FTSE 100 close: Travel stocks shake off flu

By This Is Money
Updated:

 

Banks helped push the FTSE 100 index firmly into the black today as airlines hit by swine flu fears regained some of their losses.

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Part-nationalised Royal Bank of Scotland and Lloyds Banking Group drew positive comments from HSBC brokers, while British Airways was up almost 4% after falling for two days.

The Footsie closed 93.2 points up at 4189.6, held higher by a positive open on Wall St where the Dow Jones was last up 160.2 at 8177.1.

Investors hope the US economy's slide is moderating as gross domestic product figures out later today are predicted to show a slide of 5% in the first quarter, a slower pace than in the previous period, when GDP contracted at a 6.3% annual rate.

RBS and Lloyds found favour today after brokers said their participation in a taxpayer-backed insurance scheme for toxic debts had increased certainty over their balance sheets.

RBS was the leading blue-chip stock, up more than 12% or 4.1p to 36.8p, closely followed by Lloyds, up 7.9p to 103.5p, after HSBC lifted its target price on the pair. Barclays, also marked up by HSBC, gained 24.25p to 256.5p.

Investors returned to some stocks set back by swine flu concerns in recent sessions. BA added 5.5p to 148.6p and easyJet gained 17p to 319.25p, or almost 6%.

Holiday firm TUI Travel also saw a rise, with stocks up 3.5p at 256.75p, after suffering falls in the wake of the outbreak and its moves to cancel trips to Mexico. But Thomas Cook, which has also suspended travel to the country, saw its shares fall 2.75p to 263p.

And drugs firm GlaxoSmithKline, which previously advanced on hopes of increased demand for its Relenza product, eased back 9p to 1039p today.

Retail shares were also on the back foot, led by Argos owner Home Retail Group. The stock climbed the fallers board, losing 6.25p to 263.75p after full-year profits fell by almost a quarter and it said it expected further margin pressure this year.

The retailer announced a 24% slump in pre-tax profits £327.7m. But the numbers were slightly better than market expectations. CEO Terry Duddy said Home Retail 'continue to expect a difficult trading environment for the product markets in which we operate', and he added 'we remain in a position of planning cautiously in respect of the outlook for consumer confidence in general and for the level of discretionary household spending'.

The retailer has a strong cash position, according to Richard Curr at Blue Index, with net cash of £284m, and this supports the final dividend, held steady at 10p per share from last year.

'Blue index have tracked Home Retail shares, which have enjoyed a good run up to today's numbers,' says Curr. 'Due to this, and the uncertainty looking forward, we are short-term sellers of the shares, with a target price of 248p.'

Tesco was down 4.9p to 343p after figures yesterday afternoon showed another fall in its market share, down to 30.6% and 0.5% below a year ago.

Royal Dutch Shell shares were 29p higher at 1539p after the oil major reported better-than-expected first quarter results, although the haul of £2.2bn was still 58% lower than a year earlier.

Rival BP was 5.75p down at 489.25p following its own results on Tuesday.

Shares in Croda International were 31.5p down at 527p after the chemicals group announced first-quarter pre-tax profits of £21.7m. The numbers, boosted by 20.1% on the back of favourable currency transactions, are in line with expectations, while net debt at £395.8m at the end of March, is also in line.

'While the group expects weakness in the commodity and industrial markets to continue, Croda anticipates sales growth in its Consumer Care division and is confident in its outlook for this year,' says Curr at Blue Index.

'We see a solid set of numbers here compared to group peers, with net debt under control and cost cutting having a material impact. We are buyers of Croda, with a short-term target price of 597p.'

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