Daily Business Live
Travel stocks fall; services at 24 year high; B&M improves
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5pm: London dragged lower by green list change
Shares in leading travel companies tumbled after the government removed Portugal from the UK’s green list of safe destinations.
Tui, Europe’s biggest travel group, lost 4.5% of its value as its shares fell by 19.75p to 419.75p, while easyJet, the budget airline, dipped 5%, down by 51.25p to 959.25p.
Ryanair was down 4.5% and International Consolidated Airlines Group, the owner of British Airways, was 11.25p, or 5.4% lower. Jet2, largely focused on the holiday market, fell 64.25p or 4.7 %.
The FTSE 100 ended the session down 0.61% at 7,064.35, and the FTSE 250 was off 0.57% at 22,802.40.
9.45am: Services grow sharply
The UK’s service industry grew last month at its fastest rate in 24 years.
The UK Composite Purchasing Managers’ Index (PMI) for services rose to 62.9 in May, up from 61 in April. Any score above 50 indicates growth.
IHS Markit also said that employment grew at the fastest rate in six years following the loosening of coronavirus restrictions.
The figures point to a sharp uplift in GDP in the second quarter.
However, there has also been the steepest increase in prices charged by service providers since the survey began in 1996. This added to concern that the rapid rebound from the pandemic could see a similarly dramatic jump in the rate of inflation.
9am: FTSE 100 drifts
The FTSE 100 defied expectations of an early rise by drifting 49 points lower at 7,058.85, though analysts expect Wall Street to open in positive mood and could help lift London stocks towards the end of the session.
Richard Hunter, head of markets at Interactive Investor, said: “Markets are treading water ahead of more economic data points which will further inform the inflation debate.”
B&M European Value Retail was marked down 4% in the early exchanges despite a firm set of results (see below).
Some investors may have booked profits after seeing the stock rise 41% over the past year, and there was also a warning in the statement of volatility ahead.
AJ Bell financial analyst Danni Hewson said : “Having received the prized ‘essential retailer’ status thanks to its groceries offering, the company was able to trade at a time when most rivals, other than the supermarkets, were shuttered.
“This inevitably allowed the B&M to snaffle market share and set a very hard act to follow for 2021. There was also a stockpiling effect in the early stages of Covid-19 which further inflated sales.
“While some level of drop off is only to be expected, shareholders will be crossing their fingers that the business can hold on to at least a decent chunk of the new customers it won in 2020.”
BT fell 3% after Deutsche Bank’s analyst switched a recommendation on the stock to ‘sell’.
7am: B&M improves
B&M European Value Retail has warned that 2022 UK revenues will be lower as it reported better than expected annual profits.
The discounter has remained open throughout the pandemic and said adjusted core earnings rose 83% to £626.4m on the back of a 26% rise in revenue to £4.8bn. Statutory pre-tax profits rose 108% to £525m.
“Trading continues to be volatile at a weekly and product category level, in particular since the recent easing of lockdown restrictions. This is likely to remain the case for the whole of full-year 2022, as the business annualises against the very strong comparatives throughout last year,” it said.
“As such, the B&M UK business expects to see a decline in like-for-like revenues in full year 2022 compared to 2021, but is focused on delivering a healthy two year LFL versus 2020.”
The company said like-for-like sales in the first nine weeks of fiscal 2022 were down 1% year on year.
The FTSE 100 was expected to follow the US and Japan with a further rise after closing above 7,100.
US employment data tonight and European PMI data, also due later, will be the focus of attention in a week shorn of corporate announcements.
Wall Street closed positively. The Dow Jones Industrial Average added just 25 points or 0.07%, while the S&P 500 gained just 0.14% and the Nasdaq Composite edged up 19 points or 0.14%.
Japan’s Nikkei 225 advanced 0.45% but Hong Kong’s Hang Seng was 0.6% lower. The Shanghai Composite edged slightly higher.