FTSE 100 on the rise; easyJet plc benefits from holiday booking rush
- FTSE 100 up 54 points
- easyJet sees bookings to amber list destinations rocket 400%
- UK GDP data misses forecast
9.40am: easyJet benefits from holiday booking rush
The FTSE 100 continued its rise in mid-morning, jumping 54 points to 7,085.
Britons are rushing to book their summer holidays after the government scrapped quarantine from amber destinations for UK residents who have been fully vaccinated.
easyJet PLC () was up 3% to 940p after revealing that bookings to these areas rocketed 400%, the BBC reported.
“While this is arguably the biggest reduction in the UK’s international travel barriers, there remain obstacles from ongoing restrictions on UK residents entering many countries worldwide,” analysts at broker Liberum commented.
“Assuming the UK policy changes are not reversed, and are largely reciprocated by other countries, UK-exposed airlines are likely to have a reasonable opportunity to generate some cash for a short period this summer.”
8.35am: FTSE 100 takes GDP miss and Wall Street wobble in its stride to open firmly higher
The FTSE 100 opened firmly in positive territory with traders willing to overlook a slight undershoot from the monthly gross domestic product data.
Output grew by just 0.8% in May and at a slower pace than April as bottlenecks offset a rebound for the hospitality sector. It means the economy is still 3.1% smaller than it was just prior to the pandemic.
Still, Richard Hunter, head of markets at Interactive Investor, was unperturbed by this latest blip.
“Quite apart from the benefits of freedom day, the elevated level of savings in the UK means that consumers have the financial firepower to spend,” he noted.
“In addition, and despite the easing of restrictions on overseas travel, many will already have staycations booked in the UK which should provide a further boost to the domestic economy.”
Certainly, the stock market took the latest data in its stride with concerns more centred on the outlook for inflation and monetary policy than the month-to-month growth trajectory.
The price-setters took a more bullish view on the travel sector than they had earlier in the week, marking British Airways owner IAG () 2.5% higher in the opening exchanges. easyJet advanced 2.6%.
Vectura () was up 13% after American cigarette maker Philip Morris counterbid for the inhaler specialist.
6.50 am: FTSE 100 set for a firmer start
UK stocks are set to open modestly firmer ahead of the release of gross domestic product (GDP) data.
Spread betting quotes indicate the FTSE 100 will open 16 points firmer at 7,047 despite a shake-out yesterday on Wall Street.
“While there are legitimate concerns about rising Delta variant infection rates across the globe, the UK economy still appears on course for the next stage of its reopening process on the 19th July despite similarly rising rates.
“What’s different in the case of the UK is lower hospitalisation rates, and though that could change, for now, the recovery looks good,” said CMC’s Michael Hewson.
US markets took a bath yesterday but were well off their worst levels by the close. The Dow tumbled 260 points to 24,422 and the S&P 500 shed 37 points at 4,321.
In Asia this morning, the Nikkei 225 is down 508 points at 27,610 in Japan but in Hong Kong, the Hang Seng is 178 points firmer at 27,331.
Today in London will see a trading statement from (), a fact that would not normally get highlighted but the stock is a market curiosity at the moment having recently seen off several bid approaches from private equity group Lone Star.
As such, the announcement is likely to be long on optimism and hints of better times to come but investors will have to wait until 2 August for a full market and strategy update.
On the macroeconomic front, the May GDP update will give a clue as to “how the UK economy has been playing catchup after a poor start to the year, as the January lockdown and the Brexit transition period came to an end,” according to CMC’s Michael Hewson.
“The latest UK economic data continues to point to a robust rebound as restrictions slowly get relaxed, with today’s focus on the latest industrial and manufacturing production data for May. These numbers are expected to reinforce this economic resilience if recent PMI data is any guide, though in the case of the April PMI’s the ONS numbers told a very different story.
“We saw big declines in both manufacturing and industrial production of -0.3% and -1.3% respectively, in April, largely as a result of plant closures and a slip in mining and quarrying, while manufacturing slowed due to weakness in the pharmaceuticals sector. Construction activity also slowed, falling 2%, though this needs to be put into the context of a big 5.8% rise in March.
“Despite this weakness, the May numbers are expected to be much better with gains expected for both, with recent industry surveys showing output at record levels. Industrial production is expected to rebound by 1.4% and manufacturing by 1%,” Hewson added.
Around the markets
- Sterling: US$1.3777, -0.11 cents
- 10-year gilt: 0.613%, +1.02 bps
- Gold: US$1,801.20 an ounce, up US$1.00
- Brent crude: US$74.22 a barrel, up 10 cents
- Bitcoin: US$33,100, up US$312
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly lower on Friday as Olympics organisers banned spectators from the upcoming summer games in Tokyo, after a state of emergency was declared in the city due to rising COVID-19 cases.
In Japan, the Nikkei 225 fell 0.68% and South Korea’s Kospi slumped 1.25%.
The Shanghai Composite in China fell 0.11% while Hong Kong’s Hang Seng index rose 1.06%
Shares in Australia declined, with the S&P/ASX 200 trading 1.32% lower.
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