Market report

BA eyes Q2 profit | IHG recovers | US jobs growth solid


5pm: London closes sharply lower, US jobs grow

The FTSE 100 closed 115.33 points lower at 7,387.94 as investors grew concerned over the weakening economic outlook fuelled by higher inflation.

US job growth increased more than expected in April, underscoring the economy’s strong fundamentals despite a contraction in gross domestic product in the first quarter.

US non-farm payrolls rose by 428,000 jobs last month, the Labor Department said in its closely watched employment report today.

Economists polled by Reuters had forecast payrolls rising by 391,000 jobs. Estimates ranged from as low as 188,000 to as high as 517,000. The unemployment rate was unchanged at 3.6%.

However, US markets opened lower as expected, adding to yesterday’s battering. The Dow Jones is down 1.03%, while the S&P 500 is down 1.28% and the tech laden Nasdaq shaved 1.57%.

9.30am: London opens lower

Equity prices in London opened lower following heavy selling in New York as traders contemplated a sharp slowing in the economy.

The FTSE 100 index was down 36.48 points, or 0.5%, at 7,466.79.

BA owner International Consolidated Airlines fell 8.7% after missing market forecasts. Oil majors BP and Shell were among a handful of stocks in the green, up 1.5% and 1.6% respectively, tracking spot oil prices higher. Brent crude was quoted at $111.52 a barrel, from $110.84 late Thursday.

InterContinental Hotels Group was down 0.8% after the Holiday Inn parent’s first-quarter performance was soured by weak trading in China.

9am: McColl’s lifeline

Morrisons, the supermarket chain, has made an offer to rescue the troubled convenience store chain McColl’s Retail Group, according to City sources.

Full story here

7am: BA owner expects profit in Q2

British Airways pic

British Airways owner International Airlines Group (IAG) reported narrower losses in the first three months of the year and said it expects to return to profitability from the second quarter.

The company, which also owns Aer Lingus and Iberia, posted an operating loss of €731m compared with a loss of €1.07bn a year earlier.

Passenger capacity in the quarter was 65% of pre-pandemic 2019, up from 58% in the last three months of 2021.

“The continued easing of government-imposed travel restrictions, particularly in the UK, resulted in improved travel demand, with no noticeable impact from the war in Ukraine,” the company said.

“Premium leisure continues to be the strongest performing segment and business travel is at its highest level since the start of the pandemic,” said chief executive Luis Gallego.

“As a result of the increasing demand, forward bookings remain encouraging. We expect to achieve 80% of 2019 capacity in the second quarter and 85% in the third quarter. North Atlantic capacity will be close to fully restored in the third quarter.”

7am: Omega selling test business – raising capital

Omega Diagnostics is selling its HIV testing business and has announced plans to raise up to £7.25 million in a share issue.

The net proceeds of the fundraising, amounting to between £1.75m and £7.25m, depending on the take up of the open offer and the number of warrants exercised, will be used to initially fund the CD4 HIV testing business to divestment and provide additional working capital. 

Full story here

7am: Intercontinental Hotels

Intercontinental Hotels Group indicated a sharp recovery in the hospitality sector as people gradually resume leisure and business travel after countries eased pandemic-related restrictions.

The Holiday Inn owner’s RevPAR, or revenue per available room, was up 61% for the three months ended 31 March.

In a first quarter update, Keith Barr, chief executive of IHG & Resorts, said: “We’ve seen very positive trading conditions in the first quarter with travel demand continuing to increase in almost all of our key markets around the world.

“The high level of demand we have seen for leisure travel continues to drive increased rates and occupancy. We also continue to see a return of business and group travel, further supporting RevPAR improvements in many of our key urban markets.

“As occupancy levels rise and due to the strength of our brands, our hotels are seeing increased pricing power; in March, our hotels in the US achieved leisure rates up by more than 10% on 2019 levels and rate across the whole of the US business was 4% ahead.

“Trading in Greater China continues to be impacted by restrictions put in place to control rising Covid cases.”

Global markets

US stocks fell sharply, led by technology and other growth stocks, as investors assessed the implications of Federal Reserve’s most aggressive tightening of monetary policy in more than two decades.

At the close, the S&P 500 was 3.56% softer, the Dow Jones Industrial Average was down 3.12%, while the tech-focused Nasdaq Composite was 4.99% weaker.

Investors initially responded positively to assurances by chairman Jerome Powell that the Fed was “not actively considering” a larger 75 basis point rate hike. But the mood soured amid growing doubts over the he Fed’s ability to slow inflation without triggering a recession.

Wall Street nervousness returned after the latest weekly US jobless claims showed a surprise rise to 200,000, up from 181,000 the week before.

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