted 26%.

US unemployment rate in focus

Investors are focused on US unemployment figures, due at 12.30pm UK time, with little else of note in the economic calendar and few major corporate announcements.

“Today, attention will turn to the US jobs report for May, where we are once again expecting some historic milestones to be reached, albeit not in a good way,” said Jim Reid, a senior strategist at Deutsche Bank.

Deutsche Bank expects May’s US unemployment rate to reach 18.1%, which would be the highest since the Great Depression in the 1930s.

“It is worth noting that there are substantial risks around this, and indeed the data is still likely to be messy when it comes to how to classify those affected by the coronavirus,” Reid wrote in a note to clients.

“Last month’s report saw the Bureau of Labour Statistics note that many workers had been classified as employed but ‘not at work for other reasons’, when they probably should have been in the ‘unemployed on temporary layoff’ category. So that could affect where the numbers come out.”

Non-farm payroll numbers will also be released alongside the jobs report. The non-farm data, a crucial measure of job creation in the US, is expected to show 8m jobs lost across the country over the last month.

Stocks rally

European stock markets opened higher on Friday, ahead of US unemployment figures.

The FTSE 100 (^FTSE) opened up 0.7%, while the DAX (^GDAXI) and the CAC 40 (^FCHI) both gained 1.2%.

The bounce back came after “profit taking” in Thursday’s session, according to Michael Hewson, chief market analyst at CMC Markets.

US futures were pointing to stronger open despite this. S&P 500 futures (ES=F) were up 0.7%, Dow Jones futures (YM=F) were up 0.9%, and Nasdaq futures (NQ=F) were up 0.5%.

While the unemployment rate is surging, investors have had good visibility of the spike through weekly new unemployment claims. The market has largely priced in the jump in jobless numbers and there is growing hope that the worst may be behind us.

“With certain sections of the US economy slowly reopening, there is a hope that we could start to see the unemployment rate start to plateau as more and more people return to work after being furloughed,” Hewson said.

Overnight in Asia, Japan’s Nikkei (^N225) rose 0.7%, the Hong Kong Hang Seng (^HSI) gained 0.9%, and China’s Shanghai Composite index (000001.SS) rose by 0.4%.

Online sales jump as overall spending and confidence fall

Two surveys released on Friday showed falling consumers spending and confidence, but online sales surging to a decade high.

BDO’s High Street Sales Tracker found a 129.5% increase in online shopping in May, the biggest jump since the company began its tracker in 2010.

However, while online orders jumped, BDO found overall consumer spending declined by 18.3% in May. That was the second biggest fall ever recorded, behind only the slump registered in April 2020.

A separate survey from market research firm GfK found consumer confidence had fallen by 2 points to -36 in the final week of May. It marks the lowest reading in over a decade and was close to the lowest level ever recorded by the survey.

UK house prices drop for third month

UK house prices fell for a third month in a row in May as the coronavirus continued to deter moves and dampen activity in Britain’s property market, new figures show.

The latest Halifax house price index shows a modest monthly drop of 0.2% to an average of £237,800 in May, with the pandemic sending a brief revival in prices after December’s election into reverse. Nationwide’s figures earlier this week had shown a steeper 1.7% drop, the fastest in a decade.

Prices on properties with Halifax mortgages were still up 2.6% last month compared to a year earlier however. They have not dropped recently as much as some estate agents say many buyers had hoped.

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