£32bn wiped off FTSE but airlines on rise
IN A grim day on the stock market, Easyjet and British Airwaysowner IAG offered a glimmer of light for London shares.
The airlines made gains after the Government announced that UK residents who have had both Covid vaccinations will not need to quarantine on their return to England from countries on the ‘amber’ list from July 19.
Crucially, this category includes the US – offering hope that BA might see an uptick in people booking transatlantic holidays.
But hopes that the travel industry could see a modest rebound this summer after all were marred by a washout day that wiped £32bn off the FTSE 100 and £5.8bn off the mid-cap index.
The Footsie dipped below the psychological milestone of 7,000 for a short time in its worst day for three weeks.
But it managed to recoup enough points by the close to finish at 7030.66, down 1.7pc, or 120.36 points on Wednesday’s close. The FTSE 250 fell 1.4pc, or 317.52 points, to 22652.72.
AJ Bell financial analyst Danni
Hewson said the slump came down to one thing: fear.
Hewson said: ‘Global markets have chosen today to price in the dawning realisation that Covid isn’t nearly done damaging lives and economies.
‘Case numbers are rising and it doesn’t matter how loudly politicians shout about “recovery” and relaxation of restrictions, there is a very real possibility that living with this disease will require a few more U-turns.’
US markets also suffered, with the three major indexes – the Dow Jones, Nasdaq and S&P 500 – trading lower as cases of the Delta variant first seen in India began to surge. IAG was one of five companies (if you count both listings of
Shell, up 0.3pc, or 4.4p, to 1424.8p) to rise on the Footsie leaderboard.
The Iberia and Aer Lingus owner closed up 0.3pc, or 0.56p, to 181.36p, while FTSE 250-listed Easyjet rose 1.3pc, or 12p, to 917p.
Although virtually all airlines and travel providers hailed the Government’s change in ‘amber’ list rules, some investors were less optimistic. Jet 2 plunged 4.9pc, or 61p, to 1177p after it posted a £373m full-year loss and warned it was tricky to make any financial predictions because people have been booking holidays closer and closer to take-off to minimise the risk of cancellations.
This could improve from July 19 – but it also said winter bookings were only ‘satisfactory’ as tourists worried about winter lockdowns.
WH Smith closed lower despite reporting business had picked up slightly faster than expected in the 18 weeks to July 3 because North America has been reopening following the pandemic.
The retailer (down 1.6pc, or 27p, to 1622.5p) has been buoyed for years by its shops in train stations and airports – which have seen trading hammered during the pandemic. People may not be booking holidays like they used to but, according to Watches of Switzerland, the ultra-wealthy have found another place to put all the cash they saved during lockdowns.
The UK’s biggest seller of Rolex and Tag Heuer watches mapped out a five-year expansion plan that includes moving into Europe for the first time as it said demand for luxury timepieces was soaring.
Profits skyrocketed to £64m in the year to May 2, up from £1.5m last year, despite shops being shuttered for much of the 12month period. Shares climbed 1.2pc, or 10p, to 865p.
Budget retailer B&M (down 5pc, or 29p, to 548.6p), on the other hand, has seen sales slow rapidly as the economy is reopening.
It has tough comparators for last year, when it was one of the ‘lockdown winners’ that benefited from being able to keep its stores open and a rush to buy patio furniture during the coinciding heatwave. Group sales rose 3.1pc in the 13 weeks to June 25 compared with a 21.3pc jump last year.