LONDON MARKET MIDDAY: Airlines Slump As UK Plans Passenger Quarantines

(Alliance News) - The FTSE 100 had given back its opening gains by midday on Monday, with airlines weighing on London's blue-chip index amid government plans to quarantine air travellers into the UK and dire traffic figures from the country's biggest airport.

Stocks elsewhere in Europe and US futures also were lower, with sentiment damped by fears of a second wave of Covid-19 infections.

The FTSE 100 index was down 20.49 points, or 0.4%, at 5,915.49 - having nearly touched 6,000 earlier in Monday's session. The mid-cap FTSE 250 was up 5.66 points at 16,253.60, and the AIM All-Share was up 1.1% at 824.11.

The Cboe UK 100 index was down 0.4% at 10,000.10, the Cboe UK 250 down 0.1% at 13,875.55, and the Cboe Small Companies up 0.1% at 9,000.28.

In European equities on Monday, the CAC 40 index in Paris was down 1.5%, while the DAX 30 in Frankfurt was down 0.8%.

"Equities lost much of their verve in European session trade, giving up the gains earned in Asia and turning negative on the day on a slow, news-free Monday, with markets mostly treading water after gains of last week," commented BK Asset Management.

"In the UK, Boris Johnson's government announced an easing of the lockdown measures with some non-essential retail to open in June while most of the economy was to be open in July. The announcement, however, was marred by confusion on new social distancing rules and cable fell to session lows trading below the USD1.2400 figure as a result."

The pound was quoted at USD1.2329 at midday, having traded above the USD1.24 mark early Monday morning. Sterling was quoted at USD1.2308 at the London equities close on Thursday, prior to the bank holiday on Friday.

In a broadcast from Downing Street on Sunday evening, the PM said a phased reopening of schools and non-essential shops in England could potentially begin from June 1 if transmission can be reduced.

He said people who cannot work from home should be "actively encouraged" to return to their jobs from Monday, and he granted unlimited exercise in England from Wednesday. People will be allowed to sunbathe or chat in English parks with one other person from a different household as long as two-metre distancing is maintained.

Further details are expected on plans to impose a 14-day quarantine on people flying into the UK and on a five-tier alert system to inform relaxation and strengthening of measures based on the pace of contagion. However, Johnson and French President Emmanuel Macron have agreed there should for now be no quarantine measures for travellers arriving in Britain from France, the Elysee said on Sunday.

London-listed airlines were lower at midday on the quarantine plan. easyJet was down 7.8%, International Consolidated Airlines down 4.5%, and Ryanair down 2.8%.

Heathrow Airport Holdings warned on the 14-day quarantine plan as it reported a collapse in April traffic figures, highlighting just how badly the travel restrictions to fight the Covid-19 pandemic have hurt the industry.

The airport owner also called on the UK government to lay out plans for reopening borders.

Heathrow Airport, usually one of Europe's busiest, reported a 97% fall in April traffic to just 200,000 passengers, the sort of numbers it would normally see in just one day. During the month, 1,788 cargo only flights were operated, delivering crucial supplies of personal protective equipment, Heathrow noted.

"The airport supports government's aim of avoiding a second wave of infection, even though the 14-day quarantine plan will effectively close borders temporarily. It is likely that few passenger flights will operate and even less people will travel until the quarantine is lifted," Heathrow said.

However, the airport added: "Heathrow calls on government to lay out a road map for how borders can eventually be reopened and to take a lead in developing a common international standard so that passengers can travel freely between low risk countries once the infection rate has been brought down."

Back in the FTSE 100, Intermediate Capital Group was down 4.9% after Exane BNP cut the stock to Underperform from Neutral.

Lower in the FTSE 250 after a ratings downgrade was Hammerson. The stock was down 5.8% after Morgan Stanley cut the retail property investor to Underweight from Equal Weight.

Mining and energy engineering firm Weir fell 4.4% after being lowered to Hold from Buy.

In the US, stocks are pointed to a lower start on Monday. The Dow Jones and S&P 500 both were called down 0.4%, while the Nasdaq was seen flat.

Keeping sentiment subdued at the start of the week were fears of a second wave of infections, underscored by a resurgence in South Korea. Although widely praised for its handling of its initial outbreak, it has been forced to shut all bars and clubs in the capital Seoul after a cluster of infections.

China on Sunday reported its first infection in over a month in Wuhan, where the outbreak first started late last year before going on to infect more than four million worldwide.

And in Germany there was uncertainty too, with at least one district forced to reimpose restrictions after an outbreak at a meat processing plant. And even as it loosened its lockdown restrictions, the latest German data also indicated the infection rate was rising again.

The euro was quoted at USD1.0823, up from USD1.0790 on Thursday. Against the yen, the dollar was quoted at JPY107.27, up from JPY106.48.

Brent oil was trading at USD30.17 a barrel Monday, lower than USD30.83 late Thursday in London. Gold was quoted at USD1,698.15 an ounce, soft on USD1,700.80.

By Lucy Heming; lucyheming@alliancenews.com

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