LONDON MARKET MIDDAY: FTSE 100 looking tired after strong week

(Alliance News) - Stocks in London were marginally lower at midday on Friday after returning to pre-pandemic levels, as investors look ahead to a further reopening of the economy next week.

The FTSE 100 index was down 8.98 points, or 0.1%, at 6,933.24, but is on track to end a strong week up 3.0%.

The mid-cap FTSE 250 was down just 6.28 points at 22,241.31, having hit record-setting levels on Thursday. The AIM All-Share index was flat at 1,238.93.

The Cboe UK 100 index was up 0.6% at 691.80. The Cboe 250 was up 0.2% at 19,874.30. The Cboe Small Companies was up 0.1% at 14,222.75.

In mainland Europe, the CAC 40 index in Paris was up 0.1% and the DAX 30 in Frankfurt was up 0.2%.

"European markets are stuttering towards the weekend, with the likes of the FTSE 100 and DAX failing to continue the positive sentiment set by US indices last night. The previously under-fire growth stocks have been enjoying a week of outperformance, with the tech sector helping to fire the S&P 500 into fresh record highs," said IG Group's Josh Mahony.

In the FTSE 100, JD Sports Fashion was the best performer, up 1.3% and Next was up 1.2%. The retailers were higher as lockdown restrictions are set to ease further in England on Monday with non-essential stores allowed to open until 2200 BST.

In addition, Berenberg hiked its price target on JD to 1,100 pence from 975p and reiterated its Buy rating. The bank said the sportswear retailer remains its top pick in the sector and demand for casual footwear is going unnoticed by investors.

At the other end of the large-caps, British American Tobacco was still the worst performer, down 2.2%, after JPMorgan downgraded the tobacco giant to Neutral from Overweight.

In the FTSE 250, PageGroup was the best performer, up 8.8%, after the recruiter gave a bullish outlook for this year after its performance in March recovered to near pre-pandemic levels.

Page said it expects operating profit this year of GBP90.0 million to GBP100.0 million, up from the 2020 figure of GBP17.0 million. That's after a strong first quarter, with earnings in March up 31% year-on-year, and down only 2% from March 2019.

At the other end of the mid-caps, Tui was the worst performer, down 6.5%. The Anglo-German travel operator said it has launched a bond offering worth EUR350 million, bolstering the balance sheet as it continues to navigate the Covid-19 pandemic.

The senior unsecured bonds convertible are due in 2028 and the offering may be upsized to EUR400 million, Tui said, and they will be issued with a coupon between 4.50% and 5.00% per year. They will be convertible into new or existing Tui shares.

In addition, tourism stocks were under pressure amid lack of clarity over the UK government's plans over international travel heading into the peak summer season.

Budget airline Jet2 was 3.5% lower after it said it will extend the suspension of all its flights due to "uncertainty" after the UK government refused to confirm whether foreign holidays will be permitted from May 17.

Announcing the findings of the Global Travel Taskforce, UK Transport Secretary Grant Shapps did confirm that a traffic light system will be used to categorise countries based on risk. He also said the government will work with the travel industry and private testing providers to reduce the cost of foreign trips.

At green, there is no need to self-isolate. Travellers take a pre-departure test and a PCR test on day two of their arrival in the UK. At amber, travellers self-isolate for 10 days, unless they receive a negative result from a test taken at least five days after arrival. They must take a pre-departure test, and PCR tests on day two and day eight of their arrival in the UK.

At red, travellers spend 11 days in a quarantine hotel. They take a pre-departure test, and PCR tests on day two and day eight of their arrival in the UK.

Jet2 said: "Because of the continued uncertainty following the release of the Global Travel Taskforce framework, it is with a heavy heart that we have taken the decision to extend the suspension of flights and holidays up to and including June 23."

Under the traffic light system, assessments will be based on a range of factors, including the proportion of a country's population which has been vaccinated, rates of infection, emerging new variants and the country's access to reliable scientific data and genomic sequencing.

The Department for Transport said in a statement: "It is too early to predict which countries will be on which list over the summer, and the government continues to consider a range of factors to inform the restrictions placed on them.

"We will set out by early May which countries will fall into which category, as well as confirming whether international travel can resume from 17 May."

Midcap airline easyJet was down 1.5%, while British Airways parent International Consolidated Airlines Group was 0.2% lower.

FTSE 250 member Babcock International was down 6.5%, after the Financial Times reported late on Thursday the defence contractor is preparing to write down the value of its assets and may update the market in the coming days.

The cost of the write down is still subject to change, but analysts estimate it could be as high as GBP700 million.

The pound was quoted at USD1.3711 at midday on Friday, down from USD1.3739 at the close on Thursday, amid concerns over severe side effects with the AstraZeneca Covid-19 vaccine.

Europe's medicines regulator said this week the AstraZeneca vaccine could cause very rare blood clots in some recipients, prompting a cascade of countries to pull the plug on giving it to people under a certain age.

"Concerns over AstraZeneca's vaccine in relation to blood clots, the pace of the vaccine rollout slowing, all combined with the US and Europe increasing their pace of vaccination have all caused Sterling to push lower this week," said analysts at OFX.

The euro was priced at USD1.1968, up from USD1.1903. Against the yen, the dollar was trading at JPY109.58, up from JPY109.25.

Brent oil was quoted at USD63.20 a barrel Friday at midday, up from USD62.89 late Thursday. Gold was trading at USD1,745.24 an ounce, marginally lower against USD1,754.40.

US stock were set for a mixed open as Treasury yields widened after data showed Chinese producer prices rose at their fastest pace in more than two years owing to a jump in the cost of commodities.

That has led to concerns the increases will filter through to the world economy from the export giant, putting pressure on central banks as they try to keep borrowing costs down.

The Dow Jones Industrial Average was called up 0.2%, S&P 500 flat and Nasdaq Composite down 0.2%.

US Federal Reserve Chair Jerome Powell Thursday again repeated his mantra that the central bank would stand fast in its pledge to keep borrowing costs at record lows for as long as needed to support recovery in the world's top economy.

Axi's Stephen Innes said the China figures "might add a ripple or two of angst to the inflation pacifist calm that has fallen on the market".

The international economic calendar on Friday has US producer prices at 1330 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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