LONDON MARKET OPEN: Travel Stocks Lifted By TUI's Upbeat Guidance

(Alliance News) - Stock prices in London opened higher on Tuesday as the FTSE 100 rose back above the 7,500 mark, with travel stocks among the best performers after TUI raised annual earnings guidance.

The FTSE 100 index was up 54.80 points, or 0.7%, at 7,501.68. The mid-cap FTSE 250 was up 114.77 points, 0.6%, at 21,608.09, and the AIM All-Share was up 3.49 points, or 0.4% at 965.02.

The Cboe UK 100 index was up 0.7% at 12,705.20. The Cboe UK 250 was up 0.3% at 19,437.66, and the Cboe UK Small Companies was down 0.1% at 12,385.40.

In European equities, the CAC 40 in Paris was up 0.6% and the DAX 30 in Frankfurt up 0.9%.

In the FTSE 100, TUI was the standout performer, up 11% after the Anglo-German tour operator said strong travel demand, particularly from the UK, will help it offset cost pressures from the grounding of the Boeing 737 MAX.

For the three months to December 31, the company's underlying loss before interest and tax widened 77% to EUR146.9 million from EUR83.1 million the year prior. This was despite revenue rising 7.7% to EUR3.85 billion from EUR3.57 billion the year before.

TUI said it saw the "best booking volumes month in the company's history" during the three months to December - following the collapse of rival Thomas Cook in September last year.

TUI is predicting high single-digit percentage growth in financial 2020 revenue, versus previous mid-to-high single digit percentage growth guidance, due to currently strong trading trends in its Markets & Airlines business.

Annual EBIT is now expected to be between EUR850 million to EUR1.05 billion versus previous EUR950 million to EUR1.05 billion guidance range. The tweak in annual EBIT estimate was attributed by TUI to Boeing's intention to return 737 MAX to service by mid-2020 as compared with previous April return to service estimate.

"Overall, we see this as an encouraging statement. Booking trends across the group are favourable, especially in the UK, whilst progress continues to be made in across its higher value Cruise and Hotel divisions," said Shore Capital analyst Greg Johnson.

Fellow blue-chip travel stocks, easyJet and British Airways-owner International Consolidated Airlines Group were up 4.3% and 3.5%, respectively. Irish carrier Ryanair Holdings was up 2.1%.

United Utilities was up 3.0% after Jefferies double upgraded the water works to Buy from Underperform.

Ocado Group was up 1.2%, despite reporting a widened loss for financial 2019. The online grocer said its pretax loss widened in the 52 weeks ended December 1 to GBP214.5 million from GBP44.4 million a year prior due to an increase in operating expenses.

More positively, Ocado reported revenue growth of 9.9% during the year to GBP1.76 billion from GBP1.60 billion a year earlier, driven by an increase in the average number of orders per week.

Looking ahead, Ocado said it expects revenue growth of 10% to 15% in its current financial year, with operating margins improving. The company said it also expects to recover insurance proceeds related to Andover fire "over time".

In the FTSE 250, William Hill was the best performer, up 4.5% after the bookmaker announced a strategic partnership with New York-based CBS Sports, to provide official sports book and wagering data across all CBS Sports platforms and CBS television programming.

The high street bookmaker said the partnership will begin with initial integrations in March on the CBS Sports digital platforms, with a full rollout planned for the fantasy football season. William Hill said it will receive exclusive rights to promote its brand across CBS Sports digital properties, including through CBS Sports Fantasy. Financial terms of the deal were not disclosed.

In China, the Shanghai Composite closed up 0.4%, while the Hang Seng index in Hong Kong closed up 1.4%. Financial markets in Japan were closed for a public holiday.

Sterling was quoted at USD1.2900 Tuesday morning, lower than USD1.2922 at the London equities close on Monday.

Outgoing Bank of England Governor Mark Carney will address the Lords Economic Affairs Committee at 1535 GMT on Tuesday.

The euro traded at USD1.0909 early Tuesday, lower than USD1.0920 late Monday. Against the yen, the dollar was quoted at JPY109.91, up from JPY109.76.

European Central Bank President Christine Lagarde will be speaking at 1400 GMT on Tuesday.

"ECB President Lagarde and BoE Governor Carney also speak today. Lagarde will probably have to acknowledge recent poor Eurozone data when she addresses the European Parliament, which may cause her to again call for more fiscal stimulus. Carney will not be governor by the next BoE policy meeting but markets will still be interested in his comments," noted analysts at Lloyds.

Gold was quoted at USD1,566.20 an ounce Tuesday, lower than USD1,574.80 late Monday.

Brent was trading at USD53.78 a barrel Tuesday, firm against USD53.58 late Monday.

The economic events calendar on Tuesday has UK GDP and industrial and manufacturing data at 0930 GMT.

In addition, investor attention will be on Federal Reserve Chair Jerome Powell's take on the coronavirus fallout and the health of the US economy. The Fed chief will deliver his semi-annual testimony to Congress, appearing before the House financial services committee on Capitol Hill starting at 1500 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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