FTSE 100 closes up 64 points
Oil and gas biggest risers
EasyJet COO resigns amid travel chaos
4.45pm: FTSE closes in the green
FTSE 100 closed firmly higher on Monday as commodity stocks did well and Wall Street was closed for the July 4 holiday.
Britain’s blue-chip benchmark closed up 64 points, or 0.89%, at 7,232.
“The FTSE 100 is around 1% higher, given a lift by oil and oil stocks as Europe enjoys a quiet session thanks to the US holiday,” said market analyst Chris Beauchamp from online trading platform IG in a note.
“European futures were looking strong at the beginning of the day but the session has seen continental Europe edge back while oil prices keep supporting the FTSE 100,” he added.
“A fresh surge in crude prices during the day has bolstered BP and Shell, providing hope that the UK leading index still has the power to outshine other indices. But as ever it is the absence of the US that is problematic – Wall Street has driven the selloffs this year, and today’s gains could easily slip away tomorrow.”
4pm: AO World reassures
AO World PLC (LSE:AO.) insisted its finances are nothing to worry about after a report from The Sunday Times said one of its credit insurers may be withdrawing support.
AO reassured investors that it had access to an £80mln credit facility and has been working on “actions to strengthen its balance sheet,” as it trades in line with expectations.
Numis and Jeffries commented that Atradius, the credit insurance provider, had stopped its cover at the beginning of May, with the news first reported over the weekend.
Its shares crashed 18% to a two-year low of 55.7p on Monday afternoon.
Credit insurance usually protects companies if one of their customers goes bankrupt between delivery and payment, with limited cover often a worrying sign for cash flow.
AO has nosedived over 85% since its all-time high in January 2021, when its online sales were bolstered by pandemic-related spending.
3.17pm: Plummeting real wages leaves households ‘brutally exposed’
Fifteen years of languishing incomes have left households “brutally exposed” to the rising cost-of-living crisis, according to a Resolution Foundation report.
In the decade-and-a-half leading up to the pandemic, the average income of working-age families rose by just 0.7% per year. For context, it was on average 2.3% between 1961 and 2005.
Not only was this significantly slower wage growth than in prior decades but UK inflation reaching 40-year highs has further exacerbated this problem for households.
The think tank Resolution reported that many families have not been able to save up the necessary amounts to comfortably live during times of such economic uncertainty.
2.31pm: Scandinavian airline SAS latest to announce strikes
Scandinavian airline SAS became the latest people carrier to confirm strikes after failing to reach an agreement with pilots.
It claimed the intended walkout was “devastating for SAS and puts the company’s future together with the jobs of thousands of colleagues at stake.”
Trade unions that represented approximately 1,000 SAS pilots said in June its members would refuse to work at one of the airline’s busiest times of the year after not agreeing upon a new collective labour agreement.
The airline said it was likely to provide refunds or tickets for a later date but admitted rebooking customers would be “highly limited.”
Meanwhile, various other airlines have announced large strikes during the peak summer holidays as travel chaos has shown little sign of easing.
Over 700 mostly check-in staff at Heathrow Airport have already voted to strike in the summer holidays, which is expected to severely disrupt family getaways.
Workers’ wages were slashed by 10% during the pandemic and their pay has remained at this level since. BA offered a one-off payment – equal to 10% of their salary – but the staff want the cut fully reversed.
The GMB and Unite unions have also been consulting engineers and call centre staff at Gatwick, Glasgow, Manchester and Newcastle on taking action.
Various strike talks at Britain’s biggest airline have been going on since the start of the year, with its share price taking a 35% hit in that period.
Onto the UK-listed budget airlines, Ryanair Holdings PLC (LSE:RYA) has already done or is expected to strike across several European countries.
Meanwhile, Spanish EasyJet PLC staff voted overwhelmingly in favour of action on many peak travel days this summer.
Both companies’ shares sunk over 20% in the last month as strike dates were confirmed.
1.50pm: EasyJet COO resigns amid travel chaos
EasyJet PLC chief operating officer Peter Bellew resigned following a turbulent few years for the budget airline, which most recently has seen strikes and staff shortages lead to cancelled flights.
Bellew reportedly stepped down on 1 July, EasyJet commented, with David Morgan, director of flight operations, taking his role temporarily.
Bellew will “pursue other business opportunities and in the meantime is committed to ensuring a smooth transition,” the company said.
Thousands of EasyJet flights already have been or will be delayed or cancelled amid significant staff shortages.
Although John Lundgren, chief executive, insisted it was “absolutely focused on delivering a safe and reliable operation this summer.”
This resignation was just a month after trade union Unite accused the airline of a “lack of leadership” and blamed Bellew for not “taking control of [the] situation.”
1.09pm: Sterling strengthens
The pound strengthened on Monday after advancing away from two-week lows as investors await the Bank of England’s monetary policy plans on future interest rates later this week.
Sterling jumped 0.1% against the dollar to US$1.211, while it was also up by 0.1% against the euro to 86.08p.
Two of the monetary policy committee (MPC) members will speak this week, with chief economist Huw Pill and Catherine Mann expected to address strategies on Wednesday and Thursday respectively.
The pound last week ended its largest six-month drop since 2016, when the UK voted to leave the European Union, with the Sterling down over 10% compared to the dollar in 2022.
12.23pm: Fuel prices rise but wholesale costs fall
Fuel prices have continued flirting with record highs despite nearly a month of lower wholesale costs.
Petrol reached a new all-time high of 191.53p a litre on Sunday, while diesel was just 0.04p below its record at 199.03p a litre, on average, the AA said.
Although wholesale costs have been falling since the wake of the Jubilee weekend, with petrol costs for fuel retailers 10p lower last week compared with early June.
Diesel has experienced the same decline but not by the same magnitude.
Luke Bosdet, AA fuel spokesman, commented: “It is an outrage, plain and simple, that the fuel trade could be slashing petrol prices as the nation heads towards the holiday season, but isn’t.
“The retailers came up with an excuse that demand had fallen to 80% for some.
“Yet, last week, official statistics showed that petrol consumption is still at 94% of normal.”
11.37am: Pub numbers reach record low
English and Welsh pubs plummeted to their lowest levels on record as the hospitality sector’s woes showed little sign of easing.
In 2020, pubs were forced to close due to Covid-19 and many businesses lost out on over a year’s revenues. But now, in the wake of the pandemic, pubs are having to deal with surging energy prices, soaring wholesale costs and higher tax payments.
There were just 39,970 pubs in June – a reduction of over 7,000 since 2012, according to real estate consultancy Altus Group (TSX:AIF).
The West Midlands had the most pub closures in the first half of the year, at 28, while London and Eastern England were close behind with 24.
In 2019 – the year before the pandemic – the sector grew for the first time in a decade but the unpredictable events just a year later halted the growth.
J D Wetherspoon PLC, which has over 900 pubs in the whole of the UK and Ireland, saw its share price drop 0.6% to 631.5p.
10.50am: AO World drops
AO World PLC (LSE:AO.) (AO World PLC (LSE:AO.)) sunk 16% on Monday afternoon as investors got spooked by a weekend report that one of its credit insurers might be withdrawing support.
The Sunday Times suggested one of its suppliers might be cutting back on cover, which would force the white goods retailer to pay upfront for stock, raising concern about cash flow.
Shares fell 10.6p to 57.4p, valuing the business at £281mln.
AO sells home essentials including fridges, ovens and washing machines.
During the pandemic, AO boomed as lockdowns hit competitors such as Currys PLC (LSE:CURY) (Currys PLC (LSE:CURY)) and its share price rocketed.
But its value has crashed by over 85% from the all-time high seen in January 2021, when lockdowns and online spending were still rampant.
10.10am: Ryanair and Wizz Air passenger numbers rocket
Now onto airlines, which in recent months have also been subject to mayhem, cancellations and delays on staff shortages.
Budget air carriers Ryanair Holdings PLC (LSE:RYA) and Wizz Air Holdings PLC (AIM:WIZZ) had mixed share price responses to surging June passenger numbers.
Ryanair said it carried 15.9mln people, which was triple the amount compared with the same month in 2021, while its load factor soared 95%.
Meanwhile, Wizz Air reported an increase in June passenger numbers of 180% to 4.3mln.
Although it must be noted, flying last summer was a headache and most potential holiday-goers were put off.
Many Covid-19 tests were required to fly in and out of the UK, pushing prices higher and demand lower.
On Monday morning, the non-UK-listed Ryanair climbed 3.7% in France, while Wizz Air dropped 3.1% on the London Stock Exchange.
9.30am: Campaigners cause chaos on the roads
Drivers and commuters have experienced enough chaos on the road in recent weeks but there was a new reason for delays this time.
Campaigners against skyrocketing fuel prices blocked some motorways during Monday morning’s rush hour.
Protesters made a rolling blockade along the M4, heading towards the Prince of Wales bridge, with similar actions expected in Yorkshire and Essex.
Police warned of “serious disruption throughout the day,” with motorists advised to stay home if possible.
Howard Cox, founder of the FairFuelUK Campaign, said: “These are not just demonstrations against the record excruciatingly high petrol and diesel prices that rise each and every day.
“They are also about the sickening chronic manipulation of pump prices and the complete lack of scrutiny by our out-of-touch government, in allowing unchecked petrol and diesel profiteering to run rife.”
8.55am: Oil and gas push FTSE higher
Almost an hour into open, the FTSE 100 was up 0.9%, or 65 points, as the main UK index echoed America’s positive end to last week.
The blue-chip index was led by giant oil and gas companies, with Harbour Energy PLC (LSE:HBR) stealing the headlines, having advanced 4.1% to 346.2p.
Its larger rivals, BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL), were not far behind at all in second and third place, after climbing 3.5% and 2.7% respectively.
Russ Mould, investment director at AJ Bell, said: “A small bounce back in the oil price was enough to give BP and Shell a lift and provide welcome support to the FTSE 100 index.
“Oil supplies have been watched closely in recent weeks amid concerns about a slowdown in the global economy.
“Fundamentally supplies continue to be tight and there is still enough economic activity to stop oil prices slumping.”
American markets are closed on Monday for Independence Day, while European investors await eurozone inflation data later today.
7.20am: Footsie to rally
FTSE 100 was expected to rally after US markets perked up at the end of last week.
Financial spread betting firms were pencilling in gains of around fifty points for London’s blue-chip index a couple of hours before the open.
Wall Street is shut today for the 4th of July celebrations but for the rest of the week the news comes thick and fast ending with the monthly drama that is the US non-farm payrolls data on Friday.
The latest US quarterly corporate earnings also start to be published and Liberum is warning that this season is likely to be a lot worse than current forecasts suggest with worrying trends also for new orders.
“Our analysis suggests that earnings should be downgraded by some 13% in coming months but even that is unlikely to be enough,” it said.
The broker adds that orders in both Europe and the US are also now at levels indicating a recession, especially in the US.
“Going back 50 years, the only time we saw these levels was at the beginning of a recession and during the 1991 recession, we didn’t even see levels as low as this.
“Current readings of the US NOI not only indicate a recession, but that one is starting right now or may have already started.”
In the UK, Monday has little in the way of scheduled news, but, like in the US, it gets busy later in the week.
Flash manufacturing and services data on the economy will give an insight into the economy while the impact of rising inflation and squeezed incomes is also likely to figure prominently in updates from some big companies.
Retailers J Sainsbury and Currys, housebuilder Persimmon, bookmaker Entain and holiday group Jet 2 (read more) are among the household names issuing statements.
6.50am: Early Markets – Asia / Australia
Asian shares were mixed on Monday with the Reserve Bank of Australia expected to lift the official interest rate to 1.35% at Tuesday’s board meeting. It is expected to rise to 2.35% by year’s end.
The central bank’s pivot to inflation fighting could spark a decline in mortgage lending of up to 40% in coming months, according to Swiss-based global investment bank UBS.
The Shanghai Composite in China gained 0.27% while Hong Kong’s Hang Seng index slipped 0.34%.
Japan’s Nikkei 225 was trading 0.83% higher but South Korea’s Kospi was on the backfoot, trading 0.50% lower.
Australia’s S&P/ASX200 advanced 1.1%, led by strong gains across the energy and real estate sectors.
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