Travel firms flounder as more virus curbs loom
Travel stocks suffered another torrid day as fresh worries about coronavirus sent stock markets around the world into a tailspin.
British airways owner IAG was the biggest faller on the FTSe 100 as its shares dived 3.4pc, or 5.35p, to 151.6p amid fears that tighter travel restrictions are on the way to stop the spread of Covid-19.
On the FTSe 250, holiday firm Tui was down 16.7pc, or 70.6p, to 352p while Easyjet traded down 3.3pc, or 26.6p, at 780.6p.
With summer holidays under threat, the sell-off was echoed on the Continent as German airline lufthansa fell 2.7pc and air France KlM dropped 2.5pc.
Travellers around the world are facing tough new rules that mean they must take a Covid test before departure and undergo a period of quarantine on arrival. Speculation is mounting that the UK may close its borders altogether.
Hopes of an early end to lockdown are also fading despite the rollout of vaccines – sparking fears of a double- dip recession and delayed recovery. The FTSE 100 fell 0.3pc, or 20.35 points, to 6695.07 points, while the FTSE 250 was down 1pc, or 196.81 points, to 20596.91.
‘The FTSe 100 is drifting back towards the levels seen at the start of 2021 as any optimism over Brexit resolution and vaccine roll- out is swamped by the seemingly endless Covid-19 crisis,’ said aJ Bell investment director russ Mould.
‘The Prime Minister’s refusal to flatly rule out an extended lockdown, as rumours of a gradual reopening from May started to swirl, has knocked sentiment toward those firms that would benefit most from increased movement.’
Trainline fell 5pc, or 22.2p, to 425.8p while WH Smith, which has shops in train stations and airports across the country, was down 3.3pc, or 58p, to 1725p.
Shopping centre owner Hammerson – whose tenants are struggling to survive while their stores are closed – fell 6.2pc, or 1.35p, to 20.35p.
Oil stocks were also on the back foot – BP fell 1.1pc, or 3.35p, to 290p while Shell was down 1.3pc, or 17.2p, to 1359.6p – as worries that new pandemic restrictions in China will curb demand for fuel hit the price of crude. Brent fell 1.1pc to 55.56.
It wasn’t all doom and gloom, however, and IT provider Kainos lifted its full-year guidance after a decent end to 2020.
‘The continued momentum in our business has driven a strong trading performance and we therefore expect results for the year ending March 31, 2021 to be ahead of current market consensus expectations,’ the firm said.
Kainos said it was working on ‘several substantial, long-term engagements as part of the Government’s
digital transformation programme, including supporting the NHS as it responds to Covid19’. Shares soared 16.4pc, or 186p, to 1322p.
IT consultancy Computacenter was also bullish as it raised its profits forecasts – ‘in excess of £195m’ – for the third time in less than six months.
The company added: ‘The positive momentum we have seen in trading since the start of the pandemic shows no sign of abating.’ Shares fell 1pc, or 24p, to 2430p. Pharmaceuticals giant Glaxosmithkline was given a boost when the US Food and Drug administration (FDa) approved HIv drug Cabenuva, which reduces treatment doses from one a day to one a month. Shares rose 1.1pc, or 15.4p, at 1380.2p.
Investors were keeping a watchful eye on Diageo ahead of its update next week. The Smirnoff and Guinness owner is expected to reveal a 4.6pc sales slump, according to analysts.
Shares barely moved, just edging lower by 0.02pc, or 0.5p, to 2908.5p.