Overnight UK economic data is not making for pretty reading and is bringing home the fact that with the lockdown being lifted at a much slower pace than expected there could be many more months with similarly bad economic headlines. In March Britain’s economy shrunk by 5.7%, the fastest monthly pace on record, but it managed to avoid the 8% slump forecast by analysts while April retail sales dropped by 19%.
The FTSE is straining from the weight of losses in the travel industry and the metal sector, the latter reflecting the most recent worsening of relations between the US and China. President Trump has ordered the main government pension fund not to invest in Chinese companies because according to his administration they pose a threat to US national security, a move that is bound to followed by at least some other US investors and that will also likely trigger a retaliatory response from China.
Carnival, airlines and hotel chain shares drop
On the FTSE travel industry shares are the worst hit, particularly cruise operator Carnival which initially planned to restart some routes in August but is now being investigated by the US Center for Disease Control over how it handled the virus outbreak on its cruise liners.
However, there may be a green shoot for the airlines as they start planning a return to operations. Expectations that they will have to remove the middle seat in order to start taking passengers again will actually not be realized, as the European Commission plans to allow the airlines to fly using all the seats. The EC will issue guidance for air travel later Wednesday ahead of lifting of border restrictions across the continent