Airlines keep an eye on Syria
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Sep 04, 2013
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Reuters reports that Britain's top share index fell on Wednesday, extending the previous session's losses, as leading U.S. lawmakers' support for military action against Syria took its toll on investor sentiment.
Airlines suffered steep falls, with worries about disruption from possible U.S. strike on Syria compounding a weak update from Ryanair which traders said had a read-across for the UK-listed sector.
Budget airline easyJet, which reports traffic numbers on Thursday, fell 6.3 percent, while British Airways parent IAG dropped 3.5 percent.
"The market is certainly keeping its eyes on Syria... and if oil prices stay high, airlines would suffer further from that. Ryanair had a profit warning, and easyJet is a very similar airline, so there's concern that easyJet's numbers may follow suit," Lee Armitage, senior trader at Accendo Markets, said.
"It could be a case of easyJet attracting Ryanair's customers, but there are concerns that we may see even more underwhelming figures from the sector."
Shares in the Irish group, which said it could miss its full-year profit forecast, sank 14 percent.
The FTSE 100 was down 34.91 points, or 0.5 percent, at 6,433.50 points by 1044 GMT, extending a 0.6 percent fall on Tuesday against a backdrop of investor concern over Syria.
"Upside is going to be limited for now, at least till the Obama attacking Syria situation is resolved," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million in assets.
Late on Tuesday, leaders of the U.S. Senate Foreign Relations Committee reached an agreement on a draft authorization for the use of force in Syria, paving the way for a vote by the committee on Wednesday.
The index has fallen 2.4 percent since mid-August, with investors nervous about the prospect of instability in the Middle East and many emerging markets facing slowing growth.
Consumer staples that have a lot of exposure to emerging markets were the biggest weight on the index, accounting for 12 points - or a third - of the drop. Weak data from India prompted the central bank to support the currency to stop it hitting a new all-time low, with local consumers facing a squeeze.
Also weighing was a fall in the value of stocks trading without the attraction of their latest dividend, including Resolution, TUI Travel, and BHP Billiton, which took 4.23 points off the index.