FTSE eases back after strong run, Frasers warns of hit to asset values and TUI seeks more lifeline money

“Markets can be stubborn beasts and headlines such as ‘US stocks hit new record high’ can be a hard act to follow,” says Danni Hewson, Financial Analyst at AJ Bell.

“It’s been a fantastic week for the FTSE 100 and S&P 500 as they put Covid in the rear-view mirror and raced ahead, but that momentum was tested as the trading week came to an end.

“On Friday, the FTSE 100 eased back 0.2% to 6,929 after hitting a post-pandemic high earlier this week, however pre-market indicative prices suggested that the S&P 500 could build on its record high seen yesterday when US markets reopen.

“The FTSE was dragged down by tobacco, pharmaceuticals and banking, more than offsetting the gains from UK reopening plays Whitbread and Next.

“There was nothing to cause serious concern about these price movements and, if anything, investor sentiment should be good given how the UK market has finally managed to come out of the doldrums.

“However, Sports Direct owner Frasers reminded the market that we’re not out of the woods yet with regards to the pandemic and a potential third wave.

“Its view of Government advice is that further restrictions are ‘almost certain’, meaning there is still a threat to the pace of UK economic recovery. Ahead of Monday’s reopening of non-essential shops, Frasers warned of a bigger than previously expected hit to the value of its assets.

“TUI also went cap in hand to investors yet again, seeking more money to keep it afloat while it plays the waiting game for when travel can restart in earnest.

“Plans by TUI to secure up to €400 million through issuing bonds is like giving someone an ice cream on a hot day. That amount of money will soon been gobbled up given it is probably about one month’s cash burn for the company.”

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