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LONDON (Alliance News) - London equity markets continue to fall mid-morning Tuesday, with the FTSE 100 erasing almost all of the gains it made on Friday following the UK general election results, as easyJet leads the blue-chip decliners after giving a weak outlook for the year ahead.
The FTSE 100 is down 1.6% at 6,914.54 points, touching a low of 6,887.52, having closed at 6,886.95 on Thursday last week before election polls closed. The FTSE 250 is down 1.3% at 17,649.17, and the AIM All-Share is down 0.4% at 756.41.
European stocks are also trading heavily lower with the CAC 40 in Paris down 2.0%, and the DAX 30 in Frankfurt down 2.3%.
Low-cost airline easyJet said it swung to a profit in the first half of its financial year as it flew more passengers and it benefited from lower fuel prices and favourable exchange rate movements. It said it is still on track to grow revenue and profit in the year as a whole despite a hit in April from an air traffic control strike in France.
EasyJet said it made a pretax profit of GBP5 million in the six months to end-March, compared with a loss of GBP53 million a year earlier, as revenue rose to GBP1.77 billion from GBP1.70 billion.
Looking forward, easyJet warned that air traffic control strikes in France had knocked about GBP25 million off its profit, and it expects revenue per seat at constant currency to decline by low single-digit percentage points in the second half of the year. EasyJet is the worst performer in the FTSE 100, down 8.5%.
"With FX benefits reversing and the oil price having risen from its lows, traders are suggesting easyJet shares should descend to a lower cruising altitude," says Mike van Dulken, head of research at Accendo Markets.
Experian is the biggest of only two gainers in the FTSE 100, up 0.9%. The information services and credit report company said earnings in its recently completed financial year were hurt by unwelcome foreign exchange movements and cautioned that it expects earnings to be affected in its current financial year.
In a statement, the information services and credit report company said it made a USD1.01 billion pretax profit in the year ended March 31, compared with USD1.05 billion in the prior year.
Its closely watched benchmark pretax profit, which excludes charges including those related to amortisation and financing fair value remeasurements, was flat at USD1.23 billion. Benchmark earnings per share was 95.2 US cents against 91.7 cents in the prior year.
Lloyds Banking Group, up 0.5%, is the other blue-chip gainer. The bank is continuing its gradual return to full private ownership, as stock exchange documents on Tuesday confirmed that the UK taxpayer's stake has fallen yet again. The documents confirmed that the taxpayer's stake in the bank has fallen to 19.93% from 20.95% previously. Following its GBP20 billion state rescue in the financial crisis of 2008-09, the government had owned as much as 43% of the banking group.
Regus is the biggest faller in the FTSE 250, down 6.8%. JP Morgan Securities said that Estorn Ltd has agreed to sell 30 million Regus shares at 245 pence each, raising gross proceeds of about GBP73.5 million for the vehicle controlled by the serviced office provider's founder Mark Dixon. Regus currently trades at 245.00p.
Al Noor Hospitals Group, down 3.9%, said it had continued to perform in line with its expectations in the first quarter of 2015, with revenue growth of 12%, and announced the resignation of Chief Financial Officer Pramod Balakrishnan. The United Arab Emirates-focused private healthcare service provider said that Balakrishnan has resigned to pursue an unspecified alternative opportunity, and will leave the company at the end of July. The search for a successor has begun, it said.
Greece's debt problems continue to weigh on sentiment even though it made a EUR756 million loan repayment to the IMF on Monday, hours ahead of a Tuesday deadline, according to Greek state radio.
Eurozone finance ministers said Monday that more time and effort is needed to reach an agreement over proposed reforms to keep Greece afloat. Meanwhile, Greece's Finance Minister Yanis Varoufakis said the liquidity situation was "terribly urgent" and without bailout funds, the country would face a cash crunch in the next couple of weeks.
"No sooner had Greece got back into traders' good books after making a repayment to the IMF, a comment from Yanis Varoufakis about the country's solvency sparked a new selloff. Greece has been living hand to mouth for the past five years, and now that the last bailout is due to expire next month there is the very real prospect of a default," says David Madden, market analyst at IG.
UK Prime Minister David Cameron added to the gloom in stock markets, after a number of media outlets reported that he will move the UK referendum on European Union membership forward to 2016 from 2017.
"Any news on the vote happening sooner rather than later is likely to worry and spook the markets as an exit from the EU is seen to be a hugely detrimental to business in the UK," says James Hughes, chief market analyst at eToro.
Still ahead in the economic calendar is the National Institute of Economic and Social Research's UK GDP estimate at 1500 BST.
Futures point Wall Street to a lower open, with the DJIA and S&P 500 both pointed down 0.7% and the Nasdaq 100 down 0.8%.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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