HomeBusinessMARKET REPORT: Airlines gain altitude as Covid restrictions ease

MARKET REPORT: Airlines gain altitude as Covid restrictions ease

Major airlines flew high yesterday amid evidence passengers were once again taking to the skies as pandemic travel restrictions ease.

British Airways owner IAG was the biggest riser on the FTSE 100 – up 7.4 per cent, or 10.94p, to 158.9p – as investors hoped the industry would see a return to normality.

Sentiment was boosted by an update from budget carrier Wizz Air, which reported a 243 per cent increase in passengers year-on-year to 7.8m in the three months to December 31 while revenues soared 173 per cent to £341million. 

Take off: British Airways owner IAG was the biggest riser on the FTSE 100 – up 7.4% – as investors hoped the industry would see a return to normality

But losses more than doubled to £223million amid surging fuel and staffing costs.

Wizz also predicted demand would be hit in the first three months of 2022 due to the rise in Omicron infections. The shares slid 0.2 per cent, or 8p, to 4250p.

With a spike in demand for half-term holidays next month, other holiday firms were on the up.

Easyjet rose 5.2 per cent, or 31.6p, at 635.4p, Jet2 bounced 7.5 per cent, or 91.5p, to 1305p, and Tui gained 5.4 per cent, or 13.3p, to 259.3p. 

Stock Watch – IG Design

Shares in greeting card and stationery maker IG Design lost half their value after it scrapped its divi and issued a major profit warning.

Supply chain delays incurred ‘significant’ costs for its US business, and lower sales ate into its profit margins.

As a result, its full-year earnings are expected to be ‘significantly below’ market expectations. 

It also did not issue guidance for the coming year due to the challenges. The stock crashed 58 per cent, or 147p, to 107p.  

Package holiday group On The Beach added 7.8 per cent, or 22p, to 305p, Holiday Inn owner Intercontinental Hotels rose 2.8 per cent, or 132p, to 4847p and Whitbread, which runs Premier Inn, was up 2.4 per cent, or 70p, at 3039p.

The FTSE 100 jumped 1.3 per cent, or 98.32 points, to 7469.78 while the FTSE 250 climbed 1.05 per cent, or 227.37 points, to 21873.08.

The blue-chip index continued to benefit from bargain hunting as well as the popularity of its more defensive constituents such as banks and mining firms.

However, market jitters lingered amid tensions between Russia and Ukraine and ahead of the Federal Reserve’s update. 

Oil stocks bobbed higher as the risk of war in eastern Europe drove crude prices to levels not seen for more than seven years at close to $90 a barrel. It is feared a conflict will disrupt supplies from Russia.

Shell added 5.4 per cent, or 97.8p, to 1909.8p while BP jumped 3.8 per cent, or 14.45p, to 394.1p.

Banking stocks were also boosted by a note from Barclays which predicted the sector would deliver ‘stronger revenues’ than predicted and raised target prices on several institutions.

Among these were HSBC, up 2.6 per cent, or 13.3p, to 522.7p, NatWest, which rose 2.7 per cent, or 6.4p, to 244.2p, and Standard Chartered which climbed 2.3 per cent, or 22.8p, to 524p.

Lloyds was also up 2.2 per cent, or 1.12p, at 52.03p while Barclays lifted 2.8 per cent, or 5.5p, to 202.2p.

Meanwhile, resource giant Glencore gained 2.6 per cent, or 10.15p, to 399.1p and BHP added 3 per cent, or 69.5p, to 2398p. 

Rio Tinto also rose 2.3 per cent, or 123p, to 5434p despite a target price cut from Goldman Sachs. 

However, it was not all smiles in the sector, with Mexican miner Fresnillo sinking 14.6 per cent, or 117.2p, to a 20-month low of 687.8p after missing its silver production targets for 2021.

The group also cut its 2022 guidance as it grappled with staff absences caused by Covid as well as changes to labour laws limiting its ability to use contractors, leading to shortages of equipment.

Sensyne, the medical data firm founded by Labour peer Lord Drayson, shot up 27.9 per cent, or 4.25p, to 19.5p after it secured a £11.4million financing package that will provide it with funds while it explores options to sell itself or conduct a management buyout. 

The deal comes nearly two weeks after it said it could go bust next month.

Bus firms Stagecoach and National Express were in focus as their £1.9billion merger was put on hold as the Competition and Markets Authority probes the tie-up.

It has ordered them not to sell any UK assets until its review is completed. Stagecoach rose 1.6 per cent, or 1.5p, to 90.1p. National Express gained 1.4 per cent, or 3.6p, to 260p.

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