French strikes hit EasyJet to drag on FTSE - London Report

BRITAIN’s top share index slid lower on Tuesday, weighed down by a slump in the cut-price airline EasyJet, as a global bond sell-off hit markets and ensured that optimism of a decisive British election was short-lived.

The blue-chip FTSE 100 index fell 1.4 per cent to 6,933.80 points. The FTSE hit a record high of 7,122.74 points last month and remains up by around six per cent since the start of 2015, having risen sharply at the end of last week after David Cameron’s Conservative Party won an outright majority in the election.

Shares in low cost carrier EasyJet slumped 9.8 per cent, the worst performer on the FTSE 100. Air traffic control strikes hit the company’s profits in April, hurting its broader outlook.

Among the stocks gaining ground, the world’s largest credit data company Experian rose 3.1 per cent, after the company forecast stable margins, despite reporting lower profits.

Lloyds also edged higher after the UK government sold a further £500m ($784m) of its shares in the bank.

Nav Banwait, chief market strategist at Thames Capital Markets, said that the longer-term outlook for the FTSE was positive, as the market was being helped by signs of a economic recovery in the UK, such as data yesterday that showed industrial output grew at its fastest rate in six months in March.

However, Banwait added that unease in financial markets caused by the bond market sell-off could hit the FTSE in the near-term.

“We’re anticipating a move down to 6,900 points, but we will be looking to cautiously buy into the market here as we expect the FTSE back up at 7,100 points in the next two weeks,” he said.

Others were more cautious due to the bond market jitters.

“I’m looking for a five to 10 per cent correction over the next month or two,” said Horizon Stockbroking director Kyri Kangellaris.

Although the market is well clear of recent lows, focus has switched from domestic politics, with European markets more than one per cent lower as a global bond sell-off resumed.

While analysts have said that the sell-off was partly triggered by an uptick in inflation expectations, yields continue to rise despite oil prices dipping and renewed worries over Greece.

“This is having a major impact on the other asset classes, and the volatility spills over into equity futures ...risk managers are looking at decreasing their levels of risk, given the moves,” Smith, managing director of KCG Europe, said.