LONDON MARKET MIDDAY: FTSE Edges Higher As easyJet Lifts Travel Stocks

Thu, 16th Apr 2020 11:58

(Alliance News) -Â The FTSE 100 was struggling to make headway on Thursday, lagging peers in Europe and dipping in and out the red, despite some respite for travel stocks on the back of a reassuring update from easyJet.

The FTSE 100 index was up 13.77 points, or 0.3%, at 5,611.42 Thursday midday. The mid-cap FTSE 250 index was up 69.07 points, or 0.5%, at 15,416.63. The AIM All-Share index was up 0.9% at 740.87.

The Cboe UK 100 index was up 0.2% at 9,490.80. The Cboe 250 was up 0.4% at 13,250.60, and the Cboe Small Companies down 0.2% at 8,577.37.

In mainland Europe, the CAC 40 in Paris was up 0.7% while the DAX 30 in Frankfurt was up 0.9% in the afternoon.

"US markets took a knock yesterday but managed to end the day off their lows despite a poor day for oil and financial stocks, while once again it was big tech that has led the way higher. Without this to aid the index, the FTSE 100 continues to struggle, with the index resuming its fall despite a rally overnight for the futures. Today is expected to see the renewal of lockdown measures for the UK, even as the narrative surrounding the infection and death curves continues to improve," said Chris Beauchamp, chief market analyst at IG.

The FTSE 100 was struggling to weave a convincing path higher even as travel stocks gained in the wake of a reassuring update from easyJet.

The low-cost airline, up 4.5% at midday, said it expects to post a headline pretax loss between GBP185 million to GBP205 million for the six months to March 31, which would be improved on a loss of GBP275 million a year ago.

easyJet's fleet was fully grounded on March 30.

Revenue for the period was up 1.6% to GBP2.38 billion, with seat capacity down 7.6%. Airline revenue per seat at constant currency is expected to have increased by 10%, continuing the strong momentum seen in the first quarter.

easyJet also said it has secured roughly GBP400 million on two term loans, secured against its aircraft assets. Earlier in April, it said it was issued with GBP600 million under the UK's Covid corporate financing facility. The carrier has also drawn down a USD500 million revolving credit facility.

"How do you judge a business in survival mode? One way is to look at how much cash it has left to keep the lights on. On this measure shareholders in budget airline EasyJet appear to have at least some grounds for encouragement after this morningâ€™s announcement," commented Russ Mould, investment director at AJ Bell.

Cruise operator Carnival was 5.2% higher at midday, while British Airways parent International Consolidated Airlines was up 3.6%. Ryanair was up 1.0%.

Also higher was Rentokil Initial, rising 6.1% after first-quarter revenue climbed despite a "marked" impact from the Covid-19 pandemic in the final two weeks of March.

Revenue in the first three months of 2020 was 4.4% higher year-on-year at GBP634.1 million. At constant currency, it climbed 5.8%. Ongoing Revenue, which excludes acquisition and disposals, was 5.8% higher annually at GBP630.5 million, rising 7.2% at constant currency.

It was a "good start to the year" by Rentokil's reckoning, with net operating margins also rising in line with expectations.

Gathered at the bottom of London's blue-chip index were ex-dividend stocks. This included M&G, down 12%, and St James's Place, down 5.2%.

In the FTSE 250, Petrofac slumped 12% after the Abu Dhabi National Oil Co cancelled two contracts for work on the Dalma gas development project.

The contracts, awarded in February, were worth about USD1.65 billion, with Petrofac's Emirates joint venture expecting about USD1.5 billion. The company stressed it will continue to tender major contracts in Abu Dhabi despite this setback.

In the US on Thursday, stocks are pointed to a higher open. The Dow Jones was called up 0.2%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.7%.

"Futures are pointing to a modest rebound at the US open ahead of the release of jobless claims that is expected to show millions more Americans were laid off in the past week," commented Jasper Lawler at London Capital Group.

US initial jobless claims are due at 1330 BST. In the past three weeks alone, around 16.8 million Americans have filed for unemployment.

FXStreet consensus sees 5.1 million claims for the week ended April 11, which would be down from 6.6 million the week before.

Also in focus in the US will be earnings from Morgan Stanley, after other major US banks this week reported sharp drops in first-quarter profit.

The dollar was holding up well ahead of the unemployment data.

Against the yen, the dollar was quoted at JPY107.67, up from JPY107.51. Sterling was quoted at USD1.2482 on Thursday soft versus USD1.2493 at the London equities close on Wednesday.

The euro traded at USD1.0879, lower than USD1.0903 late Wednesday as data showed German inflation softened as expected in March on lower oil prices.

Germany's consumer price index rose 1.4% year-on-year in March, compared to 1.7% growth both in January and February. The sharpest decline of 20% was recorded for heating oil prices due to an oil price slump.

Brent oil was trading at USD28.52 a barrel on Thursday midday, up on USD27.68 late Wednesday.

Gold was quoted at USD1,724.91 an ounce early Thursday, higher than USD1,720.22 on Wednesday and signalling the caution lingering in markets.

The World Health Organization's European office said Thursday that despite some "optimistic signs" in some of the countries worst hit by the new coronavirus, the number of cases was rising and approaching one million in the continent alone.

"We remain in the eye of the storm," WHO regional director for Europe, Hans Kluge, told a news conference, urging countries to put adequate controls in place before easing lockdown restrictions.

In the UK, the government is expected to extend a nationwide lockdown for another three weeks, amid signs the coronavirus outbreak is peaking, but warnings of more deaths to come.

Foreign Secretary Dominic Raab, who is standing in for Prime Minister Boris Johnson as he recuperates after spending a week in hospital with Covid-19, will meet with key ministers before making the announcement. But the government has already said that, with the death toll approaching 13,000 and still rising, now is not the time to rescind the stay-at-home order imposed on March 23.

"It is too early to make a change," Health Secretary Matt Hancock told the BBC on Thursday, ahead of meetings of the cabinet and a special coronavirus committee.

Health ministry figures show 12,868 people in hospital in Britain have so far died, making it one of the worst affected countries in the global outbreak.

By Lucy Heming;Â lucyheming@alliancenews.com