Market report

Ryanair rises, warns on Covid | costs hit SMEs


5pm: Market dips

Markets posted cautious gains, with the exception of recession-threatened Germany which was hit by a further cut in Russian gas supplies. The FTSE 100 ended up 29.93 points, or 0.4%, at 7,306.30.

While the the euro faded to $1.0215, the pound was on the up, rising to $1.2041

The US Federal Reserve will make its next statement on Wednesday and is widely expected to raise interest rates by 75 basis points.

Wall Street is looking ahead to figures from Google owner Alphabet and Microsoft, before Amazon and Apple on Thursday.

In London, the bank reporting season gets into swing with Lloyds and NatWest the stand out players reporting half-year figures. Standard Chartered rose 3.1%, NatWest climbed 2.3% and Barclays added1.8%.

There was a negative read-across in aviation after Ryanair warned it could not “ignore the risk” of new Covid variants in Autumn (see below). Ryanair ended down 0.1% in Dublin.

Shares in easyJet, which reports a trading statement on Tuesday, ended 0.8% lower. British Airways owner International Consolidated Airlines Group lost 0.9% and Jet2 fell1.3%.

Brent oil was quoted at $104.78

7am: Ryanair rises

Ryanair has posted an after-tax profit of €170 million for the three months to the end of June, its first profit in the quarter in three years but well short of pre-Covid-19 profit levels.

The Irish airline, Europe’s largest by passenger numbers, said it was too soon to provide a meaningful profit guidance for its financial year, which ends on 31 March, 2023.

Chief executive Michael O’Leary said his optimism was tempered by concerns over new Covid variants.

“While we remain hopeful that the high rate of vaccinations in Europe will allow the airline and tourism industry to fully recover and finally put Covid-19 behind us, we cannot ignore the risk of new Covid-19 variants in Autumn 2022,” he said in a statement.

Traffic during the three month period recovered strongly to 45.5m passengers, up from from 8.1m during the same period last year.

However, average fares were down 4% on the same quarter pre-Covid and Russia’s invasion of Ukraine in February damaged Easter bookings.

7am: Vodafone falls in Germany

Mobile operator Vodafone said there had been a fall in first quarter service revenue in Germany, its largest market. Overall service revenue growth grew quarter-on-quarter.

Nick Read, group chief executive at Vodafone, said in a first quarter update: “We have executed in line with our expectations, delivered another quarter of growth in both Europe and Africa, and seen an acceleration in business growth.

“Whilst we are not immune to the current macroeconomic challenges, we’re on track to deliver financial results for the year in line with our guidance.

“Our near-term focus on our operational and portfolio priorities remains unchanged. We’ve made good progress towards stabilising our commercial performance in Germany, and we continue to actively pursue opportunities with Vantage Towers and to strengthen our market positions in Europe.”

12.01am: Costs hit confidence

Rising cost pressures and a shortage of skilled workers continue to hit confidence at Scotland’s small businesses.

The Federation of Small Businesses said 91% of Scottish respondents to its survey had reported a rise in costs during the second quarter.

Andrew McRae, the FSB’s policy chairman for Scotland, said: “Many independent and local businesses are finding trading conditions merciless.

“Every penny spent at the pump or on energy bills is cash that can’t be used elsewhere.

“Businesses in sectors such as retail, tourism and hospitality — especially in rural areas — are finding it difficult to recruit and retain staff . . . far too many businesses say they’re operating at far from their maximum capacity, which slows down their ability to recover from . . . the pandemic.”

Global markets

After a positive week for equity markets, a hawkish Federal Reserve could easily put paid to the dovish sentiment this week and bring volatility back into stock market. This would likely benefit the US dollar.

The European Central Bank will consider the economic situation before deciding whether to press ahead with another big interest rate hike in September, policymaker and fiscal hawk Robert Holzmann said on Sunday.

“The economy will grow less strongly, the forecasts point in this direction, that has made us somewhat cautious,” said Holzmann, who heads the Austrian National Bank. “We will see in the autumn what the economic situation is. Then we can probably decide if we do another 0.5% or less.”

Last Thursday the ECB raised its benchmark deposit rate by 50 basis points to zero percent, its first hike in 11 years as it joined global peers in jacking up borrowing costs.

In Asia, the Nikkei 225 index in Tokyo was down 0.8%. In China, the Shanghai Composite was down 0.7%, while the Hang Seng index in Hong Kong was down 0.9%.

Among companies declaring results, NatWest will report first half numbers on Friday.

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