MARKET REPORT: Shares in airline Jet2 plunge

Shares in airline Jet2 plunged yesterday as it announced a £422m share issue to help the business ride out the pandemic. 

Bosses said the new equity gave it enough liquidity to see it through an extended and unpredictable shutdown, but maintained a cautious approach to the 2021 summer season. 

The new shares, at a price of 1180p, 9 per cent discount, were equivalent to a fifth of its share capital before the fundraising. Shares fell 7.2 per cent, or 94p, to 1204p. 

Getaways are banned under lockdown and ministers have advised holidaymakers not to book trips abroad this summer. 

But now travellers into the UK must have three Covid-19 tests – one before departure and two in the days after arrival. 

The move plunged travel firms deeper into crisis following a year of travel restrictions, which have ravaged airlines’ balance sheets. 

Sunseekers have also been put on edge by Australia-style hotel quarantine, costing £1,750 per person, for those returning from red list countries. The malaise dragged shares down across the industry yesterday with cruise operator Carnival down 2.9 per cent, or 37.5p, to 1263p, and Holiday Inn hotels owner IHG down 0.6 per cent, or 30p, to 4895p. 

Tui, the world’s largest holiday group, which said it will run 80 per cent of its normal capacity this summer, also suffered falling 1.7 per cent, or 5.7p, to 317p. 

British Airways owner IAG fell as well in early trading, but recovered as the day wore on to finish up 0.4 per cent, or 0.55p, at 149.45p, Shares in care home investor Target Healthcare fell after it said it would raise £50m to buy new sites to help fund the acquisition of new sites. It said it had seen a significant jump in inquiries, leaving it rushing to find new homes. But shares fell 3.1 per cent, or 3.6p, to 113p, as it said it would raise the cash via an issue of new shares. 

The market overall had a shaky start following revelations that the UK economy shrank by a record 9.9 per cent last year due to the effects of the pandemic.  

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But positive growth in the fourth quarter, allowing the UK to avoid a double dip recession, helped allay investors’ fears and the FTSE 100 index rose 0.94 per cent, or 61.07 points, to 6589.79. This represented a 1.2 per cent rise over the week. The FTSE250, meanwhile, finished up 0.09 per cent, or 19.62 points, at 21037.47 points. 

Traders wrestled with the negative figures, matched with uncertainty over when lockdown will lift, with the positive outlook on a ‘Roaring 20s’ thanks to the (on target) vaccine rollout. 

Retailers were some of the biggest fallers, with Tesco down 1.6 per cent, or 3.9 per cent, to 240.6p, B&Q-owner Kingfisher down 2.2 per cent, or 6.1p, to 270.9p, and WH Smith was down 1.7 per cent, or 27p, to 1548p. 

Mining stocks also lost out, with Antofagasta down 0.5 per cent, or 7p, to 1533p, Fresnillo was off 1 per cent, or 10p, to 1020.5p and Glencore fell 0.3 per cent, or 0.7p, to 268.8p. 

Likewise bank stocks were in the red ahead of results season next week and some shoddy numbers from Commerzbank in Germany. Sentiment was also being damaged as trading in the derivatives market flooded out of London last month to rival financial centres in New York, Amsterdam and Paris. 

Stats from IHS Markit showed that trading of swaps in London dropped from nearly 40 per cent of the market last July to 10 per cent in January. Natwest was down 0.5 per cent, or 0.85p, to 171.35p, while Barclays fell 0.04 per cent, or 0.06p, at 145.9p. 

Pan-African fuel retailer Vivo Energy provided a bright spot. It upgraded earnings ahead of analysts’ forecasts and announced a dividend, thanks to limited travel restrictions in the countries where it operates. Its shares rose 5.8p, or 4.5 per cent, to 82.7p.

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