FTSE 100 opens higher as traders ignore gloom; worst rail strike in 30 years looms

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Travel chaos has continued to strike misery for expected holiday-goers and workers across the UK.

EasyJet PLC said it will cancel a further 7% of its 160,000 flights between July and September.

This followed on from Gatwick airport revealing it would slash the number of flights during peak summer season on staff shortages.

Tens of thousands of passengers have already been impacted by cancellations and delays, with many left stranded overseas during the half-term holidays.

Meanwhile, the largest rail strike in 30 years will begin tomorrow in England, Scotland and Wales, according to a treasury minister.

The strikes, which will be on Tuesday, Thursday and Saturday, were sparked by rail staff who were not satisfied with their stagnating pay and potential job losses. They will also take place across the London Underground on Tuesday.

Transport for London warned disruption will continue on non-strike days on fewer staff, with travellers advised to only travel if absolutely necessary.

EasyJet shares sunk 3.1% to 423.6p on Monday morning.

9.31am: Crypto reverses weekend’s losses

While equity markets were switched off over the weekend, it was carnage for cryptocurrencies.

A massive sell-off hit the sector on Saturday and sent the price of bitcoin below the $18K mark, the lowest level since the end of 2020, while ethereum fell below $900, its weakest in almost a year and a half, and other smaller cryptocurrencies followed their larger peers in beating a hasty retreat. 

“All anyone is talking about this morning is the chill winds blowing from the crypto winter,” says market analyst Neil Wilson at Markets.com.

“Exchanges all over the place are halting withdrawals amid liquidity problems as investors (bagholders) rush for the exits. Rising interest rates, an acute risk-off mood across markets, a thinning of liquidity is all to blame: in short the end of free money from the Fed means the artificial pump that created these assets is no longer working.”

Sunday saw a rebound, says Ipek Ozkardeskaya at Swissquote Bank, “as dip buyers piled in on belief that bitcoin may have cheapened enough to catch an interesting dip, but cryptocurrencies remain at a slippery ground as factors that triggered this weekend’s selloff are still in play. And the level of stress in the market intensifies, both from the macro and industry specific perspectives.”  

In other company news, easyJet PLC shares are down nearly 3% as the airline released a summer trading update, trimming its passenger traffic guidance and planning price increases as it outlined new measures to address flight caps at Gatwick airport (read more here).  

BA owner IAG is on the leaderboard though, despite many of its passengers being hit by the latest flight cancellations, this time due to a Heathrow Airport baggage mountain

8.23am: More sanguine than expected

Defying predictions of a negative start to the week, the FTSE 100 wiped out all of Friday’s losses as traders took a more sanguine view of the market than had been anticipated.

It’s been a shaky June for the blue-chip index, which has lost 7.5% wiped from the blue-chip index amid the fear of recession, rising prices and a risk-off attitude towards equities.

Monday appeared to be a pause for breath session.

The day’s big gainer, up 23%, was Euromoney Institutional Investor (LSE:ERM) after it received a £1.6bn bid approach from private equity groups Astorg and Epiris.

The UK group said it was in talks with the buyout firms, but cautioned that “there can be no certainty that an offer will be made” (read more here).

Also among the newsmakers was Associated British Foods PLC (LSE:ABF), which was up 1.5% in early trade after a solid trading statement.

Primark, now 44% of the combined ABF business, was the focus of attention, not just for investors, but followers of the retail sector.

The eyes-on-stalks number was the 81% quarterly rise in retail sales, which represented a 4% increase on the pre-pandemic number.

“With the shackles of the pandemic now largely removed, the figures are very promising, with the unit seemingly coming back into fashion,” said Richard Hunter, head of markets at Interactive Investor.

6.50am: Tepid start predicted 

The FTSE 100 looks set to open at its lowest level since early March with the spectre of recession continuing to haunt UK equities.

On Friday, US manufacturing data were softer than expected, adding to the welter of red-lit economic indicators – including housing starts and retail spending.

In China earlier iron ore, steel rebar and coal futures were all hit by slowdown fears precipitated by America’s apparent slowdown.

“Even oil prices cracked under the weight of recession noise. A classic case perhaps, of high prices being the best cure for high prices?” noted Jeffrey Halley, Asia analyst for forex trading group OANDA.

Against this backdrop, Asia’s main markets kicked off the new trading week in negative territory, with Europe’s major bourses set to follow suit.

Closer to home, it is expected to be a busy week for scheduled corporate and economic news with updates on inflation and from housebuilder Berkeley, Carnival, the cruise operator, and AB Foods, which owns the Primark chain.

Around the markets

  • Pound US$1.2229 (-0.1%)
  • Bitcoin US$19,869.60 (-3.3%)
  • Gold US$1,844.60 (-0.2%)
  • Brent crude US$113.17 (flat)

6.50am: Early Markets – Asia / Australia

Asian shares were mostly lower on Monday as China’s one-year and five-year loan prime rates were both left unchanged.

Japan’s Nikkei 225 was trading 0.96% lower while South Korea’s Kospi tumbled 2.45%.

The Shanghai Composite in China rose 0.09% and Hong Kong’s Hang Seng index gained 0.05%.

Australia’s S&P/ASX200 fell for a seventh consecutive session on Monday, dropping 0.6% to 6433.4.