Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
“Perhaps all the warnings about a slowdown in the global economy were premature. While it is a mistake to read too much into one or two pieces of economic data, the surprise news overnight that China’s manufacturing sector returned to growth in March certainly provides food for thought. "For one thing, it suggests the Chinese authorities’ efforts to revive the economy through financial stimulus are having some impact. And given China is such a hungry consumer of resources, it was no surprise to see miners helping to drive this morning’s rally. Top of the FTSE 100 leader board was global advertising firm WPP due to a broker upgrade. The company is a good bellwether for the economy with demand for its services linked to fluctuations in the economic backdrop,” says AJ Bell Investment Director Russ Mould.
easyJet
“easyJet’s warning about softer ticket prices has sent shockwaves across the airline industry, adding to problems already voiced by tour operators and suggesting that 2019 could be a washout for the travel sector.
“People have been worried about the impact of Brexit on the aviation sector and there is lots of chatter that individuals are holding off from booking flights and holidays.
“If you’re going to hand over a large sum of money for a trip abroad, you want to be reassured that the flight will actually happen and will take off as scheduled. At the moment travellers don’t seem to have that reassurance.
“easyJet insists that it will be ‘flying as usual’ whatever happens with Brexit, however these positive words may not be enough to solve its problems. The airline, alongside its peers, is also battling higher fuel bills and excess capacity in parts of the world including Europe.
“Running an airline is a tough job as there are often many factors outside of management control.
“Fuel can be forward-bought but ultimately management are still at the mercy of oil price movements. The weather is another unpredictable factor and it is now clear that Brexit uncertainty has been added to the list.
“Tour operators Thomas Cook and TUI have both issued profit warnings in the past six months amid various factors including a squeeze on margins and the grounding of certain Boeing planes.
“The delay to Brexit adds to the travel sector’s woes as it prolongs consumer anxiety about whether to book a holiday or not.
“As such, it seems highly likely that easyJet won’t be the only airline to moan about weaker prices, and indeed the tour operators are certainly not in comfortable territory as they face the same headwinds.”
These articles are for information purposes only and are not a personal recommendation or advice.