FTSE 100 Drops 1% as Commodity, Financial Stocks Weigh

The blue-chip index fell 1.1% and was on course for its worst daily performance in three weeks. Life insurers and banks dragged the most, dropping 2% and 1.3%, respectively.

Miners slumped 1.4%, tracking iron-ore prices, while BP and Royal Dutch Shell shed 1.4% each.

The domestically focused mid-cap FTSE 250 index declined 0.5%.

Globally, investors treaded lightly as a resurgence in COVID-19 cases fuelled concerns about slowing global growth amid talk of major economies easing crisis-era stimulus measures.

The European Central Bank’s policy decision, due later in the day, was on the radar for cues on whether the bank would take a step towards reducing its emergency economic support for the bloc.

“The potential taper talk doesn’t necessarily please investors, as the COVID situation remains uncertain and European businesses need the ECB’s support to go through what might be another dark winter,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“I believe that the divergent opinions at the heart of the ECB won’t let the bank make any sharp move in the close future.”

Domestically, Bank of England governor Andrew Bailey said policymakers were split evenly last month on whether basic conditions for a rate hike were met by the British economy’s recovery.

easyJet fell 9.7% after the British airline said it rejected a takeover offer and would raise $1.7 billion from shareholders to fund its pandemic recovery and expand operations.

Genus slid 9.5% as Peel Hunt downgraded the livestock genetics firm’s stock to “hold” from “buy” after it missed annual profit estimates.

On the other hand, Hays jumped 3% to top the FTSE 250 index after Barclays upgraded the recruitment agency’s stock to “overweight” from “equalweight”.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Devik Jain in Bengaluru; Editing by Saumyadeb Chakrabarty and Devika Syamnath)

European Stocks Slide Ahead of ECB Meeting, EasyJet Tumbles

The continent-wide STOXX 600 index was down 0.8%, hitting a three-week low, with UK’s FTSE 100 leading losses with a 1.1% drop and Germany’s DAX touching over a one-month low.

British airline easyJet tumbled 13.8% after it revealed plans to raise 1.2 billion pounds ($1.7 billion) and said it had rejected a takeover offer.

Travel stocks, down 1.8%, fell the most among sectors, while miners, technology and automakers dropped between 1.0% and 1.4%.

The ECB is expected to slow its bond buying via its Pandemic Emergency Purchase Programme (PEPP), according to a Reuters poll, but also reassure markets that this is not the start of a gradual exit from easy policy.

Asian shares dropped more than a percent, with Chinese gaming stocks coming under pressure from fresh regulatory scrutiny, while data showed China’s factory gate inflation hit a 13-year high in August.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)

Marketmind: Over to You, Christine

A look at the day ahead from Karin Strohecker.

September has already seen many major indexes, from the S&P 500 to STOXX 600, ease after multi-month winning streaks. Both European and U.S. equity futures point to more falls ahead on Thursday, while Treasury and Bund yields are off the mid-July highs hit earlier this week.

But there’s much more than an ECB meeting to fret about — Beijing’s regulatory crackdown shows no sign of a letup.

Chinese gaming and media stocks – including Tencent Holdings and NetEase – have suffered further sharp falls after regulators summoned gaming firms to ensure they implemented new rules for the sector.

The impact of the widening crackdown is being felt as far as Tencent shareholder Prosus in Amsterdam which is set to open 3.5% weaker.

Shares and bonds in the embattled Evergrande Group too slumped further after media reports the property developer would suspend interest payments due on some loans and all payments on its wealth management products.

And then there is the U.S. debt ceiling quagmire, with Treasury Secretary Janet Yellen warning again that cash and extraordinary measures might run out in October.

On the data front, China factory gate inflation jumping 9.5% to a 13-year-high in August shows no let up in price pressures. In Britain, a lack of new homes for sale boosted house prices again.

Corporate news a-plenty too. EasyJet will raise more than 1 billion pounds ($1.4 billion) through a share sale. Similar news elsewhere in the travel sector too, with Japan Airlines announcing $2.7 billion in borrowing to weather the prolonged COVID-19 impact.

Key developments that should provide more direction to markets on Thursday:

ECB holds monetary policy meeting and presser

-Lloyd’s of London swung to H1 pre-tax profit of 1.4 billion pounds, helped by rising premium rates

-Fed speakers: San Francisco Fed President Mary Daly 12:05 GMT; Chicago President Charles Evans 15:05 GMT

-Emerging markets: Malaysia, Peru, Serbia, Ukraine central bank meetings

Auctions: U.S. 30-year bonds, 4-week t-bills.

U.S. earnings: Oracle

For a look at all of today’s economic events, check out our economic calendar.

($1 = 0.7263 pounds)

(Reporting by Karin Strohecker; editing by Sujata Rao)

 

European Travel Demand Drives EasyJet Summer Comeback

By Sarah Young

LONDON (Reuters) -EasyJet plans to fly 60% of its pre-pandemic capacity in July-September as a travel recovery takes hold in mainland Europe, and Britain is expected to catch-up in the coming weeks.

The British airline said it was confident on demand for the summer and autumn, issuing its most buoyant update since the start of the pandemic almost a year and a half ago, and allowing it to lift capacity from just 17% of 2019 levels in March-June.

The travel pick-up has to date been led by the European Union, said easyJet, leading it to shift planes from Britain to markets including Scandinavia and Holland.

Two-thirds of bookings are currently coming from the rest of Europe, while normally its business is evenly split between Britain and the continent, but easyJet expects that to change now travel rules for fully-vaccinated Britons have been relaxed.

“I have absolutely no doubt in my mind that the UK demand will follow the same pattern that we’re seeing outside the UK in mainland Europe,” chief executive Johan Lundgren told reporters on Tuesday.

Lundgren has been one of the most vocal critics of Britain’s approach to travel over the last two months, slamming last-minute changes which have resulted in booking surges and mass cancellations.

Britain should add more countries to its “green list” of low-risk destinations, Lundgren said.

Asked about worries quarantine could be reintroduced for Britons returning from Spain, as it was for France recently, he said easyJet was flexible.

“We set ourselves up to be able to cope with shifting demands,” he said.

Shares in easyJet traded up 2% to 785 pence at 0845 GMT. The stock has lost about 20% of its value over the last month over worries about the impact of strict UK travel rules.

The airline’s plan for more flights in July-September, when it tends to make almost all of its profit, is being mirrored at rivals such as Ryanair and Wizz Air.

EasyJet, which has shed staff, cut the size of its fleet and taken on new debt to survive, said it was well-placed financially, with 2.9 billion pounds ($4 billion) of liquidity, and had cut costs to improve its cash burn rate.

But it said limited visibility and ongoing uncertainty meant it could not provide guidance for the rest of the year. For the three months to June 30, easyJet posted a pretax loss of 318 million pounds.

($1 = 0.7324 pounds)

(Reporting by Sarah Young Editing by Jason Neely and Mark Potter)