London’s FTSE 100 finished lower on Friday as travel-related stocks fell and after the S&P 500 and Nasdaq opened lower, with a rise in US bond yields weighing on highly valued tech stocks a day after the S&P 500 set a record closing high.
By the close on Friday, the benchmark FTSE 100 index was down 0.38% at 6,915.75 points, though the high-flying FTSE 250 ended 0.02% higher at 22,251.26.
TRAVEL STOCKS TUMBLE
Shares in International Consolidated Airlines (IAG), TUI (TUI), On the Beach (OTB) and Jet2 (JET2:AAIM) all fell following the publication of the government’s report into foreign travel.
Even if foreign travel gets the go-ahead next month the season has already been curtailed and airline and package holiday provider Jet2 said it won’t even think about restarting holidays until the end of June because of a lack of clarity and detail, sending its shares 5.1% lower to £12.98.
Diagnostics firm Novacyt (NCYT:AIM) slumped 39% to 422p after the testing specialist warned sales and profits for 2021 may fall short of market expectations due to a failure to extend its supply contract with the UK’s Department of Health and Social Care.
Elsewhere, sportswear retailer JD Sports Fashion (JD.) jumped 4.45 to 910.4p after Berenberg raised its price target on the stock.
BABCOCK SLUMPS ON WRITEDOWN REPORTS
Engineering company Babcock (BAB) cheapened 2.7% to 230.5p as it reportedly gets set to announce a string of asset write-downs costing several hundred million pounds, according to a Financial Times report citing unnamed sources.
While the final figure for the write-down is expected to become clearer in the coming days, analysts have estimated that it could be as high as £700 million, according to the report.
The company is set to deliver a strategic review alongside its full-year results next month, but an update could be announced in the coming days.
RIO TINTO AGREES $2.3 BILLION COPPER MINE DEAL
Mining giant Rio Tinto (TIO) softened 1.3% to £56.82 after entering into an agreement with Turquoise Hill Resources for an updated funding plan of about $2.3 billion to complete the Oyu Tolgoi mine in Mongolia, one of the largest known copper and gold deposits in the world.
Rio Tinto and Turquoise Hill Resources will reprofile principal debt repayments up to $1.4 billion with lenders under the existing project finance arrangements to ‘better align’ with the revised mine plan, project timing and cash flows.
They’ll also look to raise up to $500 million in senior supplemental debt under the existing arrangements from ‘selected international financial institutions’.
Military equipment company Avon Rubber (AVON) gained 1.5% to £34.82 as it said it remains ‘confident’ of achieving its expectations for the current financial year as positive momentum continued into the second quarter.
Revenue for the first half of the year is expected to be $122 million, up from $87 million. The growth included a first-time contribution from Team Wendy of $20 million during the first five months of ownership.
FRASERS FLAGS FURTHER WRITEDOWNS
Retailer Frasers (FRAS), formerly Sports Direct, edged 0.8% higher to 501p despite flagging a further write-down in excess of £200 million to its assets due to the pandemic, as it envisaged a third wave of Covid-19 would result in further lockdown restrictions.
‘In our ongoing assessment we note the continuing Government and Government advisor pronouncements regarding ‘third waves’ and normality being ‘some way off’, meaning further restrictions are in our view almost certain,’ the company said.
Tour operator TUI tumbled 2.7% to 386.5p as it launched a convertible bond offering of €350 million to improve its liquidity position, with an option to increase the issuance volume to €400 million.
However investors weren’t impressed given the company had estimated liquidity of only €1.6 billion at the end of March and monthly cash burn between €250-300 million, with the bond offering adding only an extra month of liquidity despite an uncertain summer period ahead.
OTHER NEWS
Recruitment business PageGroup (PAGE) soared 11.9% to 560p after announcing a gross profit of £184.2 million in the first quarter of the year, up 2% versus the first quarter of 2020 as the company delivered record results in March in many markets.
Online fashion retailer Boohoo (BOO:AIM) dipped 0.4% to 343.4p as it agreed a long-term lease for a new warehouse in Daventry, due to become operational in the second quarter of the group’s financial year.
This site will support the group’s expansion and adds capacity in addition to its existing facilities in Burnley, Sheffield and Wellingborough. In aggregate, these sites will give the group net sales capacity in excess of £4 billion, and the company plans to invest £50 million in the coming years to further boost capacity.
Private label loo rolls-to-facial tissues maker Accrol (ACRL:AIM) advanced 6.9% to 62p as it announced the £3.9 million acquisition of John Dale, a flushable and biodegradable wet wipes business.
