Market report

Travel and oil weak on Covid fears | Burberry CEO quits


10pm: Wall Street lower

The Dow Jones Industrial Average was down 0.44%, while the S&P 500 ticked up 0.23% and the Nasdaq Composite saw out the session 0.98% firmer.

5pm: Travel shares down on Covid worries

British Airways pic

Travel stocks were under pressure after Germany pushed the European Union to designate the UK a “country of concern” and introduce strict quarantine measures for British travellers.

German chancellor Angela Merkel is understood to be pushing the proposal, which will apply regardless of whether or not travellers have been fully vaccinated, because the Delta variant is now so widespread in the UK. Other countries may tighten up on travel.

Shares in British Airways-owner IAG fell 6%, with budget airlines Ryanair, Wizz Air and easyJet all lower. Rolls-Royce which manufactures and services aircraft engines, was also weaker.

Whitbread, owner of the Premier Inn budget hotel chain fell 3%. Shares in holiday firm TUI and cruise ship operator Carnival were also lower.

Oil stocks also fell as prices slipped back ahead of this week’s OPEC+ meeting amid concerns that new restrictions will act as a brake on the pace of global reopening, with BP and Royal Dutch Shell lower.

Elsewhere, Burberry Group shares fell 195p or 8.67% to 2059p after Marco Gobbetti, its chief executive, announced he was leaving the company.

The luxury fashion chain said Mr Gobbetti will step down as chief executive officer at the end of 2021 after nearly five years with the company.

He is taking up another opportunity that will enable him to return to Italy to join Italian luxury group Salvatore Ferragamo and be closer to his family.

The FTSE 100 closed down 63.1 points at 7,072.97.

7am: NatWest Irish deal

Natwest Group is selling most of its Irish subsidiary Ulster Bank’s commercial lending unit to Allied Irish Banks.

The deal will see AIB take over around €4.2 billion in gross performing commercial lending and associated undrawn exposures of around €2.8 billion, Natwest said in a statement.

It follows an announcement in February when NatWest said it would withdraw from the Irish market.

7am: Greggs

Fast food chain Greggs said that in recent weeks the impact of pent-up demand for retail has reduced but, nonetheless, like-for-like sales growth in company-managed shops has remained in positive territory ranging between 1% and 3% compared to the same period in 2019.

“This level of sustained sales recovery is stronger than we had anticipated and, if it were to continue, would have a materially positive impact on the expected financial result for the year,” it said in an update.

7am: Lookers delays results

Car dealer Lookers has announced a 24-hour delay to the publication of its final results for the year ended 31 December 2020 due to be published on 29 June, saying its new auditor, BDO, requires “slightly more time” to conclude the audit process.

“The board is mindful that under the Financial Conduct Authority’s amended Disclosure Guidance and Transparency Rules, the group’s 2020 results need to be published by 30 June 2021,” it said in a statement.

“The board’s view is that this timetable is still achievable, but some timing risk still exists in the completion of audit processes.”

The company said trading in the four-month period to 30 April 2021 was strong and these positive trends have continued into May and June where it has seen robust consumer demand and ongoing outperformance of the UK retail new car market. 

However, it add that there remains some uncertainty around supply restrictions in both new and used vehicles, which have been tightening in recent weeks.

“Notwithstanding these uncertainties, given the strength of performance during the first half of 2021, the board expects the full year performance to 31 December 2021 to be significantly ahead of current expectations.

7am: Burberry chief quits

Luxury fashion chain Burberry said Marco Gobbetti will step down as chief executive officer at the end of 2021 after nearly five years with the company to take up another opportunity that will enable him to return to Italy and be closer to his family.

7am: Petrofac

Oil services group Petrofac warned that orders were likely to remain depressed in engineering and construction this year due to the ongoing pandemic.

The company said the recovery in oil prices still had not resulted in a significant increase in capital spending by clients.

It is focused on improving productivity and cost-competitiveness to mitigate the impact of challenging market conditions.

The group’s backlog fell to $4 billion at the end of May from $5bn at year-end 2020, due mainly to its suspension from competing for contracts in the UAE by Adnoc Group.

The Abu Dhabi firm made the decision after watchdogs announced in January that a former Petrofac employee had pleaded guilty to further bribery charges relating to contract awards in the country in 2013 and 2014.

Global markets

Airlines and travel firms are likely to come under pressure amid growing concerns over the spread of the Delta variant of Covid-19.

However, new health secretary Sajid Javid is said to be keen on a rapid easing of lockdown restrictions to allow the economy to continue its revival.

Asia’s main markets opened in subdued mood, while a rainstorm delayed the start to trading in Hong Kong.

Stocks in the Asia-Pacific region slipped as official data showed profits at China’s industrial firms rose by 36.4% in May, weaker than a 57% year-on-year growth posted in April.

The Shanghai Composite fell 0.13% and Hong Kong’s Hang Seng index was 0.08% lower.

The Nikkei 225 dipped 0.15% while South Korea’s Kospi off by 0.12%.

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