London midday: Stocks gain on travel strength, manufacturing data
London stocks were still in the black by midday on Tuesday, with the FTSE 100 back above 7,000 thanks to strength in the travel sector and solid manufacturing figures.
The top-flight index was up 0.7% at 7,016.89.
IG analyst Chris Beauchamp said: "UK traders have returned from the bank holiday in optimistic mood, pushing the FTSE 100 back above 7,000. A rally in precious metals has put the gold/silver mining contingent at the top of the leader board, taking heart from gold’s strong performance of late against a more convivial backdrop for the safe haven due to the slowing of the rise in Treasury yields. Aramco’s strong numbers have also put the fight back into oil stocks, lifting BP and Shell by an appreciable amount in early trading.
"Positive news on travel plans for the UK have also provided the spark for gains in travel stocks such as IAG and Tui, building on hopes that the summer will see a decent return to holidaying; the likes of IAG have struggled to build on the good start to the year holding below recent highs, but if today’s news can be followed by more loosening of travel restrictions the sector might have found the catalyst for more gains."
On the data front, a survey showed the UK manufacturing sector surged in April, although disruptions to the supply chain continued to cast a shadow.
The IHS Markit/CIPS purchasing managers’ index rose to 60.9 in April from 58.9 in March. That was marginally above both consensus and the flash estimate, for 60.7, and the highest reading since a record 61.0 in July 1994.
Both output and new orders improved in April as lockdown restrictions eased and demand picked up, which in turn boosted employment.
However, supply-chain issues continued to dampen progress in some areas. "The sector remained beset by supply-chain delays and input shortages, which contributed to increased purchasing costs and record selling price inflation," IHS noted.
In equity markets, precious metals miners Fresnillo and Polymetal shone, but travel stocks were the best performers after the EU said on Monday that it will allow holidaymakers from countries with low coronavirus infections, such as the UK, and fully vaccinated tourists from June.
British Airways and Iberia owner IAG rallied, with the added boost of an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan Cazenove. The bank said that while 2021 is expected to remain very challenging, the prospects for 2022 onwards "look promising as global air travel starts to normalise".
"We anticipate turbulence on this journey but consider IAG an attractive long-term investment," JPM said.
Premier Inn owner Whitbread, budget airline easyJet and travel company Tui were also high risers.
Shopping centre owners British Land and Land Securities also rose amid brightening prospects after the reopening of non-essential stores.
Elsewhere, Mike Ashley’s Frasers Group gained after saying it was starting a share buyback of up to £60m to reduce its share capital.
On the downside, online supermarket Ocado, online electricals retailer AO World and Just Eat Takeaway - all of which have benefitted from Covid restrictions and lockdowns - were on the back foot.
Doorstep lender Provident Financial slumped as it that a review of its consumer credit division (CCD) is nearing completion and the outcome will be announced with its full-year results next week.
FTSE 100 - Risers
Fresnillo (FRES) 860.80p 4.52%
Royal Dutch Shell 'A' (RDSA) 1,406.20p 3.02%
BP (BP.) 312.05p 2.99%
International Consolidated Airlines Group SA (CDI) (IAG) 208.50p 2.81%
Royal Dutch Shell 'B' (RDSB) 1,334.80p 2.76%
Whitbread (WTB) 3,333.00p 2.74%
Land Securities Group (LAND) 740.00p 2.66%
Polymetal International (POLY) 1,534.00p 2.57%
British Land Company (BLND) 531.40p 2.51%
Next (NXT) 7,992.00p 2.44%
FTSE 100 - Fallers
Aveva Group (AVV) 3,372.00p -3.10%
Ocado Group (OCDO) 2,034.00p -3.00%
Intermediate Capital Group (ICP) 2,130.00p -2.56%
Pearson (PSON) 814.60p -1.86%
London Stock Exchange Group (LSEG) 7,266.00p -1.81%
HSBC Holdings (HSBA) 445.95p -1.51%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,398.00p -1.29%
Hikma Pharmaceuticals (HIK) 2,412.00p -1.15%
Standard Chartered (STAN) 514.00p -1.08%
Pershing Square Holdings Ltd NPV (PSH) 2,685.00p -0.92%
FTSE 250 - Risers
TUI AG Reg Shs (DI) (TUI) 448.80p 4.20%
Cairn Energy (CNE) 176.90p 4.18%
Frasers Group (FRAS) 534.50p 3.69%
Wood Group (John) (WG.) 291.60p 3.55%
Restaurant Group (RTN) 124.00p 3.33%
easyJet (EZJ) 1,070.50p 3.33%
Dechra Pharmaceuticals (DPH) 4,160.00p 3.12%
ITV (ITV) 124.60p 2.98%
Greencore Group (CDI) (GNC) 163.40p 2.96%
Syncona Limited NPV (SYNC) 244.50p 2.95%
FTSE 250 - Fallers
Provident Financial (PFG) 233.60p -4.58%
AO World (AO.) 267.00p -3.96%
UK Commercial Property Reit Limited (UKCM) 77.70p -3.36%
Elementis (ELM) 144.70p -3.28%
Just Group (JUST) 105.70p -3.12%
Oxford Instruments (OXIG) 2,115.00p -2.98%
CMC Markets (CMCX) 473.50p -2.97%
Baillie Gifford US Growth Trust (USA) 321.00p -2.87%
Softcat (SCT) 1,868.00p -2.56%
Allianz Technology Trust (ATT) 292.00p -2.50%