Travel companies have been among the UK share prices to watch today, pressured by a rise in oil prices as well as downbeat results at low-cost carrier Ryanair (LON:RYA). Tomorrow meanwhile is expected to see FTSE 100 energy majors come into focus as the annual general meeting (AGM) season continues.
Travel shares weigh on FTSE 100 index
Tour operator TUI Group (LON:TUI) is currently the benchmark FTSE 100’s biggest faller in percentage terms, trading about 4.5 percent lower in early afternoon, pressured by a rise in oil as OPEC signalled that it is likely to maintain production cuts. Ryanair’s update is also weighing on travel stocks as the low-cost carrier posted a hefty drop in full-year profits, with a fall in fares offsetting traffic growth. The London-listed company further guided broadly flat on profits, noting that its outlook for the new financial year remained cautious on pricing.
“Increased passenger numbers are boosting headline revenues, and optional extras like paninis and hold baggage are selling like hotcakes, but that hasn’t been enough to offset the effect of declining ticket prices on profitability,” Hargreaves Lansdown analyst Laith Khalaf said, as quoted by Reuters. Ryanair’s shares are about 3.4 percent down, while FTSE 100 peer easyJet (LON:EZJ) is trading more than two percent lower. Shares in British Airways and Iberia parent IAG (LON:IAG) are changing hands about 1.3 percent in the red. By comparison, the FTSE 100 index is about 0.9 percent down.
Proactive Investors meanwhile quoted AJ Bell’s Russ Mould as commenting that times were ‘tough’ for the travel industry.
“Brexit is affecting consumer sentiment, appetite for travel and the operating environment for the airlines themselves. If that weren’t enough, oil prices are on the rise and excess capacity is adding to the pressure on profitability,” he pointed out. Last week’s notable faller Thomas Cook (LON:TCG) is again deep in the red, trading more than 14 percent lower this Monday following its recent disappointing update.
Blue-chip housebuilders are also under the cosh as Rightmove’s house price index for May revealed weakness in asking prices in London and its commuter belt. Overall UK house price growth meanwhile slowed this month. Rightmove noted that four out of 11 regions were “bucking the Brexit blues,” setting new asking price records for newly-marketed property. Barratt Developments (LON:BDEV), Berkeley Group (LON:BKG) and Taylor Wimpey (LON:TW) are all among the FTSE 100’s biggest fallers, having given up between 2.9 and 3.9 percent each.
UK share prices to watch tomorrow
With the earnings season winding down, water utility Severn Trent (LON:SVT) is the only company scheduled to update investors on its performance tomorrow. The update will come against the background of political and regulatory uncertainty amid worries about the Labour party’s plans for water companies, and with industry regulator Ofwat having recently set out the prices the companies can charge over the 2020-25 period.
Proactive Investors quoted Deutsche Bank as commenting in a recent note that the “slightly more conservative” forecasts for allowed returns and outperformance led it to lower its equity return estimates by an average of 0.5 percent, although the prices could still change modestly if Ofwat revised its view. The analysts forecast a 17-percent increase in pre-tax profit (PBT) to £376 million and a 16-percent increase in adjusted earnings per share (EPS) to 140.5p, with the dividend per share (DPS) up eight percent.
Both Royal Dutch Shell (LON:RDSA) and BP (LON:BP) will be among tomorrow’s UK share prices in focus, being scheduled to hold their respective AGMs tomorrow. Reuters reported on Friday that BP was likely to face pressure to set tougher targets to combat climate change. While the energy major has already backed a resolution for it to be more transparent about its emissions and link executive pay to reducing emissions, some investors want the group to go further and follow the lead of rival Royal Dutch Shell, which bowed to years of lobbying and set the toughest industry targets for cutting greenhouse gas emissions.
Reuters notes that the motion, proposed by BP and a group of 58 shareholders holding 10 percent of its shares, known as Climate Action 100+, is expected to pass at the oil major’s AGM in Aberdeen.
Peer Shell is also set to hold its AGM tomorrow after saying last week that it intended to withdraw a resolution by activist group Follow This from the meeting agenda. The move came after the activist group said last month that it had withdrawn the resolution calling on the Anglo-Dutch group to change its climate policy, with the oil major having reached a broader agreement with investors on the matter, as reported by Reuters.
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