Panic selling hits firms caught by card fee ban

AIRLINES and food delivery firms took a beating after being singled out by the Government as the worst offenders for imposing ‘ripoff’ card charges on customers.

Takeaway firm Just Eat was headed for its worst daily drop since the start of the year, down by as much as 9.4pc in early trading, after the Treasury said card charges will be axed from January.

Card payments generated around 13pc of Just Eat’s revenue last year, coming in at 50p per transaction. However, the food delivery app pulled back losses throughout the day to finish down just 1.1pc, or 8p, at 707p. The firm’s main list rival, Domi

no’s Pizza, also fell by as much as 2.2pc in early trading, before settling down by 1.5pc, or 4.2p, at 280p. Airlines IAG, Ryanair, and

EasyJet all fell by between 1.5pc and 2pc after the sector was singled out by the Government, which said consumers paid £473m on card surcharges in 2010 alone.

IAG eventually closed down 0.3pc, or 2p, at 619p, while Ryanair fell 0.3pc, or €0.10, to €18.80, and EasyJet ended up rising 0.4pc, or 5p, to 1418p.

Analysts at Barclays said the market reaction to the news suggested investors had misinterpreted what the changes will mean for affected firms. The bank said that rather than losing cardprocessing fees, companies are more like to raise prices to cover any losses or add ‘generic administration fees’ to transactions.

The FTSE 100 rose 0.6pc, or 40.7 points, to 7430.91, following a strong day of trading.

Markets were buoyed by housebuilders after Liberum said it expects to see continued outperformance in the sector on the back of ‘surprising resilience’ against a challenging market backdrop.

Among the firms it highlighted were Bellway, which rose 2.5pc, or 76p, to 3118p, Galliford Try, up 4.7pc, or 59p, to 1328p, and Redrow, up 2.8pc, or 15.5p, to 578.5p.

Brokers were suitably wowed by construction firm Morgan Sindall after it issued a blinding unscheduled trading update. The firm saw shares hit an eight-year high after raising profits forecasts on the back of ‘much stronger than previously expected’ performance in its office fitting division.

It added that the size and quality of its order book for the division indicates the outperformance will continue for the rest of the year. With ‘modest’ performance also coming from its property services and investments divisions, Morgan Sindall expects profits to hit around £23.5m in the first half of 2017 – year- on-year growth of around 45pc.

With the results coming just one week after sector leader Carillion saw shares dive by more than 70pc in two days on the back of a profit warning, the ‘buy’ ratings for Morgan Sindall came flowing.

‘When we awoke to another unscheduled trading update in the UK construction sector, our hearts sank,’ wrote analysts at Jefferies. ‘However, our fears were unfounded. After recent events in the sector, strong performance is something to write home about.’

Analysts at Liberum added that the results showed ‘Carillion is playing catch up rather than leading the pack down,’ and said there is further scope for upgrades at Morgan Sindall this year. Shares rose 4.5pc, or 55p, to 1275p.

Wizz Air defied general weakness in the airline sector to rise 3.2pc, or 83p, to 2671p, after reporting a record 50pc growth in profits over the second quarter.

It also announced the promotion of financial planning head Iain Wetherall to finance boss – a move which Panmure Gordon described as ‘reassuring’ as it reiterated its ‘buy’ rating.