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London open: Stocks led lower by EasyJet and IAG as Turkey worries weigh
London stocks opened in the red on Thursday as geopolitical concerns weighed ahead of the first announcement from the European Central Bank since the UK’s vote to leave the EU.
The FTSE 100 was down 0.32% at 6,707.57 an hour after the market opened, with travel stocksEasyJet, IAG and TUI leading the fallers as Turkey declaring a state of emergency, while the FTSE 250 was sitting 0.36% lower at 6,704.88.
The ECB is expected to maintain the status quo when its decision is published at 1245 BST before the bank’s president Mario Draghi addresses the media at 1330 BST.
CMC Markets’ Jasper Lawler said: “There is no real expectation of the ECB adding to measures only recently implemented at its meeting on Thursday. The euro has fallen and the German DAX has recovered most of its post-Brexit losses so there is no financial tightening for the ECB to combat. The central bank is likely to remain in wait-and-see mode.
“The key, as is mostly the case, will be in the words of President Mario Draghi. Markets are looking for Mr Draghi to give some indication that the ECB is willing to act in case Brexit begins to weighs on the Eurozone economy. Any sort of vaguely specific timeframe for new stimulus could see EUR/USD finally crack the 1.10 handle, but given the likely inaction, a short squeeze appears more likely.”
On the UK data calendar, retail sales are duye from the Office for National Statistics at 0930 BST. In the US, initial jobless claims and the Philadelphia Fed survey are at 1330 BST, while existing home sales and leading indicators are at 1500 BST.
In corporate news, budget airline EasyJet led the fallers as news from Turkey coincided with a drop in revenue per seat and total revenue for the third quarter amid difficult trading that was hit by the terror attack in Brussels and the EgyptAir tragedy.
For the quarter ended 30 June, total revenue per seat was down 8.3% at constant currency or 7.7% on reported basis to £54.54, while total revenue fell by 2.6% to £1.196bn as increased seat capacity was offset by the impact on yield of overall market capacity and cancellations as a result of external events.
Unilever spiked but then lost momentum as it reported on a solid underlying rate of sales growth of 4.7% in the second quarter. However, first-half turnover fell and the company said it was preparing for tougher market conditions as it sees no sign of an improving global economy.
Group sales decreased by 2.6% at current exchange rates but increased by 5.4% at constant exchange rates, with core earnings per share up 1.3% at current exchange rates and 7.5% at constant rates.
SSE said the external operating environment continues to have an impact on the company, calling recent reforms imposed by the regulator as “considerable” that had to be implemented into a “fast changing energy supply market”.
The energy group added that the outcome of the UK’s referendum to leave the European Union “could lead to aspects of the financial, regulatory and political environment becoming more uncertain in the years ahead”.
Megabrewer SABMiller hit an all-time high as it announced that the US Department of Justice has given its clearance on the company’s proposed combination with AB InBev. The merger has now received approval in 21 jurisdictions.
As part of the consent decree, AB InBev has agreed among other conditions to divest SABMiller’s US interest in MillerCoors to Molson Coors. It said the divestiture, which was previously announced between AB InBev and Molson Coors, is conditional on the successful closing of the combination of AB InBev and SABMiller.
