LONDON MARKET MIDDAY: Travel Firms Extend Gains On Summer Holiday Hope

(Alliance News) - London stocks pushed higher on Wednesday, with travel firms once again the top of the pack as lockdown easing optimism overshadowed increasing tensions in Hong Kong.

The FTSE 100 index was up 87.43 points, or 1.4%, at 6,155.19 on Wednesday. The mid-cap FTSE 250 index was up 287.14 points, or 1.7%, at 17,220.56. The AIM All-Share index was up 0.1% at 854.70.

The Cboe UK 100 index was up 1.4% at 10,407.03. The Cboe 250 also was up 2.0% at 14,747.10, and the Cboe UK Small Companies up 0.7% at 9,083.55.

In mainland Europe, the CAC 40 in Paris was up 1.8% while the DAX 30 in Frankfurt was 1.7% higher Wednesday afternoon.

"European markets are maintaining their positive mindset today despite ongoing fears over an impending breakdown in relations between the US and China," said Joshua Mahony, senior market analyst at IG.

"The current bullish sentiment permeating throughout European and US markets looks difficult to derail, with optimism over impending lockdown easing measures sparking a surge towards those hard-hit travel and tourism stocks," said Mahony. "Yet again we are seeing those unloved stocks such as Carnival, Rolls-Royce, and IAG gaining ground as the airline sector lays out plans to start flying once more".

Spain said on Saturday it will let in foreign tourists from July 1. Italy is due to reopen its borders to foreign tourists from June 3.

Jet engine maker Rolls-Royce was up 11%, cruise operator Carnival up 14% and British Airways owner International Consolidared Airlines up 6.1%.

FTSE 250-listed TUI rose 19%, furthering Monday's 52% rise to bring its week-to-date gain to over 80%. Even with this recent boost, the Anglo-German travel operator remains 43% lower since 2020 began.

Optimism over the lifting of Covid-19 lockdowns overshadowed tensions flaring in Hong Kong.

Hong Kong police cast a dragnet around the financial hub's legislature on Wednesday and fired pepper-ball rounds in the commercial district as they stamped down on protests against a bill banning insults to China's national anthem.

The latest unrest comes days after China announced separate plans to impose a sweeping national security law on Hong Kong following last year's huge and often violent pro-democracy rallies.

That move has prompted US President Donald Trump to warn that Hong Kong might lose its status as a global financial centre if the city's freedoms and vaunted judicial independence are swept aside.

Washington has already said it could terminate its preferential trading status over the issue.

Stocks on Wall Street are set for a strong start to Wednesday's session. The Dow Jones is called up 1.4%, the S&P 500 up 1.3% and the Nasdaq up 1.0%.

Gold traded USD1,708.80 an ounce on Wednesday, lower than USD1,713.19 on Tuesday, reflecting Wednesday's risk-on mood. Brent oil was largely unchanged USD35.66 a barrel, flat on USD35.61 late Tuesday.

Sterling was at USD1.2331 Wednesday midday, soft against USD1.2346 at the London equities close on Tuesday.

The euro traded at USD1.1028 on Wednesday, up from USD1.0978 late Tuesday. Against the yen, the dollar was quoted at JPY107.71, higher versus JPY107.62.

Back in London, M&G shares were trading 8.8% higher after saying it has added GBP14 billion to its assets under management by acquiring Royal London Mutual Insurance Society's platform business Ascentric.

Ascentric is a digital wrap and wealth management platform for advisers with assets under administration of GBP14 billion, around 1,500 adviser relationships, and more than 90,000 underlying customers. It has been part of mutual insurer Royal London since 2007.

No financial details of the deal were disclosed.

FTSE 100-listed M&G separately reported an 8.2% drop in total assets under management and administration mainly due to the "shock to markets in March from the disruption associated with the outbreak of Covid-19".

St James's Place rose 8.0% after the wealth management business said April gross inflows were robust as its partners shifted to managing clients "virtually".

Gross inflows for April amounted to GBP1.17 billion versus GBP1.35 billion a year ago, with net inflows broadly flat at GBP810 million. Closing funds under management totalled GBP108.83 billion, up 1.5% from 107.19 billion.

For the four months to April, gross inflows were GBP5.21 billion, up from GBP4.96 billion a year before, and net inflows were up to GBP3.18 billion from GBP2.98 billion.

"Following record first-quarter new business, we have naturally seen a reduction in new investments as the Covid-19 crisis developed. In light of the need to observe social distancing, the partnership has quickly adapted to managing client relationships 'virtually' and April gross inflows were robust, albeit 13% lower than the same month last year," said Chief Executive Andrew Croft.

Ocado was the worst blue-chip performer, down 6.5% despite the latest Kantar figures showing the online grocer grew sales and its market share substantially in the 12 weeks to May 17.

Take-home grocery sales in the UK increased at the fastest rate since comparable records began in 1994, and consumers are now taking tentative steps out of lockdown with a marginal rise in shop visit numbers, research agency Kantar said.

Take-home grocery sales grew by 14% and online sales were 75% higher year-on-year, according to Kantar. Total grocery sales rose 14% to GBP31.41 billion in the period from GBP27.48 billion a year ago.

Ocado Group saw sales rise by 33% to GBP487 million, with its market share increasing to a new high of 1.6% from 1.3% a year ago.

Among the "Big Four" UK grocers, Tesco saw a 13% sales rise to GBP8.45 billion, but its market share fell to 26.9% from 27.3%. J Sainsbury also booked a 13% sales jump to GBP4.69 billion. Its market share fell to 15.0% from 15.2%.

At Wm Morrison Supermarkets, sales rose 9.8% year-on-year to GBP3.13 billion, with market share down to 10.0% from 10.4%.

Tesco shares were up 0.5% at midday, with Sainsbury's up 0.9% and Morrisons up 0.7%.

Pearson slipped 2.7% after Berenberg cut the educational publisher to Sell from Hold.

By Lucy Heming; lucyheming@alliancenews.com

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