The FTSE 100 was down 34.60 points at 6094.18 this morning after Shell and Lloyds both posted disappointing results.
Lloyds set aside a further £2.4 billion in its second quarter to cover the cost of loans it thinks could turn bad as a result of the coronavirus crisis.
The impairment charge is £1 billion more than analysts had expected and pushed the bank to a loss of £602 million for the first half of the financial year. The first half loss compared with pretax profits of £2.9 billion last year.
Meanwhile oil giant Shell has taken a giant £14.2 billion loss in the second quarter of the year, after writing down the value of its reserves.
The company is a bellwether for the global economy. Oil prices remain steady near $41 per barrel even with the announcement of a surprise 10 million barrel slump in US oil inventories last week.
There was little to cheer as Standard Chartered posted losses. The bank’s earnings fell in the second quarter as the bank suffered heavy credit impairment charges and announced redundancies amid the coronavirus pandemic.
Pre-tax profits at the emerging markets-focused lender fell 40% on year during the period to $733 million.
Germany’s economy is expected to contract by 9% while some analysts have penned a 34.5% decline for the US.
Michael Hewson, analyst at CMC Markets, said: “In times such as these, the use of adjectives like unprecedented has become an almost daily event, however the use of it doesn’t change the fact that trying to determine the economic damage caused by the virus can’t really be estimated by calculations on a spreadsheet, given the knock-on effects it continues to have on human behaviour now as well as future economic activity over the next few quarters.”
You can find our Community Guidelines in full
Lloyds Bank, Lloyds Banking Group, Coronavirus, Finance
World news – GB – FTSE 100: Shares in the red as Lloyds and Shell post steep losses