Banks and insurers and travel firms keep FTSE trading in the red

The FTSE spent all day in negative territory as Anglo-German travel operator TUI lead the fallers following a negative earnings report. Banks, insurers and oil companies were also bid lower but metal firms benefited from a pick-up in gold and copper prices.

TUI, the world’s largest travel operator, saw its shares plunge 9% in early trading after the company said it made a significant loss in the third quarter as the unusually hot weather encouraged Britons to stay at home this summer and the football World Cup affected summer bookings. Nevertheless the company regained some lost ground later in the day to close with a loss of just under 3%.

Trade signals from Wall Street were also muted with the Dow Jones Industrial Average trading just below the flat line and the S&P 500 trading 0.06% above. The latest round of US economic data on jobs and inflation worked in favour of the dollar as they are expected to prompt the Federal Reserve to continue raising interest rates, potentially two more times before the year end and then several times in 2019. 

The US labour market looked unexpectedly strong last week as unemployment claims fell 6,000 to 213,000. The jobless data is being increasingly scrutinised by analysts for signs that the trade tariff wars with China, Canada, Mexico and Europe are not starting to have an effect in terms of job losses in the manufacturing industries.

More Russia sanctions

After China and Iran, Russia is now also being dragged into the global sanctions and tariff tit-for-tat. The US has announced a new round of sanctions against Russia because of its involvement in the attempted assassination of former Russian spy Sergei Skripal in the UK. The sanctions include restrictions on selling to Russian state enterprises and mean that certain high level US equipment will no longer be delivered to the country. 

Russia promptly started working on its own set of retaliatory measures but has not announced yet what those measures will be. In the meantime, the rouble fell to a two-year low on concerns over how the latest US sanctions will affect the country’s economy. Evraz, the largest Russia company traded in London, managed to withstand the pressure and traded up 0.68% on the day.

Oil seesaws as sanctions come in

Oil prices seesawed throughout the day, dipping to $71.73 in early trade only to make it back up to $72.45 as the first round of US sanctions against Iran took effect this week. Traders are already beginning to price in the second round which will be applied in November and are expected to start affecting Iran’s energy infrastructure and oil exports.