Market Report: Travel stocks set to bounce as JP Morgan predicts Turkey will make a comeback as a holiday destination next year
Tour operators are set to enjoy an uplift after JP Morgan said Turkey could make a comeback as a holiday destination next year.
Despite lowering the price targets of TUI AG and Thomas Cook, the US investment bank hailed the possible revival of the distressed holiday destination as “a realistic scenario”.
Holidaymakers turned their backs on the formerly popular Turkey last year following a series of bombings and a failed coup, forcing TUI and Thomas Cook, the market leader in that country, to switch their holiday programmes to Spain and Portugal.
Thomas Cook already signalled some modest improvement in bookings to Turkey in its half-year pre-close trading statement at the end of March. Holidays in Turkey now come at a discount to other destinations, with hotel prices 31pc cheaper to Greece or Spain, the bank said.
Separately, Fosun, a unit of a Shanghai-based conglomerate backed by billionaire Guo Guangchang, upped its stake in Thomas Cook to above 11pc.
Nevertheless, travel shares ended the day in the red, with TUI AG down 6p at £11.76 and Thomas Cook 1p lower at 96p.
On the wider market, risk appetite returned to the market and commodity-related stocks rebounded, sending the FTSE 100 41.35 points, or 1pc, higher to 7,342.21.
Following sharp overnight losses, copper prices edged up lifting miners higher. Glencore jumped 6.5p to 290.9p, BHP Billiton added 25p to £11.50, Anglo American rose 11p to £10.21, and Antofagasta climbed 7.5p to 761p.
Advertising giant WPP ticked up 20p to £17.01 after its digital agency POSSIBLE acquired Marketplace Ignition for an undisclosed sum, while Dublin-based Smurfit Kappa advanced 17p to £21.84 on the back of a price target upgrade by Goldman Sachs.
On the other side, energy stocks were rattled by Theresa May’s pledge to cap energy prices if re-elected next month. Centrica tumbled 2.4p to 200p and SSE surrendered 18p to £14.31.
Separately, Credit Suisse removed Centrica from its UK ‘top picks’ list.
Tech group Micro Focus became the biggest laggard, down 149p to £24.90, after sales at the $6.8bn Hewlett Packard business it is preparing to buy fell 10pc in the last quarter.
Away from the blue chips, Carillion, the buildings and maintenance company, rallied 10.5p to 226.1p, as bid rumours swirled the City. Last week, the FTSE 250 firm said it made an encouraging start to the year, pointing to new orders and probable orders worth approximately £1.3bn.
Broker Numis lowered IG’s rating to “hold” from “add”, assuming that the current low market volatility continues all the way to the end of this month. Analyst James Hamilton said: “Low volatility for IG is the equivalent of lower markets for fund managers.” Shares dipped 3p to 550p.
Meanwhile, UBS downgraded the Card Factory to “neutral” on valuation groups, sending shares 3.9p lower to 321.5p.