FTSE spared heavy losses for now and TUI guidance maintained

“Given the turmoil in global markets, from a range of issues spanning Brexit to the US-China trade war and Italian political instability, the FTSE 100 appears to have gotten off pretty lightly on Tuesday morning.

“Early on the index is trading just a handful of points lower although the US open will be eyed nervously for the cue it might provide for afternoon trading,” says AJ Bell Investment Director Russ Mould.


“The desperate position of its rival Thomas Cook means investors will be breathing a big sigh of relief on the publication of travel outfit TUI’s third quarter results.

“The biggest takeaway is that full year guidance is being maintained. Not that this is a great set of numbers, the company swinging to a loss in the nine months to the end of June.

“However, this performance was affected by the grounding of Boeing 737 planes on safety concerns which it is probably fair to treat as a one-off issue. This remains a cloud which has not shifted, with no clarity on when the aircraft will be cleared to fly again.

“Margins and bookings for the airline and package holiday business continue to be impacted by pricing pressure, knock-on effects from last year’s summer heat wave and Brexit uncertainty.

“TUI has set plenty of store in its higher margin hotel and cruise offerings and encouragingly these parts of the business are performing pretty well.

“The company’s experiences-driven getaways, whether engaging in eco-archaeology in Cancun or sledding a husky trail in Lapland, also continue to chime with today’s holidaymakers.

“Nevertheless, and particularly given Thomas Cook’s financial struggles, shareholders might be eyeing TUI’s debt rather nervously given it is creeping towards the €1bn mark.”

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.