Markets end August in red as travel stocks drop
TRADERS slowly lost heart as they logged back on from the bank holiday weekend on Tuesday amid a slowdown in the Chinese services sector and the continued fallout of last week’s news.
Travel companies were among the worst-hit firms on the day. Wizz Air sat at the bottom of the FTSE 250 for a time, while British Airways owner IAG ended in the
FTSE 100’s bottom three. A little bit further up, shares in aeroplane engine-maker Rollsroyce dropped by 1.6%.
It helped push the top index down by 0.4%, or 28 points to 7,119.7.
Other losers included retailers including B&M,
Sainsbury’s and Ocado. The index has started more or less flat, as London’s traders did not look too troubled by the data out of China. The country’s service sector has contracted for the first time in 18 months as the Delta variant of Covid-19 hit the economy.
“The month is ending with weakness for European markets, with US markets also running out of upward momentum for the time being. Undoubtedly monthend rebalancing will get the blame, and a low reading on US consumer confidence will also be in the frame for why Wall Street is down,” said Chris Beauchamp, chief market analyst at IG.
“Value stocks have been hit across the FTSE 100 today, with banks down as UK stocks play catch-up with [Jerome] Powell’s speech on
Friday and travel stocks remain in the red as investors fret about the outlook for the next few months.
“Hopefully, US jobs data this week will give equities a lift, allaying fears that the global economy is hitting a rough patch, and while the inflation story has not entirely disappeared, it looks like the main takeaway from Jackson Hole [where Jerome Powell made his speech] is that the Fed continues to err on the side of caution.”
In the US both the S&P 500 and the Dow Jones were trading flat as markets prepared to close in Europe.
The German Dax index closed down 0.3%, while the Cac 40 in Paris dropped 0.1%. Sterling was down less than
0.1% against the dollar and the euro. At the end of the day one pound could buy 1.3756 dollars or 1.1653 euros.
Ryanair said that it would launch another 14 routes
from London airport this winter, flying to several European countries. Shares closed down 2.8% amid a wider sell-off in travel stocks.
Bunzl also saw a drop in its share price, after it warned investors that it is facing supply chain issues in many major markets. In the UK there are both materials and labour shortages to contend with, Bunzl said. Its shares dropped 1.6%.
Glaxosmithkline saw a 0.9% drop in its share price as it started a Phase 3 trial of its Covid-19 vaccine work with South Korea’s SK Bioscience. They hope to start supplying the vaccine in the first half of next year.
The biggest risers on the FTSE 100 were Weir Group, up 64p to 1,751.5p, Ferguson, up 280p to 10,505p, Just Eat Takeaway.com, up 152p to 6,559p, Persimmon, up 49p to 2,940p, and Ashtead, up 76p to 5,690p.