MARKET REPORT: Stock markets end another turbulent week on strong momentum for investors reeling from recent turmoil in global finance
Stock markets ended another turbulent week on a high, giving a boost to investors reeling from the recent turmoil in global finance.
The FTSE 100 rose 2.7%, or 188.36 points, to 7,208.81 while the FTSE 250 rose 2.3%, or 430.73 points, to 19,123.71.
The rally was reflected in Europe and on Wall Street and was a welcome relief for investors with pensions, ISAs and other investments amid the turmoil in global markets.
Rebound: The FTSE 100 rose 2.7%, or 188.36 points, to 7,208.81 while the FTSE 250 rose 2.3%, or 430.73 points, to 19,123.71
Share prices have fallen in recent weeks as central banks around the world, including the US and UK, raise interest rates in a desperate bid to rein in runaway inflation.
But there are fears that the global economy could slow to such an extent that further rate hikes may not be as aggressive as previously thought.
While the slowing economy doesn’t bode well for corporate earnings and therefore for stock prices, hopes of moderating rate hikes have been enough to provide equity markets with some respite. Michael Hewson, analyst at CMC Markets, said: “After a few fairly lackluster days, European markets have seen a decent rebound, with the FTSE 100 looking set to post its first positive week after three weeks of declines.”
He said that as “recession fears mount”, stocks have benefited from hopes that “an economic slowdown could keep rates from rising as much as originally thought”.
Mid-cap cruise line Carnival said demand has increased with recent bookings surpassing the pre-Covid days of 2019.
It has almost resumed full operations and recorded its best quarterly booking volumes since the start of the pandemic. Revenue for the three months to the end of May soared to £2bn from £41m a year earlier, but fell short of analysts’ expectations of £2.3bn.
Carnival expects bookings to skyrocket next year. Its shares rose 8.7%, or 60.4p, to 756.8p.
But that was a different story for another of Britain’s biggest travel companies. Investors in Tui suffered yet another setback as its chief executive said he would step down after nearly a decade at the helm.
Friedrich Joussen has led it since 2013 and will be replaced by CFO Sebastian Ebel in October. The company’s shares fell 3.3%, or 5.85p, to 146.83p.
Joussen has guided Tui through the pandemic, but its recovery remains fragile and the stock is down around 85% since its peak in 2018.
Tui has repaid some of the nearly £4.2bn cash support given to it by the German government to help keep it afloat.
But the holiday giant has endured a torrid time lately, causing hardship for families after it canceled hundreds of flights. Joussen, the general manager of telephone company Vodafone Germany from 2005 to 2012, before joining Tui, said: “When the spring 2020 pandemic turned us into a company without a business practically overnight, our full attention was is focused on one goal: saving Tui.
“Under new leadership, Tui is now beginning the next chapter.”
In another blow to the sector, Deutsche Bank has downgraded its outlook for Easyjet, Wizz Air and IAG, the company that owns British Airways.
Easyjet’s target price was lowered to 490p from 570p, and its shares fell 0.9%, or 3.5p, to 394.9p. Earlier this week, the budget carrier reduced the number of flights it had planned for the summer.
Meanwhile, Wizz Air shares fell 0.1%, or 11.5p, to 1968.5p after its target price was cut to 2350p from 2900p.
IAG managed to rise 0.4%, or 0.5p, to 114.68p after its target price was cut to 140p from 155p.