LONDON MARKET PRE-OPEN: Wizz, Ryanair traffic up; Grafton CEO to leave

(Alliance News) - Stock prices in London are seen opening solidly higher on Monday, starting the week in bullish fashion despite virus fears in China and worrying developments in the war between Russia and Ukraine.

IG futures indicate the FTSE 100 index is to open 75.4 points higher, 1.1%, at 7,244.05. The blue chip index edged up 0.63 of a point to 7,168.65 on Friday. The blue-chip index lost 0.6% over the course of last week.

In early corporate news, budget carriers Wizz Air and Ryanair recorded sharp traffic growth in June. DIY retailer Grafton Group has kicked off a search for a new chief executive, while Supermarket Income REIT has acquired a series of new assets for GBP82.9 million.

Wizz Air said its June passengers numbers more than doubled to 4.3 million from 1.6 million a year earlier. Capacity rose to 5.0 million seats from 2.4 million and load factor improved to 86.1% from 64.0%.

Ryanair, meanwhile, said its June passenger numbers surged to 15.9 million from 5.3 million a year earlier. Ryanair's June passenger numbers were its best so far this year, eclipsing May's 15.4 million.

The figures come as airports across the globe are gripped with cancellations and delays. Carriers, which cut jobs in the wake of the Covid-19 pandemic, have struggled to cope with a pick-up in demand as restrictions have eased.

Over the weekend, International Consolidated Airlines Group's British Airways and Heathrow Airport welcomed measures to help airlines prevent last-minute flight cancellations over the summer.

UK government regulations will allow a one-off "amnesty" on airport slots rules, enabling airlines to plan ahead and deliver a more realistic summer schedule with a view to minimising disruption at airports.

Airlines will be able to cancel flights without being penalised for not using their airport slot, but must finalise their summer schedule by this Friday.

Slots are used to manage capacity at the busiest airports, giving airlines authorisation to take off or land at a particular airport at a specified time on a specified day.

Airlines must use slots a certain amount of times each season in order to keep them, and this "amnesty" is giving them the leeway to put a more manageable schedule in place without the risk of losing a slot due to cancelling flights.

Elsewhere in London, Selco owner Grafton said Gavin Slark plans to step down as chief executive, after 11 years at the helm.

He will stay on as Grafton's boss until the end of the year, "in line with his service agreement".

"A process to appoint a successor will commence immediately with the support of an executive search firm," Grafton said.

Fellow FTSE 250 listing Supermarket Income REIT said it has purchased a Tesco superstore in Basingstoke and an Asda supermarket in Doncaster for a combined GBP82.9 million.

The Tesco deal also includes an M&S Foodhall and an Iceland unit, as well as a 16-pump petrol filling station.

"The store is an online hub for Tesco, operating 13 home delivery vans and a dedicated Click & Collect facility in the car park. The property also includes an M&S Foodhall, Iceland and further complementary non-food tenants. The Tesco store has a remaining lease term of 12 years and is subject to 5-yearly open market rent reviews," the real estate investment trust said.

On the Asda buy, it added: "Asda has operated from the site since the 1970s with the store being fully refurbished in 2019. The store supports Asda's online fulfilment in the area through Click & Collect. The property was acquired via a direct sale and leaseback transaction with Asda under a new 100 year lease. The property is subject to 5-yearly rent reviews which are upwards only and CPI-linked (subject to a 2.5% cap and a 0.0% floor)."

It has paid GBP82.9 million in total for the sites, representing a combined net initial yield of 4.9%.

Supermarket Income has also sealed a GBP412.1 million unsecured credit facility with a bank syndicate comprising Barclays, Royal Bank of Canada, Wells Fargo and Royal Bank of Scotland International.

"This is the first time the company has accessed unsecured debt financing," it said.

Elsewhere in London, filtration, laboratory and environmental technology firm Porvair reported an improved interim performance.

Revenue in the six months to May 31 increased 18% to GBP82.3 million from GBP69.7 million a year earlier. Pretax profit rose 6.7% to GBP9.5 million from GBP8.9 million.

It lifted its payout to 1.9 pence per share from 1.8p.

"While the group has managed supply dislocation and inflationary pressure satisfactorily thus far, both are expected to persist for the rest of 2022," it cautioned.

"The strong current order book is flattered in places by extended lead times, but the underlying order position remains healthy, with aerospace and laboratory demand notably stronger than one year ago. The focus for the coming months is on margins. The group will continue to pass on cost increases where necessary and has accelerated investments in productivity. 2022 has started strongly and provided economic conditions allow the outlook for the balance of the year is promising."

Pawnbroker H&T said demand for pledge lending increased in the first half of 2022.

Its pawnbroking pledge book surged to GBP84.2 million at June 30 from GBP48.3 million a year earlier.

"Pledge lending remains at record levels, with incremental growth month on month over the period. Lending volume is currently over 40% above pre-pandemic levels. Average loan sizes, loan to value ratios and redemption rates have been maintained," H&T said.

Retail sales, meanwhile, are line with expectations, and gold purchasing has been "buoyant". Foreign currency revenue doubled annually and volumes are edging closer to pre-pandemic levels.

The company also announced a GBP4.3 million deal to buy Swiss Time Services, an independent watch servicing and repair centre based in Essex.

In Tokyo on Monday, the Nikkei 225 closed 0.8% higher. In China, the Shanghai Composite was up 0.3%, while the Hang Seng in Hong Kong was down 0.4%. In Sydney, the S&P/ASX 200 surged 1.1%.

China placed 1.7 million people under lockdown in central Anhui province, where authorities reported nearly 300 new cases Monday in the latest of a string of outbreaks testing Beijing's no-tolerance approach to Covid-19.

The country is the last major economy wedded to a zero-Covid strategy, responding to all cases with strict isolation orders and tough testing campaigns.

The outbreak in Anhui – where officials first found hundreds of cases last week – comes as the Chinese economy begins to rebound from a months-long lockdown in Shanghai and disruptive Covid restrictions in the capital Beijing.

Also a potential sentiment-sapper on Monday, the Ukrainian army retreated from the strategic city of Lysychansk over the weekend, as Russia claimed a major victory by seizing control of the entire eastern Lugansk region.

The Ukrainian withdrawal followed weeks of fierce fighting and marked a decisive breakthrough for Moscow's forces more than four months after their invasion and after turning their focus away from the capital Kyiv.

Leaders from dozens of countries and international organisations will meet Monday in Switzerland to map out a "Marshall Plan" to rebuild Ukraine – aimed to begin even as Russia's war efforts continue to rage.

The pound was quoted at USD1.2104 early Monday in London, up from USD1.2034 at the equities close on Friday. The euro was priced at USD1.0431, up from USD1.0406. Against the safe haven Japanese yen, the dollar was trading at JPY135.39, up from JPY135.19.

Brent oil was quoted at USD112.18 a barrel early Monday, up from USD110.84 late Friday. Gold was quoted at USD1,811.75 an ounce, up from USD1,806.73.

Still to come on Monday's economic calendar is a eurozone producer price inflation report at 1000 BST.

By Eric Cunha; ericcunha@alliancenews.com

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