Market report: Mid-caps bounce as lockdown eased
Mid-caps jumped on Tuesday as investors reacted to a loosening of lockdown restrictions. A motley crew of retailers, travel firms and pubs – many of which had been among the worst-hit stocks during the recent market tumult – chalked up big gains, after Boris Johnson said on Sunday that all non-essential retailers would be allowed to open on June 15.
The easing is the first clear sign that the Government is looking at peeling back the tight lockdown restrictions that have led to widespread closures.
A wave of easing from other countries added to the mix, sending the FTSE 250 up more than 3pc to 16,933.4 points, leaving it as one of Europe’s top-performing indices, with a slew of companies chalking up double-figure percentage point gains.
The FTSE 100 also shot out of the gates, but lost momentum as the day went on, ending up just 1.2pc at 6,067.8, roughly in line with its continental peers. Travel stocks led both indices, as Germany and other countries began to loosen flight restrictions.
British Airways owner International Consolidated Airlines and fellow carrier easyJet were the biggest blue-chip climbers. IAG jumped 43p to 233.8p, while easyJet, which also announced its chief financial officer would step down, jumped 107.8p to 665.2p.
Reviewing travel measures across Europe, Stephanie D’Ath of Royal Bank of Canada said Britain was standing out for the wrong reasons due to its incoming quarantine measures for travellers. She said exposure to the UK was “detrimental at this point”.
Analysts at Citi concurred, saying Britain was now “a clear outlier” and that the quarantine “will cast doubt on the UK-focused airlines and their respective schedules”.
Travel and tourism firm Tui led risers on the FTSE 250, soaring 52p to 458.8p. Its shares are still worth less than half their start-of-year price.
SSP, which operates commuter-friendly food stores including Upper Crust, jumped 59p to 305.2p, while WH Smith – which has many of its branches in airports and travel hubs – rose 159.5p to £11.22.
Other companies holding out for an easing of restrictions also climbed – among them movie theatre operator Cineworld, retail landlord Hammerson and serviced offices firm IWG.
Clive Black of Shore Capital said many shopkeepers would be hoping that virus metrics continued to ease, allowing reopening to proceed smoothly.
He added, however: “It will also, sadly, be interesting to see just how many stores do not reopen; a reasonable list of what were relatively vulnerable retail chains before the coronavirus crisis have gone into administration through the spring.”
Pub chains also jumped. Mitchells & Butlers rose 39.8p to 192.2p, while JD Wetherspoon climbed 105p to £11.19. Peel Hunt analysts said Wetherspoons, flush with cash after a recent share sale, was now “ready to press home its advantage” within the vulnerable sector.
