LONDON MARKET OPEN: Travel Stocks Hit Again As Countries Tighten Entry

(Alliance News) - London stocks started the week on a largely downbeat note, ignoring more optimistic trading in Asia, with travel stocks hit as countries tightened borders to stem the spread of coronavirus strains.

The junior AIM market, however, racked up gains as shares in boohoo and ASOS rose with the online retailers looking to pounce on collapsed high street chains.

The FTSE 100 index was down 16.37 points, or 0.2%, at 6,678.70 early Monday. The mid-cap FTSE 250 index was down 24.04 points, or 0.1%, at 20,572.87. The AIM All-Share index was up 0.6%.

The Cboe UK 100 index was down 0.1% at 664.35. The Cboe 250 was down 0.4% at 17,892.31, and the Cboe Small Companies down 0.2% at 12,224.54.

At the bottom of the FTSE 100 was British Airways-parent International Consolidated Airlines, down 8.4%, and jet engine maker Rolls-Royce, down 6.2%.

UK Prime Minister Boris Johnson last week warned that further measures could be required to stop new coronavirus variants entering the UK following the decision to suspend all the government's travel corridors.

Meanwhile, the US was set to join France, Israel and Sweden in pulling up the drawbridge to certain arrivals, with special concern about new strains of the pathogen that originated in Britain and South Africa.

In Washington, President Joe Biden will on Monday reimpose a ban on most non-US citizens who have been in Britain, Brazil, Ireland and much on Europe, as well as adding South Africa to the list, a senior White House official said.

On Sunday, France started demanding a negative PCR test for arrivals by sea and air from EU neighbours. Sweden said it would prohibit entry from neighbouring Norway for three weeks, after cases of the more infectious British strain were detected in Oslo.

At the bottom of the FTSE 250 was airline easyJet, down 6.1%, while Anglo-German tour operator Tui fell 5.2%

At the top of the mid-caps was TI Fluid Systems, up 3.6% after reporting an "exceptional" performance in the closing months of 2020.

Revenue for 2020 is seen at EUR2.8 billion, and on a constant currency basis the performance is expected to be in line with the decline in global light vehicle production volumes. However, full-year adjusted earnings before interest and tax margin are estimated to be slightly better than expected.

TI Fluid - which makes products that store and move fluids such as fuel and brake fluid around automobiles - declared an interim dividend of 6.74 euro cents per share, but said it won't be paying a final dividend.

"In light of the significant amount of the interim dividend now being declared and the anticipation that, despite exceptional operating and financial performance during 2020, adjusted net income for the 2020 financial year will be relatively low, the board has decided that it would not be practical to propose a nominal final year 2020 dividend under the dividend policy," the firm said, adding that it expects to return to its annual dividend policy in 2021.

The company said it has entered the new year with "solid momentum".

JTC rose 2.6%. The professional services firm said it performed well in the second half of the year and expects results in line with consensus expectations.

New business performance in the year was "strong" despite the ongoing pandemic, with the annualised value of new business won increasing 20% to GBP17.9 million with "good momentum" in the fourth quarter.

On AIM, boohoo shares rose 4.6% after buying the all of the intellectual property assets of department store chain Debenhams from its joint administrators for GBP55 million in cash.

The company will only be acquiring brands and associated intellectual property rights. The deal does not include Debenhams retail stores, stock, or any financial services.

"The transaction represents a fantastic opportunity to grow the group's target addressable market and increase the share of wallet opportunity through a new capital light and low risk operating model that is complementary to the group's highly successful direct-to-consumer multi-brand platform," said boohoo.

The AIM-listed firm said it intends to "rebuild and relaunch" the Debenhams platform. It expects to relaunch Debenhams on the group's platform in the first quarter of the 2022 financial year, which for boohoo begins in February.

boohoo Executive Chair Mahmud Kamani described the deal as "transformational".

ASOS was up 4.0%, meanwhile, as it confirmed exclusive discussions with Arcadia's administrators over the acquisition of the Topshop, Topman, Miss Selfridge and HIIT brands.

"The board believes this would represent a compelling opportunity to acquire strong brands that resonate well with its customer base. However, at this stage, there can be no certainty of a transaction and ASOS will keep shareholders updated as appropriate," ASOS said.

In mainland Europe, the CAC 40 in Paris was down 0.1% while the DAX 30 in Frankfurt was up 0.1% early Monday.

In Asia on Monday, the Japanese Nikkei 225 index closed up 0.7%. In China, the Shanghai Composite ended up 0.5%, while the Hang Seng index in Hong Kong closed up 2.4%.

The S&P/ASX 200 in Sydney closed up 0.4%.

Sterling was quoted at USD1.3704 early Monday, higher than USD1.3665 at the London equities close on Friday. The euro traded at USD1.2174 early Monday, flat on USD1.2175 late Friday.

Against the yen, the dollar softened to JPY103.73 versus JPY103.80.

Gold was quoted at USD1,851.62 an ounce early Monday, lower than USD1,853.00 on Friday. Brent oil was trading at USD55.65 a barrel, firm on USD55.55 late Friday.

The economic events calendar on Monday sees the World Economic Forum's Davos Agenda get underway virtually, with keynote speakers including China President Xi Jinping and Bank of England Governor Andrew Bailey.

By Lucy Heming; lucyheming@alliancenews.com

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