London midday: Stocks extend losses as travel sector slumps

London stocks had extended losses by midday on Friday, with travel shares under pressure as the UK added more countries to its quarantine list, while disappointing data out of China also weighed.

The FTSE 100 was down 2% at 6,062.97.

Data released earlier by China’s National Bureau of Statistics showed retail sales fell 1.1% on the year in July, which was an improvement on the 1.8% drop in June but missed expectations of a 0.1% increase. This marked the seven month in a row that sales have fallen.

Meanwhile, industrial output rose 4.8% on the year in July, matching June’s expansion rate and coming in below expectations of a 5.1% jump.

CMC Markets analyst Michael Hewson said the latest retail sales and industrial production numbers from China "continue to point to a weak recovery in the region".

"Retail sales growth in China hasn’t been the same since the country came out of lockdown at the end of February, though optimism over the July numbers had been increasing given recent positive data from the auto sector in July, as well as reports from the likes of Daimler, and Apple talking of some decent rebounds in their Chinese markets."

He said the decline in retail sales shows that the Chinese consumer remains "quite nervous about coming out of hibernation".

Trade issues were still very much in focus, with officials from the US and China due to meet on Saturday for a review of their deal.

"At the same time, markets will be keeping an eye on whether the stalemate surrounding the next round of US fiscal stimulus can be broken, even though the better-than-expected readings on the US economy could buy Congress more time," said Han Tan, market analyst at FXTM.

Later in the day, the focus will shift to the US, where retail sales figures for July are due at 1330 BST. They are expected to show a 2% increase on the month, down from 7.5% growth in June.

There was a dearth of UK corporate news - as tends to be the case in the middle of August - but travel-related stocks were under the cosh after the UK government added more countries to its 14-day quarantine list, including France, the Netherlands, Malta and Monaco.

British Airways and Iberia parent IAG, budget airline easyJet, travel company TUI, engine maker Rolls-Royce, WH Smith, InterContinental Hotels and Premier Inn owner Whitbread were all trading lower.

Neil Wilson, chief market analyst at Markets.com, said: "The move will force a large swathe of cancellations right at the peak of the summer holiday season for one of the largest markets for UK tourists. Half a million Brits are thought to be in France right now.

"Apart from the immediate damage this will do at the height of the school holidays and peak summer season, the quarantine decision also underlines the inherent risk you take in booking a holiday abroad right now, which will do nothing for consumer confidence."

Elsewhere, Domino’s Pizza was weaker after a downgrade to ‘sell’ at Citi.

On the upside, gambling company Rank rallied, with casinos due to reopen on Saturday as restrictions in England are eased further.

Market Movers

FTSE 100 (UKX) 6,062.97 -1.98%
FTSE 250 (MCX) 17,693.57 -1.29%
techMARK (TASX) 3,854.80 -1.57%

FTSE 100 - Risers

Smurfit Kappa Group (SKG) 2,724.00p 0.89%
Taylor Wimpey (TW.) 119.60p 0.08%
Admiral Group (ADM) 2,690.00p 0.04%
Hikma Pharmaceuticals (HIK) 2,324.00p -0.17%
BAE Systems (BA.) 532.80p -0.26%
Persimmon (PSN) 2,507.00p -0.28%
SEGRO (SGRO) 958.40p -0.50%
Berkeley Group Holdings (The) (BKG) 4,556.00p -0.59%
Polymetal International (POLY) 1,982.50p -0.63%
Antofagasta (ANTO) 1,101.00p -0.63%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 191.50p -6.31%
GVC Holdings (GVC) 760.60p -4.93%
Rolls-Royce Holdings (RR.) 255.00p -4.74%
Melrose Industries (MRO) 101.50p -4.56%
Informa (INF) 405.20p -4.03%
Glencore (GLEN) 170.12p -3.42%
Whitbread (WTB) 2,441.00p -3.40%
InterContinental Hotels Group (IHG) 4,085.00p -3.34%
Royal Dutch Shell 'B' (RDSB) 1,123.00p -3.22%
Avast (AVST) 562.50p -3.10%

FTSE 250 - Risers

HGCapital Trust (HGT) 252.00p 2.44%
Rank Group (RNK) 139.20p 2.35%
IWG (IWG) 275.60p 1.17%
Pershing Square Holdings Ltd NPV (PSH) 1,900.00p 1.06%
St. Modwen Properties (SMP) 313.50p 0.97%
Gamesys Group (GYS) 1,102.00p 0.92%
Schroder Oriental Income Fund Ltd. (SOI) 237.00p 0.85%
Scottish Inv Trust (SCIN) 745.00p 0.81%
JPMorgan Japanese Inv Trust (JFJ) 539.00p 0.75%
Herald Investment Trust (HRI) 1,716.00p 0.70%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 65.30p -7.44%
Petrofac Ltd. (PFC) 174.45p -7.21%
easyJet (EZJ) 567.00p -7.17%
Just Group (JUST) 51.75p -5.91%
TUI AG Reg Shs (DI) (TUI) 325.40p -5.60%
Capita (CPI) 35.90p -5.35%
Greencore Group (GNC) 122.00p -5.28%
Mitchells & Butlers (MAB) 165.20p -5.17%
Domino's Pizza Group (DOM) 341.00p -4.64%
Provident Financial (PFG) 173.50p -4.09%