Tuesday, 30th May: UK markets returned to action after the extended bank holiday weekend, with much political and business news looking to impact movements. Starting with the catastrophe that was British Airway’s IT bank holiday miss-hap, IAG, the parent owner, fell more than 4% at the open (closing -1.38%). In case you were one of the lucky people who chose not to fly BA over the weekend, and ultimately missed the news, an IT failure on Saturday grounded all flights from London Heathrow and Gatwick, leaving 75,000 passengers with nowhere to go. It didn’t get much better on Sunday and Monday, but it is expected a full flight schedule will resume today. BA’s chief executive blamed a power surge at data centres for the disruption, not any cost-cutting measures the group have been implementing. BA is now liable to reimburse passengers for refreshments and hotel expenses which could run into tens of millions of pounds.
Staying with airlines, Ryanair today announced plans to continue its expansion into Europe, after posting record annual profits. Europe’s biggest budget airline has been cutting costs and prices to undercut rivals and is in talks with Boeing to add further jets to its existing delivery. Fares are expected to fall between 5-7% over the next 12 months, but an increase in passenger numbers over the last 12 months has pushed profits higher. Brexit and terror attacks remain challenges to not only Ryanair, but the industry as a whole. The group’s Chief Financial Officer added today the carrier saw strong bookings over the weekend as BA’s IT went to pot, claiming Ryanair regularly tests its backup procedures and has a less complex IT infrastructure.
UK Prime Minister Theresa May and rival Jeremy Corbyn went head to head in a televised debate last night, 10 days before the UK public go to the polls (again). Jeremy Paxman fired the questions at the respective Conservative and Labour leaders. May’s lead has narrowed in recent days following her plans to make the elderly pay more for their care, (then u-turning on the decision), however Corbyn hasn’t helped himself today, failing to put a cost on Labour’s plan to extend 30 hours a week of free childcare to all 2-year olds. Expect further politics talk over the coming days with polling stations opening on 8th June.
Finally, it could be said relations between the US and Germany has seen better times. You could say the fallout goes back to when Trump first took office, when his administration said Germany’s trade surplus (with the US) is the result of Germany’s manipulation of the euro, (of which Germany has said it has no powers to manipulate the euro). Following the G7 meeting late last week, Merkel claimed discussions with Trump had been “very unsatisfying”, further adding on Sunday that “we Europeans must really take our destiny into our own hands”. Trump responded on Twitter this morning (where else) with the following tweet:
It was a sea of red across at the European close, with the CAC 40, DAX and FTSE 100 closing -0.68%, -0.28% and -0.11% respectively. In the US the Dow Jones is down 0.17% while the S&P 500 is -0.11% at the time of writing. GBP/USD is +0.34% @ $1.2858, but down 0.14% against the euro at €1.1497.