Leading shares made an early attempt to move higher after Monday’s near 3% surge, but the rally has soon run out of steam.
Investors have been buoyed by hopes that central banks would keep supporting the global economy with stimulus measures. New moves from China and the European Central Bank have been suggested, while the Federal Reserve seems less likely to raise US rates this year after Friday’s weak jobs data.
But with poor German factory orders and renewed worries about the eurozone after Spain’s budget proposals were deemed not sufficient, markets have turned negative. Germany’s Dax is down 0.4% while the FTSE 100 has fallen 19.10 points to 6279.82.
Airlines are bucking the downward trend. EasyJet is up 4p at £18.12 after the budget operator reported a 7.6% rise in September passenger numbers compared to a year ago. The load factor - a measure of how much capacity is being used - rose from 92.2% to 93.1%.
Its full year profit guidance remained at between £675m to £700m. Analysts at Liberum issued a buy note, saying:
An interesting aside - easyJet’s full year traffic figures saw it post an eighth consecutive annual increase in load factors. Over that period, it has improved its load factor from 83.7% to this year’s 91.5% (year to September). Meanwhile, Ryanair has gone from 82% to 91% in just two years, highlighting the speed of Ryanair’s improvements and repositioning.
Meanwhile British Airways owner International Airlines Group has climbed 13p to 597.5p, making it the biggest riser in the leading index, in the wake of an update on Monday.
But mining shares have moved lower as commodity prices continued to be under pressure. Glencore, which soared on Monday on vague talk of possible takeovers or disposals, has slipped back 4.3p to 110.7p, while Antofagasta is down 14p at 523.5p. HSBC analysts cut their price target on both businesses.
Among the mid-caps, Greggs has impressed with its latest update, with its shares climbing 63p to £11.39.
But pharmaceutical group BTG has dropped 53p to 610p after it warned revenues would be at the lower end of expectations due to delays in sales of Varithena, its varicose vein treatment. Analysts at Jefferies kept their buy recommendation, however:
Most other key products are performing well, but we expect focus to be on Varithena which, despite BTG remaining confident in its longer-term potential, is likely to send the shares down... today, in our view. We still believe the current share price more than discounts Varithena risks, hence the buy rating.
Panmure Gordon was also positive:
The long- term potential with Varithena remains attractive in our view as the company expands reimbursement coverage and pipeline plans in interventional medicine remain compelling.
