Britain’s main stock index topped its European peers on Tuesday, led up by travel and commodities, with optimism also supported by bullish manufacturing data.
The FTSE 100 UKX,
the index of major London stocks by market cap, hovered around flat, ahead of most other major European indices, which were deeper in the red. The relative outperformance of the FTSE 100 on Tuesday came after the UK markets closed on Monday due to a public holiday.
While the broader rhetoric remains one of economic optimism driven by the waning severity of the COVID-19 pandemic, with investors continuing to view inflation as a risk to markets, airline stocks have been boosted by plans to reopen Europe to wider travel.
On Monday, the executive branch of the European Union recommended easing travel restrictions to allow tourists from more countries to enter the 27-member bloc.
Read more: EU proposes to reopen external borders as vaccination campaigns accelerate
According to the European Commission proposal, people who have been fully vaccinated against COVID-19 with an EU-approved vaccine or who come from a country with “a good epidemiological situation” will be welcome to the region. The EU has approved Pfizer PFE’s vaccines,
and Johnson & Johnson JNJ,
“The announcement that the European Commission is taking action to reopen the continent in time for the summer travel season raises risk appetite,” said Sophie Griffiths, analyst at Oanda. “In addition, Britain’s awaited announcement of a green list for countries people can travel to adds further support to travel and tourism stocks.”
UK Trade Secretary Liz Truss told Sky News on Tuesday that a “green list” of countries Britons could travel to without having to self-isolate upon return is expected to be released shortly.
Actions in IAG IAG airlines,
– which owns British Airways – and easyJet EZJ,
took off in London, with IHG from InterContinental Hotels Group,
also lifting stock.
“Adding to the optimistic mood, the data revealed that manufacturing activity in the UK hit a 27-year high in April,” Griffiths added.
The IHS Manufacturing Purchasing Managers Index rose for the 11th consecutive month in April to 60.9 – the highest value since 1994.
The other stocks that contributed to the relative strength of the FTSE 100 were companies exposed to commodity prices.
“The catalyst for this latest upward movement is the gossip about a commodities supercycle, with oil companies and miners higher up, as well as continued optimism about the reopening of the global economy,” Russ said. Mold, analyst at AJ Bell.
More: Is there a new commodity supercycle? Maybe not, say these analysts.
Metals and mining stocks Rio Tinto RIO,
Anglo American AAL,
Polymetal International POLY,
and Fresnillo FRES,
all of them surged, as did the shares of the big oil companies BP BP,
and Royal Dutch Shell RDSA,
Tech stocks added weakness to the key London index, with stocks in industrial software group Aveva AVV,
Ocado OCDO Online Grocery and Robotics Logistics Group,
and the delivery man Just Eat Takeaway JET,