Jobless tally falls | EasyJet cuts losses | shoppers cautious
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5pm: London cuts losses
The FTSE 100 finished the day on a negative note at 7,577 points, a 0.55% loss, but off its lows for the day largely because of the more positive tone coming from Wall Street and the rebound in US markets.
European markets came under pressure for a second day after China’s Premier Li Keqiang issued another warning of the effect that covid lockdowns would have on the Chinese economy.
The travel sector had a largely difficult trading day. British Airways parent International Consolidated Airlines Group fell 1.7%, Wizz Air lost 2.3% and Tui dropped 3.7%.
easyJet bucked the trend, however, rising 1.7%. It said it expects a narrowed half-year loss with current operations running broadly as planned despite widespread reports of disruption.
Asos rose 4.8% despite posting an interim loss as the fast fashion company faces an increasingly difficult market backdrop.
Brent was quoted at $104.70 a barrel at the time of the equity market close in London on Tuesday, up sharply from $98.80 on Monday evening.
9am: Markets hit by cost of living worries
Cost of living concerns hang over markets with the Office for National Statistics revealing that real pay for workers fell for the second month running as wage rises were more than offset by rising inflation.
EasyJet was lower even as the airline reported improved trading in the second quarter after the removal of Covid travel restrictions, and said summer bookings were tracking ahead of pre-pandemic 2019.
Miners and oil companies such as BP, Glencore, Fresnillo and Endeavour have managed modest gains.
Shares in engineering giant Rolls-Royce plunged after bankers at JP Morgan downgraded the stock to ‘underweight’ and slashed its target price.
The target price to 75p from 140p, sending shares tumbling more than 5%. JPMorgan said it had looked more closely at the engine maker’s ‘New Markets’ division, which focuses on electrical power for small aircraft and small modular reactors, and warned that it did not guarantee long term returns for investors.
The FTSE 100 was trading 63.51 points lower at 7,554.80.
7.30am: Jobless figure falls
Unemployment in the UK fell to a near-record low of 3.8% in the three months to February from 3.9%, while the the number of job vacancies reached a fresh high of 1.29 million- a rise of 492,400 roles compared with the pre-pandemic first three months of 2020.
In Scotland, unemployment was 3.5%, down 0.2 percentage points since December 2019-February 2020.
The average wage, excluding bonuses, rose by 4% in the three months to February compared with a year earlier.
7am: EasyJet cuts losses
Budget airline EasyJet said first half losses have reduced year on year, outperforming expectations, as self-help measures including network optimisation, ancillary products, and a continued cost focus deliver. It now expects losses in the range of £535million to £565m.
It has ramped up capacity throughout the quarter, operating at 80% of FY19 capacity in March. Since the announcement to remove UK travel restrictions on 24 January, it has seen a strong and sustained recovery in trading. Summer bookings for the last six weeks have tracked ahead of the same period in FY19 as customers book closer to departure.
Passenger numbers in Q2 increased to 11.5 million (Q2 FY21: 1.2 million).
EasyJet has very little exposure in Eastern Europe, with no routes into Ukraine, Russia or Belarus.
7am: Parsley Box loss
Ready meals company Parsley Box saw losses mount and new customers fall after a “challenging” year since it floated in March last year.
The loss for the year rose 206% from £3.18m to £9.73m.
7am: Calnex acquires software firm
Telecoms testing firm Calnex Solutions has acquired iTrinegy, a Stevenage-based software developer in a deal worth up to £3.5m.
12.01am: Shoppers show caution
UK retail sales slowed in March although spending remained above last year, reflecting more caution among shoppers as the rising cost-of-living and the conflict in Ukraine dented consumer confidence.
The British Retail Consortium (BRC) and KPMG’s retail sales monitor showed total sales rose 3.1% in March, slipping back from a 6.7% rise in February.
On a three-year basis, sales grew 5.4% last month compared with the same time in pre-pandemic 2019.
Helen Dickinson, CEO of BRC, said:”The rising cost-of-living and the ongoing war in Ukraine has shaken consumer confidence, with expectations of people’s personal finances over the next 12 months reaching depths not seen since the 2008 financial crisis.
“Furthermore, households are yet to feel the full impact of the recent rise in energy prices and national insurance changes.
“There is also potential for further supply chain disruption, with China putting key manufacturing and port cities into lockdown.
“Ultimately, consumers face an enormous challenge this year, and this is likely to be reflected in retail spend in the future.”
Oil prices continued to fall as China’s Covid resurgence worsened, raising concerns about demand from the world’s biggest crude importer.
Brent Crude was trading at around $100 a barrel, while West Texas Intermediate futures slid below $94 a barrel, touching the lowest level since late February.
Virus cases continue increasing in Shanghai, and there is no clarity on when restrictions will be lifted. The flare-up has led to disruptions at ports and prompted some refiners to trim operating rates.
Oil now has given up most of the gains seen since Russia’s invasion of Ukraine in late February following a tumultuous period of trading.
Wall Street stocks registered losses as the Fed continued to brace market participants for tighter monetary policy.
The Dow Jones Industrial Average was down 1.19%, while the S&P 500 was 1.69% weaker and the Nasdaq Composite saw out the session 2.18% softer.
Treasury yields were in focus throughout the session on Monday after the yield on the benchmark 10-year note exceeded 2.79%, a level not seen since January 2019.
Covid-19 related lockdowns in China and the Russia-Ukraine conflict were also drawing an amount of investor attention.