LONDON MARKET MIDDAY: FTSE 100 Buckles With Travel Stocks In Retreat

(Alliance News) - London stocks were posting a downbeat start to the week as shares in travel firms crumbled under plans for tighter border restrictions across the globe to halt the spread of new coronavirus strains.

The FTSE 100 index was down 30.16 points, or 0.5%, at 6,664.91 on Monday at midday. The mid-cap FTSE 250 index was down 99.48 points, or 0.5%, at 20,497.43. The AIM All-Share index was up 0.8% at 1,204.72.

The Cboe UK 100 index was down 0.3% at 663.44. The Cboe 250 was down 0.7% at 17,844.56, and the Cboe Small Companies up 0.1% at 12,255.69.

In mainland Europe, the CAC 40 in Paris was down 0.4% while the DAX 30 in Frankfurt was 0.2% lower on Monday.

"A somewhat drab start to European trade has highlighted the detrimental impact of the lockdown measures seen throughout the region," said Joshua Mahony, senior market analyst at IG.

This was reflected by a decline for travel stocks at the start of the week.

Shares in British Airways-parent International Consolidated Airlines fell 6.9%, making the stock the worst performer in the FTSE 100 on Monday, while jet engine maker Rolls-Royce tumbled 4.7%.

In the FTSE 250, low-cost airline easyJet fell 5.8% and Wizz Air fell 6.3%. Ryanair tumbled 5.5%.

Border restrictions were being tightened around the world Monday to combat the spread of new coronavirus strains.

The US was set to join France, Israel and Sweden in pulling up the drawbridge to certain arrivals, with special concern about new strains of the pathogen that originated in Britain and South Africa.

On Sunday, France started demanding a negative PCR test for arrivals by sea and air from EU neighbours. Sweden said it would prohibit entry from neighbouring Norway for three weeks, after cases of the more infectious British strain were detected in Oslo.

"The decline in travel stocks not only highlight the expectations of a drawn-out period of lockdown, but also the outside chance that a new strain takes us back to square one in the vaccination effort," said IG's Mahony.

At the top of the FTSE 100 was Evraz, up 4.2% after JPMorgan raised the Russian steelmaker to Overweight from Neutral.

In the FTSE 250, JTC rose 3.5% after the professional services firm said it expects results for 2020 to be in line with expectations due to good performance in the second half of the year.

JTC stated new business performance in the year was "strong" despite the ongoing pandemic, with the annualised value of new business won increasing 20% to GBP17.9 million with "good momentum" in the fourth quarter. This compares to GBP14.9 million in 2019.

Network International fell 4.5%. The Middle East and Africa-focused payments services provider said it has published "final responses" to the critical report published by short seller ShadowFall Research in relation to the company's link with failed German digital payments provider Wirecard.

On its Investor Relations page, Network International clarified its rationale for buying DPO, its own financial position, and its governance policies.

"Therefore, we will not be publishing further responses to matters raised which we consider immaterial, factually inaccurate, historical, or that have already been addressed in our investor communications," the FTSE 250-listed payments solutions provider said Monday.

Network International had previously said there is no evidence of wrongdoing by Nairobi-based online commerce platform Direct Pay Online Group with regards to DPO subsidiary AnconaOnline's connections with Wirecard.

On AIM, ASOS rose 6.1% after the online clothing retailer confirmed exclusive discussions with Arcadia's administrators over the acquisition of the Topshop, Topman, Miss Selfridge and HIIT brands.

"The board believes this would represent a compelling opportunity to acquire strong brands that resonate well with its customer base. However, at this stage, there can be no certainty of a transaction and ASOS will keep shareholders updated as appropriate," the company said.

Arcadia, which employed around 13,000 people and has 444 UK stores, collapsed at the start of December due to the impact of the coronavirus pandemic, years of under-investment, and a failure to keep up with shifts to online shopping.

"ASOS clearly wants to just scoop up the cream from Sir Philip Green's retail trifle, leaving the more unappetising remains left out for others to pick over. Brands like Burton and Dorothy Perkins are likely to be a much harder sell, in a very competitive mid-market," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Meanwhile, peer boohoo advanced 4.5% after buying all of the intellectual property assets of department store Debenhams Retail for GBP55 million in cash.

The company will only be acquiring brands and associated intellectual property rights. The deal does not include Debenhams retail stores, stock, or any financial services.

boohoo Executive Chair Mahmud Kamani described the deal as "transformational".

"Our ambition is to create the UK's largest marketplace. Our acquisition of the Debenhams brand is strategically significant as it represents a huge step which accelerates our ambition to be a leader, not just in fashion eCommerce, but in new categories including beauty, sport and homeware," said Kamani.

Wall Street is on course for a brighter start to the week, with the Dow Jones pointed up 0.1%, the S&P 500 up 0.3% and the Nasdaq Composite up 1.0%.

The week ahead is a busy one for US corporate earnings, with the likes of Microsoft, Apple, Facebook and Tesla all reporting.

The dollar gained ground as Monday's session progressed, with the pound falling from its session high of USD1.3724.

Sterling was quoted at USD1.3688 Monday midday, higher than USD1.3665 at the London equities close on Friday.

The euro traded at USD1.2157, down on USD1.2175 late Friday.

German business confidence weakened at the start of the year amid a resurgence in coronavirus cases, data from the Munich-based Ifo institute showed.

The Ifo business climate index fell to 90.1 points in January from 92.2 in December, the lowest reading since July's 90.0. January's reading still remains far higher than the low of 75.5 hit in April during the first wave of the pandemic.

Against the yen, the dollar firmed to JPY103.84 versus JPY103.80.

Gold was quoted at USD1,863.45 an ounce on Monday, higher than USD1,853.00 on Friday. Brent oil was trading at USD55.84 a barrel, up on USD55.55 late Friday.

By Lucy Heming; lucyheming@alliancenews.com

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