Sectors benefiting from rising risk appetite
Fiona Cincotta May 28, 2020 3:11 PM
Which sectors have been benefiting the most from easing lock down measures?
The FTSE is on the rebound, trading over 1% higher for the third straight session. The Index is on track to gain 3.6% across the week, its second straight week of gains over 3%. The FTSE has risen for 4 of the past five weeks. The numbers tell us that a recovery is in progress, at least for now.
It is still a long way back for travel stocks, however revived hopes of a summer holiday season has lifted the likes of BA owner International Consolidated Airlines Group, EasyJet, Carnival Group and TUI Travel to name a few. Optimism is growing that summer holiday’s might not be a complete write off after all. Traders will also be watching the government’s response as pressure builds on Boris to scrap the 14-day quarantine rule for all those entering the UK. Any sign of this being removed could give this sector an important boost
Despite recent gains it is still too early to call a recovery for travel stocks with IAG still 60% below its February price and EasyJet 58%.
The announcement that shops will be reopening their doors at from 15th of June, was reflected by a jump in retailers. Primark owner Associated British Foods was a notable winner, given its lack of an online presence. Bellwether has also charged higher over the coming days. Next is in a particularly good spot given its sophisticated online offering. The retailer will be able to take advantages in any longer-term changes to shopping habits which lock down produced – namely more online shopping. The government is considering reducing the social distancing limit down from 2 meters. Should this go-ahead retailers could get an additional boost.
Property stocks, such as Foxtons, Rightmove and Countrywide have risen this week and could continue to rise. Rightmove has surged 8.6% so far as investors grow increasingly optimistic of a housing market revival. However, it is worth keeping an eye on Brexit news over the coming months. A cliff edge Brexit could add pressure to the housing market, property prices and property shares.
Transport will be a sector to watch after the UK government pledged £254 million for buses and £29 million for trams and light railway to improve the frequency of services. Stocks such as Stagecoach, National Express and First Group have all performed well across the past few sessions with scope for further upside as people start returning to work.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.