LONDON MARKET MIDDAY: Travel and leisure shrug off lockdown end delay

(Alliance News) - Stocks were posting modest gains at midday on Tuesday as traders moved hesitantly, ahead of the latest US interest rate decision this week.

London's internationally exposed FTSE 100 was getting a boost from dollar-earning firms as the pound softened, while travel and leisure firms gained despite a setback to England's lockdown easing plan.

The FTSE 100 index was up 22.23 points, or 0.3%, at 7,168.91 midday Tuesday. The mid-cap FTSE 250 index was up 11.41 points, or 0.1%, at 22,755.92. The AIM All-Share index was down just 0.55 of a point at 1,250.41.

The Cboe UK 100 index was up 0.2% at 714.18. The Cboe 250 was down 0.1% at 20,458.80, and the Cboe Small Companies up 0.6% at 15,299.54.

In mainland Europe, the CAC 40 in Paris was up 0.4%, while the DAX 30 in Frankfurt was 0.5% higher in the early afternoon.

European stocks climbed, and Wall Street futures were mostly higher, as traders focus on the US Federal Reserve's two-day policy-setting meeting, which kicks off on Tuesday.

"There is only one show in town this week, and that's the Fed," said Sophie Griffiths, market analyst at Oanda.

While data last week showed that US inflation accelerated at the fastest pace since 2008, the Fed on Wednesday is expected to hold firm in its belief that price pressures are temporary. The central bank is expected to stand pat on monetary policy.

The Fed unveils its decision at 1900 BST on Wednesday, followed by a press conference at 1930 BST with Chair Jerome Powell.

Wall Street was seen opening mostly higher on Tuesday, with the Dow Jones flat, but the S&P 500 and the Nasdaq Composite both pointed up 0.1%.

Turning to stock performance in London, Oanda's Griffiths noted the FTSE 100 was being lifted on Tuesday by "large dollar-earning companies such as Diageo, Unilever and British American Tobacco" as the pound pulled back.

Diageo and Unilever both were up 0.9%, while British American Tobacco rose 1.9%.

Sterling was quoted at USD1.4083 midday Tuesday, down on USD1.4112 at the London equities close on Monday, despite data showing the UK unemployment rate improved.

The jobless rate for the three months to April was 4.7%, down from 4.8% for the three months to March.

This labour market recovery appears to have extended into May. The number of payrolled employees has increased for the sixth consecutive month, the ONS said, up by 197,000 in May to 28.5 million.

However, the jobs report came after UK Prime Minister Boris Johnson delayed the end of England's coronavirus restrictions by up to four weeks, having been warned that ending curbs could lead to thousands of deaths and unbearable pressure on the NHS. Johnson announced the setback to the final phase of his plan to end the lockdown on Monday, citing concerns over the rapidly spreading Delta variant first identified in India.

Experts feared going ahead with step four on June 21 as planned could lead to hospital admissions on the scale of the first wave of Covid-19 heaping unsustainable pressure on the health service. To avert this, Johnson said during a Downing Street press conference that the end of all legal limits on social contact would be put back to July 19.

Investors in London-listed travel and leisure firms seemed unfazed.

"Confidence may have been boosted by comments government's chief medical officer Professor Chris Whitty who said it was important to strike the right balance between protecting people and opening up society, offering hope that yet another delay will be unlikely," said Susannah Streeter, senior investment & markets analyst at Hargreaves Lansdown.

Primark-owner Associated British Foods was up 2.8% at midday while British Airways-parent International Consolidated Airlines rose 2.7%. easyJet and Wizz Air topped the FTSE 250, up 2.3% and 2.1%, respectively. Wagamama-owner Restaurant Group rose 1.6%.

Also bolstering confidence in the eventual end to lockdown in the UK was some positive news on the vaccine front against variants.

AstraZeneca noted new data from Public Health England demonstrating its Covid-19 vaccine offers good protection against the Delta variant. Real world data from PHE, published as a pre-print, showed two doses of Astra's jab were 92% effective against hospitalisation from the Delta variant and showed no deaths among those vaccinated.

Shares in Astra were up 0.2% at midday.

Elsewhere in London, FTSE 100-listed Ashtead rose 2.6%. The equipment rental firm upped its annual payout, after more than doubling profit in the closing months of its financial year.

Ashtead reported a pretax profit of GBP220 million in the fourth quarter of the financial year that ended April 30. Revenue during the three-month period jumped 13% annually, or 23% at constant currency, to GBP1.27 billion.

The firm proposed a final dividend of 35 pence, taking the year's total to 42.15p, up 3.7% from 40.65p the year before.

Boohoo shares rose 2.1% on AIM as it reported a "strong start" to its financial year.

Revenue in three months to May 31 was GBP486 million, up 32% from GBP368 million in the same period the year before. Trading was significantly higher in the UK and US, increasing 50% and 43% respectively, the online fashion retailer said.

Still to come in Tuesday's economic calendar are US producer prices and retail sales, both due at 1330 BST. Industrial production follows at 1415 BST.

Already released, figures showed the eurozone's trade surplus slimmed in April as exports shrank and imports grew.

Euro area exports to the rest of the world in April fell 2.3% month-on-month on a seasonally adjusted basis, while imports increased by 2.4%. This resulted in a trade surplus of EUR9.4 billion, down from EUR18.3 billion in March.

The euro traded at USD1.2123 following the data, flat on USD1.2124 late Monday.

Against the yen, the dollar rose to JPY110.04 versus JPY109.99.

Gold was quoted at USD1,865.56 an ounce on Tuesday, up a touch from USD1,863.20 on Monday. Brent oil was trading at USD73.32 a barrel, firm on USD73.28 late Monday.

By Lucy Heming; lucyheming@alliancenews.com

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