LONDON MARKET OPEN: Travel Stocks Push Rally Further On Lockdown Hopes

(Alliance News) - Momentum spilled over into the start of Wednesday's session with airlines and other travel stocks once again leading the FTSE 100 higher, as countries in Europe ease their Covid-19 lockdowns.

The FTSE 100 index was up 53.65 points, or 0.9%, at 6,121.41 early Wednesday. The mid-cap FTSE 250 index was up 114.17 points, or 0.7%, 17,047.59. The AIM All-Share index was up 0.2% at 855.74.

The Cboe UK 100 index was up 1.0% at 10,361.08. The Cboe 250 also was up 1.0%, at 14,602.96, and the Cboe Small Companies up 0.2% at 9,032.61.

In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt was 0.3% higher early Wednesday.

"The increasing prospect that a slowing infection rate and falling death count will see economies start to slowly reopen next month has seen equity markets across the globe get off to a flying start this week, building on the gains we saw last week," said Michael Hewson, chief market analyst at CMC Markets.

"Big gains in travel and leisure stocks, as well as retailers yesterday appear to be predicated on the assumption that after weeks of lockdown people will head off to sunnier climes, as the southern European economies of Spain, Italy and Greece look to roll out the red carpet in an attempt to salvage what is left of their holiday season, and industry," he added.

London-listed airlines got off to a flying start to Wednesday's session, with British Airways owner International Consolidated Airlines up 6.2% and easyJet up 5.5%, extending recent gains.

In the FTSE 250, TUI was up 14%, adding to Tuesday's 52% surge. Since the year began, though, the stock still remains 45% lower.

Despite a strong US session overnight and a higher start for Europe, stocks in Asia wobbled. The Nikkei 225 index in Tokyo closed up 0.7%, but in China, the Shanghai Composite ended down 0.3%, while the Hang Seng index in Hong Kong is down 0.7% in late trade.

Hong Kong riot police ringed the city's legislature on Wednesday to stifle any protests ahead of a debate over a law that bans insulting China's national anthem, the latest measure activists say is chipping away at free speech in the finance hub.

The debate 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.

Gold was priced at USD1,708.80 an ounce early Wednesday, lower than USD1,713.19 on Tuesday, reflecting Wednesday's risk-on mood. Brent oil was trading at USD35.53 a barrel, flat on USD35.61 late Tuesday.

The euro traded at USD1.0958 early Wednesday, down from USD1.0978 late Tuesday. Against the yen, the dollar was quoted at JPY107.49, soft versus JPY107.62.

Sterling was at USD1.2295 early Wednesday, lower than USD1.2346 at the London equities close on Tuesday.

On the London Stock Exchange, St James Place was up 4.0% after reporting "robust" April gross inflows even though they were lower than a year ago.

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, the wealth management business said.

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.

"We are encouraged by the robust gross and net inflows we have continued to experience during May, though the short to medium-term impact of government measures and economic volatility on our flows remains uncertain," Croft added.

Pearson was at the bottom of the index, down 2.3% at Berenberg cut the educational publisher to Sell from Hold.

Mid-cap Provident Financial was up 7.2% as it highlighted its strong liquidity position.

Regulatory capital was GBP710 million at April 30, equating to a core CET1 ratio of 33.4% and headroom of approximately GBP190 million above the minimum regulatory requirement. This is before taking into account the capital conservation buffer of GBP50 million, the subprime lender noted, which is held to be used in the event of a stress situation.

Underwriting standards have been "tightened significantly" in response to Covid-19. As a result, the four months to April has seen Vanquis Bank's new customer bookings reduced by 75%.

Moneybarn has remained open to new business throughout the Covid-19 crisis, while lending in Satsuma was temporarily paused. Restarting lending in Satsuma remains "under constant review".

By Lucy Heming; lucyheming@alliancenews.com

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