LONDON MARKET OPEN: No tailwind for travel stocks on 'Freedom Day'

(Alliance News) - London stocks dived at the market open on Monday with travel firms failing to receive a boost from England's 'freedom day' from lockdown curbs, after the UK government tightened restrictions on holidaymakers heading to France.

"The lack of warning about the need for travellers from France to isolate for ten days from today has thrown holiday plans into fresh mass chaos, with hopes of a boost to summer bookings evaporating," said Susannah Streeter, senior investment & markets analyst at Hargreaves Lansdown.

The FTSE 100 index was down 87.03 points, or 1.2%, at 6,921.06 early Monday. The mid-cap FTSE 250 index slumped 300.04 points, or 1.3%, to 22,166.96. The AIM All-Share index fell 0.6% to 1,214.19.

The Cboe UK 100 index was down 1.2% at 689.19. The Cboe 250 was down 1.6% at 19,833.98, and the Cboe Small Companies down 0.5% at 15,011.33.

In mainland Europe, the CAC 40 in Paris was down 1.3%, while the DAX 30 in Frankfurt was 1.1% lower early Monday.

"Investors have moved risk averse for the moment, as a number of persistent concerns weigh on sentiment," said Richard Hunter, head of markets at Interactive Investor.

He noted concerns over the spread of the Delta variant. The more infectious strain has sent coronavirus cases surging from Europe to Asia.

"The general breadth of economic concerns has inevitably spread to the UK market, with the likes of the oil and mining sectors under pressure within the premier index on fears of slowing growth," said Hunter.

Shares in miners such as Antofagasta, Anglo American and Glencore were down 2.3%, 2.3% and 2.0%, respectively, early Monday.

Another group in the red were travel stocks, despite the UK government lifting pandemic restrictions on daily life in England.

UK Prime Minister Boris Johnson – who is self-isolating after his health minister was infected – urged the public to remain prudent and for any laggards to join the two-thirds of UK adults who are now fully vaccinated. He defended the reopening – dubbed "freedom day" by some media – despite scientists' grave misgivings after daily infection rates in Britain topped 50,000, behind only Indonesia and Brazil.

Fully vaccinated residents returning from "amber list" destinations in Europe no longer have to quarantine – although in a last-minute policy shift, the government has kept the requirement in place for France.

International Consolidated Airlines, owner of British Airways, fell 4.2% in early trade. Holiday Inn parent InterContinental Hotels Group fell 3.2%.

Cruise operator Carnival was down 6.4% in the FTSE 250 and budget airline easyJet fell 3.9%.

Buyers of sterling also were lacking in enthusiasm as England opened up. The pound was quoted at USD1.3717 early Monday, slipping from USD1.3788 at the London equities close on Friday.

In the green in London early Monday was Sumo Group, shooting up 42% to 509 pence after the video game services provider agreed to be taken over by Chinese technology giant Tencent in a deal worth GBP919 million.

Existing shareholder Tencent offered 513 pence per share in cash for the Sheffield, England-based provider of creative and development services to the video game industry, a 43% premium to Sumo's closing price on Friday of 358.00p.

In other M&A news, Audioboom shares rose 8.7% to 962p. All Active Asset Capital said it is in "constructive discussions" with Audioboom about a possible offer for the podcasts producer at GBP12.00 per share.

If an offer is made, AAA said, it would consist of 12.5 new AAA shares and 200p in cash per Audioboom share. This would value Audioboom shares at GBP12.00 each, a premium of 36% to Friday's closing price of 885p. That would make the offer worth about GBP188 million.

AAA has received irrevocable undertakings to accept such an offer in respect of 4.1 million Audioboom shares, representing 26% of its share capital. However, there can be no certainty that any firm offer will be made, it stressed.

The euro traded at USD1.1783 early Monday, down against USD1.1810 late Friday. Against the safe-haven Japanese yen, the dollar fell to JPY109.85 versus JPY110.15.

Gold was quoted at USD1,809.97 an ounce early Monday, down against USD1,813.55 on Friday.

Brent oil was trading at USD72.44 a barrel, down on USD73.27 late Friday after the world's leading oil producers agreed on Sunday to continue to modestly boost output from August.

In a rare challenge to OPEC leader Saudi Arabia, the UAE had rejected a proposed deal earlier this month as "unjust", leading to a stalemate. But in a compromise, Sunday's discussions agreed to adjust output quotas next May for the UAE, Iraq, Kuwait, Russia and Saudi Arabia itself, meaning their actual cuts will be less.

Saudi Energy Minister Prince Abdulaziz bin Salman, who chairs the OPEC group, declined to say how the new quotas were decided and beneficiaries chosen, saying it had been part of "consensus building".

The economic events calendar on Monday has eurozone construction output at 1000 BST.

By Lucy Heming; lucyheming@alliancenews.com

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