London close: Travel and leisure plays underpin positive finish

Market Close Report
15:26, 23rd February 2021

(Sharecast News) - London equity markets had broken back into positive territory by the close on Tuesday, as a rally in travel and leisure stocks offset consternation over inflation and the latest unemployment data.
The FTSE 100 ended the session up 0.21% at 6,625.94, and the FTSE 250 was 0.37% firmer at 21,057.72.

Sterling was in the green as well, last trading 0.21% stronger against the dollar at $1.4092, and rising 0.31% on the euro to change hands at €1.1604.

"After a promising start European markets have struggled to maintain their early market optimism though it has been notable, we've seen decent gains continue in the likes of travel and leisure stocks, with multi month highs in a lot of cases," said CMC Markets chief market analyst Michael Hewson.

"Over the last three days this renewed buoyancy has been evident in anticipation of a possible reopening, and with a set of deadlines to focus on, there is a renewed sense of optimism that we could well see an end point for restrictions which would mark a slow return to some sort of normal."

Investors were earlier digesting the latest figures from the Office for National Statistics, which showed the unemployment rate hit its highest level in five years in December.

The unemployment rate rose to 5.1% in the three months to the end of December from 5.0% in November, in line with economists' expectations and marking the highest level since early 2016.

Meanwhile, 726,000 jobs had been lost since before the pandemic in February 2020.

Still, the figures also showed that in January, 83,000 more people were in payrolled employment compared to December, making the second consecutive monthly increase.

"Our survey shows that the unemployment rate has had the biggest annual rise since the financial crisis," said ONS deputy national statistician for economic statistics, Jonathan Athow.

"However, the proportion of people who are neither working nor looking for work has stabilised after rising sharply at the start of the pandemic, with many people who lost their jobs early on having now started looking for work."

In equity markets, HSBC closed down 0.85% after it reported a 34% slump in annual profits, but resumed dividend payments as it said it would refocus operations on China.

Online supermarket Ocado and Just Eat Takeaway, both of which have benefitted from lockdowns and restrictions, lost ground a day after Boris Johnson laid out the government's plans for England to emerge from the current set of restrictions.

Ocado ended the day down 2.75%, and Just Eat Takeaway was 1.87% weaker.

On the upside, shopping centre owners Land Securities and British Land rallied 4.45% and 5.43%, respectively, amid the prospect of non-essential retailers being able to open.

Travel and leisure stocks were also sharply higher as budget airline easyJet said there had been a surge in bookings after Prime Minister Boris Johnson outlined the government's lockdown exit strategy on Monday.

British Airways owner IAG was up 1.97%, easyJet ascended 4.51%, engine maker Rolls-Royce was up 1.47%, caterer Compass Group advanced 1.55%, Cineworld rocketed 9.45%, Mecca Bingo owner Rank Group was 5.7% higher, WH Smith gained 7.23%, SSP surged 17.02%, and TUI managed to rise 2.63%.

InterContinental Hotels was in the red by 1.62%, however, reversing earlier gains after saying it swung to a full-year loss and scrapped its final dividend.

"The roadmap to reopening has accelerated the recovery in travel and hospitality stocks with fresh rises since the market open," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"The palpable sigh of relief that there are dates to target for struggling pub and restaurant chains, has translated into a share price rally for the sectors.

"Although international travel won't begin until at least 17 May, news that the government's global taskforce will reconvene in April to recommend how holidays can resume has been a boost for the industry which has been anxious for a sense of direction."

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