(Alliance News) - Oil firms and travel stocks were pushing up the FTSE 100 higher on Tuesday, even as the pound held its ground above the USD1.40 mark following mixed UK jobs data.
The FTSE 100 index was up 23.54 points, or 0.4%, at 6,635.78 early Tuesday. The mid-cap FTSE 250 index was up 182.12 points, or 0.9%, at 21,163.21. The AIM All-Share index was flat at 1,200.66.
The Cboe UK 100 index was up 0.2% at 660.23. The Cboe 250 was up 0.9% at 18,794.51, and the Cboe Small Companies up 0.3% at 12,949.70.
The gainers in London early Tuesday were stocks well-placed for a post-pandemic recovery, with the travel, leisure and hospitality sectors all surging.
British Airways parent International Consolidated Airlines was at the top of the FTSE 100 in early Trade on Tuesday, up 7.9%, while Premier Inn owner Whitbread rose 4.1% and Holiday Inn operator InterContinental Hotels Group rose 3.6%, even as the firm posted a swing to loss for 2020
IHG's total revenue for 2020 slumped 48% to USD2.39 billion from USD4.63 billion, with the company swinging to a pretax loss of USD280 million from a USD542 profit in 2019.
RevPAR - revenue per available room, a key metric in the hotels industry - fell 53%, though IHG noted the variation by region reflected local market Covid-19 restrictions and recovery pace. Greater China's recovery was most advanced, with fourth quarter RevPAR down 18%, while the Americas was down 50% and Europe, the Middle East & Africa down 71%.
"The shape of recovery remains varied globally, but we've continued to outperform the industry in key markets thanks to the strength of our teams, business model and segments in which we compete. This includes our industry-leading position in upper midscale, where demand remains stronger," said Chief Executive Keith Barr.
IHG proposed no final dividend for 2020 and did not pay out anything at the interim stage, though the FTSE 100 constituent said it will consider future dividends once visibility over the pace and scale of market recovery has improved. In 2019, IHG paid out 39.9 cents per share.
In the FTSE 250, travel and leisure stocks also dominated. easyJet shares surged 10% while WH Smith - which operates shops on both the High Street and in travel hubs such as airports and train stations - rallied 7.3%, and cinema operator Cineworld gained 7.3%.
UK Prime Minister Boris Johnson said spring and summer in England will usher in changes to make lives "incomparably better", as he set out a plan to fully ease the lockdown by June 21.
The prime minister defended his "cautious but also irreversible" approach to relaxing restrictions with a four-step plan on Monday, arguing he will not be "buccaneering" with people's lives. But despite billing his plans as a "one-way road to freedom", he admitted he cannot guarantee that the vaccination programme will prevent restrictions from ever returning.
In the hours after the announcement, easyJet said bookings by UK customers for the summer season were more than four times higher compared with the same period during the previous week.
In the first phase of Johnson's four-stage plan, all pupils in England's schools are expected to return to class from March 8. Socialising in parks and public spaces with one other person will also be permitted from that date. A further easing of restrictions will take place on March 29 when the school Easter holidays begin – with larger groups of up to six people or two households allowed to gather in parks and gardens.
Then, from April 12 at the earliest, shops, hairdressers and outdoor hospitality venues such as beer gardens will reopen. Foreign holidays could be permitted from May 17.
Chancellor Rishi Sunak is under pressure to extend measures such as the furlough scheme, which is due to expire at the end of April, when he delivers his government budget on March 3.
Against this backdrop, figures on Tuesday showed the UK unemployment rate edged up in the three months to December, as expected.
Figures from the Office for National Statistics on Tuesday showed the UK unemployment rate nudged up to 5.1% for the final three months of 2020 from 5.0% in the three months to November, and was 1.3 percentage points higher than a year ago.
More positively, the ONS noted that the claimant count - the number of people claiming unemployment benefits - decreased slightly in January, down 0.8% on the month before to 2.6 million. Still, this was double March 2020's level. Also in January, 83,000 more people were in payrolled employment when compared with December - the second consecutive monthly increase - but 726,000 fewer people were in employment when compared with February 2020.
The pound was holding firm above the USD1.40 mark after the UK jobs data. Sterling was quoted at USD1.4080 early Tuesday compared to USD1.4060 at the London equities close on Monday.
Also in the economic calendar on Tuesday is eurozone inflation at 1000 GMT. The euro traded at USD1.2161 early Tuesday, edging up from USD1.2145 late Monday.
In mainland Europe, the CAC 40 in Paris was u p0.5% while the DAX 30 in Frankfurt was 0.2% higher early Tuesday.
In Japan, financial markets were shut for the Emperor's Birthday holiday. Against the yen, the dollar was quoted at JPY105.17 versus JPY105.07.
In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong closed up 1.0%.
Gold was quoted at USD1,807.52 an ounce early Tuesday, easing from USD1,810.01 on Monday. Brent oil was trading at USD66.14 a barrel, higher than USD64.45 late Monday and trading above the USD66 mark for the first time in just over a year.
Danske Bank said oil prices are supported by "a tight inventory balance and an improved demand outlook".
Surging oil prices led to gains for BP and Royal Dutch Shell early Tuesday. BP shares rallied 3.6% while Shell 'A' and 'B' shares rose 1.9% and 2.1% respectively.
In the red in morning trade was HSBC, down 1.2% after the bank reported a sharp drop in profit in 2020 but offered some "cautious optimism" going forward.
For 2020, the China-focused lender saw its pretax profit drop to USD8.78 billion from USD13.35 billion in 2019. The 34% fall was blamed on higher expected credit losses and other credit impairment charges and lower revenue. Despite the sharp drop, HSBC's pretax profit came in ahead of market consensus, which forecast the figure at USD8.33 billion.
Net operating income plunged 21% to USD41.55 billion from USD52.31 billion, as net interest income fell 9.5% to USD27.58 billion from USD30.46 billion. Market consensus had forecast net operating income at USD50.04 billion, while net interest income was predicted at USD27.23 billion.
Looking ahead, HSBC said it recognises a number of "fundamental changes", including the prospect of prolonged low interest rates, the significant increase in digital engagement from customers and the enhanced focus on the environment. As a result, the lender said it has "aligned its strategy accordingly".
The bank noted it had a "good start" to 2021, and is "cautiously optimistic" for the year ahead.
By Lucy Heming; lucyheming@alliancenews.com
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