LONDON MARKET OPEN: Travel Stocks Buffeted By Swirl Of Lockdown Worry

(Alliance News) - Fears of a second wave coronavirus infections gripped markets at the start of ...

Alliance News 21 September, 2020 | 8:45AM
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(Alliance News) - Fears of a second wave coronavirus infections gripped markets at the start of the week, with London's FTSE 100 shedding more than 100 points in early trade on Monday and travel & leisure stocks hit by anticipation of a new lockdown in the UK.

The FTSE 100 index was down 112.78 points, or 1.9%, at 5,894.27 early Monday. The mid-cap FTSE 250 index was down 340.92 points, or 1.9%, at 17,228.76. The AIM All-Share index was down 0.9% at 964.97.

The Cboe UK 100 index was down 2.1% at 586.72. The Cboe 250 was down 2.2% at 14,646.42, and the Cboe Small Companies down 0.5% at 9,324.05.

In mainland Europe, the CAC 40 in Paris was down 1.0% while the DAX 30 in Frankfurt was 1.2% lower early Monday.

"The fact that the WHO has warned about serious coronavirus infection rates developing in Europe, and central banks' have decided to leave their monetary policy unchanged - we had a number of central banks announcing their monetary policy decision last week - have given no further reason to investors why they should increase any of their equity bets," said Naeem Aslam, chief market analyst at AvaTrade.

"Targeted lockdowns are already taking place around the globe, and the fear is that these are likely to turn into national lockdowns," Aslam added. "It is certainly possible that if coronavirus cases continue to increase, smaller periods of national lockdowns may become a reality."

Towards the bottom of the FTSE 100 was British Airways parent International Consolidated Airlines, down 6.2%. Other travel stocks were lower as well, with budget airline easyJet down 4.9% and Premier Inn owner Whitbread down 3.1%.

The UK government has refused to rule out a second lockdown as the country grapples with a resurgence in infections.

In a televised briefing on Monday, Chris Whitty, the chief medical officer for England, will say the country faces a "very challenging winter", with the current trend heading in "the wrong direction".

UK Prime Minister Boris Johnson spent the weekend with senior ministers and advisers discussing what action to take as the rise in the number of new cases showed no sign of slowing. It is thought Johnson could announce new measures in a press conference as early as Tuesday.

Ministers were reported to be split on how far any new restrictions should go, with UK Chancellor Rishi Sunak said to be resisting controls which could further damage the economy. During a series of broadcast interviews over the weekend, however, Health Secretary Matt Hancock refused to rule out a second national lockdown in England, if people fail to follow the social distancing rules.

Among the measures being considered by ministers is a temporary two-week "circuit break", with tighter restrictions across England in an attempt to break the chain of transmission.

Sterling was quoted at USD1.2937 early Monday, down on USD1.2949 at the London equities close on Friday.

The euro traded at USD1.1854 early Monday, marginally lower than USD1.1863 late Friday. Against the yen, the dollar edged down to JPY104.12 versus JPY104.41.

HSBC shares shed 3.3% in London on fears it could be added to a Chinese list of firms deemed a threat to national security and following news it had been accused of allowing fraudulent activity to go unpunished, AFP reported.

HSBC shares had dropped to HKD29.60 at one point on Monday in Hong Kong – a level not seen since mid-1995 – as investors fret over its ability to continue doing business in China and Hong Kong, which make up a crucial portion of its growth.

The sell-off came after the Global Times, a state-run English tabloid in China, reported the bank could be one of the first firms to be named on Beijing's "unreliable entity list" as part of a tit-for-tat stand-off with several western countries.

The report pointed to HSBC's participation in Washington's investigation of Huawei and the arrest of its chief financial officer Meng Wanzhou in Canada.

Meanwhile, according to an international journalism investigation published Sunday, massive sums of allegedly dirty money have flowed for years through some of the world's largest banking institutions, including HSBC and Standard Chartered.

Standard Chartered was down 3.1%, having dropped 5.4% in Hong Kong.

The Hang Seng index was down 1.7% late in Hong Kong on Monday, while the Shanghai Composite closed down 0.6%. Financial markets in Japan are closed Monday and Tuesday for holidays as the country celebrates Respect for the Aged Day and the Autumnal Equinox.

Crowning the blue-chips in London was Informa, rising 3.2% despite swinging to an interim loss.

The business information publisher and events organiser reported revenue of GBP814.4 million for the first half of 2020, down 42% from GBP1.41 billion a year ago. Informa posted a pretax loss of GBP801.2 million, swinging from a profit of GBP232.8 million.

Chief Executive Stephen Carter said: "Despite the first-half disruption to physical Events businesses caused by the pandemic, we are seeing strong demand and resilience in our specialist Subscriptions, Data and Content, reflecting the power of our brands and depth of geographic reach and customer relationships. Encouragingly, we have also seen our physical Events business recover in mainland China."

Full-year revenue is now expected to be around GBP1.7 billion, which would be down 41% from GBP2.89 billion in 2019.

The FTSE 100 constituent said it has moved to the "next stage" of its Covid-19 action plan, which includes the delivery of over GBP600 million in cost savings to adjusted operating profit in 2020, with direct savings of around GBP400 million and more than GBP200 million annualised indirect savings by year-end.

Carter said: "The combination of our resilient Subscriptions-led businesses and the actions we are taking position Informa securely through to the end of 2021. We remain confident that Informa will emerge from the pandemic with Stability and Security, delivering long-term sustainable growth and shareholder value."

Elsewhere in London, Superdry shares fell 9.2% on a drop in annual revenue and a deeper loss.

Revenue for the financial year that ended April 25 fell 19% to GBP704.4 million, with the firm's pretax loss deepening to GBP166.9 million from GBP89.3 million.

The sales fall reflected a planned move away from "persistent discounting", and also the hit from Covid-19 in the fourth quarter, with its entire store estate closed from March 22 to the financial year-end.

Current trading continues to be disrupted, the firm noted, but has improved from the end of the financial year. Superdry said 95% of its store estate and 98% of franchises now have re-opened since lockdown.

"While our underlying profit has been impacted by trading performance during the year, including Covid-19 related store closures, I am particularly pleased by how strongly e-commerce has performed, with FY21 first quarter revenues nearly doubling year-on-year. This has been complemented by our increased digital consumer engagement, which helped drive a stronger womenswear mix than we have ever seen before," said Julian Dunkerton, founder & chief executive.

Gold was quoted at USD1,952.70 an ounce early Monday, down against USD1,953.70 on Friday. Brent oil was trading at USD42.55 a barrel, lower than USD43.34 late Friday.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Standard Chartered PLC 399.40 GBX 4.20
HSBC Holdings PLC 321.40 GBX 4.71
easyJet PLC 548.40 GBX 2.58 -
Whitbread PLC 2,386.00 GBX 2.54 -
International Consolidated Airlines Group SA 109.00 GBX 3.96 -
Informa PLC 449.00 GBX 2.91 -

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