LONDON MARKET OPEN: Stocks lower as travel sector takes another hit

(Alliance News) - London stocks opened lower on Thursday morning after disappointing UK jobs figures, while airlines were hurt by changing UK travel restrictions.

The FTSE 100 index was down 13.84 points, or 0.2%, at 7,077.35 early Thursday. The mid-cap FTSE 250 index was down 52.55 points, or 0.3%, at 22,697.49. The AIM All-Share index was down 0.6% at 1,235.39.

The Cboe UK 100 index was down 0.3% at 704.20. The Cboe 250 was down 0.4% at 20,352.01, and the Cboe Small Companies down 0.1% at 15,221.26.

In mainland Europe, the CAC 40 in Paris was down 0.3%, while the DAX 30 in Frankfurt was broadly flat.

The UK unemployment rate unexpectedly edged up in the three months to May, but data pointed to a recovery in the labour market in June, the Office for National Statistics said on Thursday.

The unemployment rate for the three months to May was 4.8%, up from 4.7% for the three months to April. This was ahead of market expectations, according to FXStreet, which saw the unemployment rate remaining unchanged. The jobless rate started 2021 at 5.0%, representing the three months to January.

However, the labour market appears to have bounced back again in June. The number of payrolled employees has increased, with some regions now reaching above pre-pandemic levels, the ONS said. The number of payroll employees was up by 356,000 in June to 28.9 million.

Still, this remains 206,000 below pre-virus levels.

Sterling was quoted at USD1.3854 early Thursday, soft on USD1.3870 at the London equities close on Wednesday.

The euro traded at USD1.1840 early Thursday, up from USD1.1825 late Wednesday. Against the yen, the dollar slipped back after three days of gains. The greenback was quoted at JPY109.79, down versus JPY110.02 late Wednesday.

US President Joe Biden and German Chancellor Angela Merkel meet in the White House on Thursday as part of efforts to renew trans-Atlantic ties after the tensions unleashed by his predecessor's "America First" administration.

The chancellor is set to begin the day in Washington with a breakfast meeting with US Vice President Kamala Harris before talks with US business leaders and receiving an honorary doctorate from the Johns Hopkins University.

On the LSE, Avast was the best performer among blue-chips, surging 15% in early trade. NortonLifeLock and Avast confirmed they are in advanced talks regarding a possible combination.

A deal may be in form of a cash and share takeover offer by Norton for Avast, the two companies said. Possible terms were not disclosed.

The talks were first reported by the Wall Street Journal late on Wednesday. A deal could value Avast at around USD8 billion, assuming a typical premium to its closing market capitalisation of GBP5.20 billion, the WSJ said.

Following its rise early Thursday, Avast has a market cap just under GBP6 billion compared to NortonLifeLock's USD15.77 billion.

Under UK takeover rules, Norton will have to make a firm offer by August 11, or announce it will not make an offer.

Credit checking firm Experian was the second-best performer, up 3.3%, after reporting a strong performance in the three months to June 30.

Total revenue growth was 31% at actual exchange rates and 28% at constant exchange rates in the first quarter. Organic revenue growth was 22%, and all regions and segments delivered growth for the quarter.

The company said its improved performance was driven by an innovation-led strategy and a faster-than-expected recovery as economies emerge from the Covid-19 pandemic.

Experian said it now expects total revenue growth for the full financial year to March 31, 2022 in the range of 13% to 15%.

At the other end of the FTSE 100 index was Just Eat Takeaway.com, down 1.6%, despite posting growth in second-quarter orders.

Just Eat Takeaway also said it has gained market share in the UK. It said that its losses peaked in the first half and margins will pick up from here on in.

The company boosted its annual guidance. It now expects order growth of "more than" 45% for 2021, excluding new US acquisition Grubhub, raised from its previous forecast of order growth of more than 42%.

Total orders excluding the US rose 47% year-on-year to 212.4 million in the second quarter of 2021, from 144.9 million.

"The company's efforts in the historically under-invested legacy Just Eat markets have continued to drive growth and win online share. Just Eat gained online share in the UK, including a significant inflection in London with triple-digit order growth in the first half of 2021 compared with the first six months of 2020," Just Eat Takeaway said.

Budget airlines easyJet, Wizz Air and Ryanair were down 2.4%, 1.5% and 1.1%, respectively, while British Airways-parent International Consolidated Airlines Group lost 1.6%. TUI was down 2.7%.

The UK government has been accused of a "double standard" on international travel after it was announced Ibiza, Mallorca and Menorca would be added to the amber travel list due to a surge in coronavirus cases, little more than a fortnight after they went green.

The change for those returning to England, Scotland and Wales from Spain's Balearic Islands will take place at 4am on Monday, potentially sparking a rush for holidaymakers to return to avoid the need to quarantine.

Johan Lundgren, chief executive of easyJet, noted Covid-19 infection rates were rising in the UK but remained lower in much of Europe.

"So we cannot understand why the government is going to allow people to go to a nightclub – without a mask or social distancing – and yet is not comfortable with people going to the beaches of Europe, where the infection rates are lower than in the UK," Lundgren said.

In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.2%. In China, the Shanghai Composite closed up 1.0%, while the Hang Seng index in Hong Kong advanced 0.9%. The S&P/ASX 200 in Sydney closed down 0.3%.

"Equity markets mixed in Asia: up in China as data provides some comfort, but down in Japan and Australia as pandemic worries weigh," said Daiwa Capital Markets Analyst Chris Scicluna.

China's sharp economic rebound from last year's pandemic slowdown lost steam in the second quarter, official data showed, with consumers lacking the confidence to splurge.

The world's second-largest economy has staged a rapid recovery from last year's slump caused by the coronavirus pandemic, but its pace is easing with manufacturing slowing and consumer demand not picking up as quickly as expected.

China's GDP growth came in at 7.9% year-on-year in the April to June period, said the National Bureau of Statistics – a significant slowdown from the 18% surge in the first three months.

Gold was quoted at USD1,831.78 an ounce early Thursday, higher than USD1,822.70 on Wednesday. Brent oil was trading at USD73.58 a barrel, down from than USD76.16 late Wednesday.

Still in the economic events calendar on Thursday are the latest US jobless claims numbers at 1330 BST.

By Evelina Grecenko; evelinagrecenko@alliancenews.com

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