FTSE lifted by retail and travel optimism

Europe’s underlying economic picture remains fragile with the Eurozone’s GDP expected to show a decline of between 8% and 12% according to Christine Lagarde, but traders are fending this off as a worry for another day and are instead focusing on the reopening of retail trade and the very gradual recovery in the travel sector. UK banks seem to be about the main ben beneficiaries of the current market optimism on expectations that retail-facing businesses will gradually get back on their feet.

Banks are attracting heavy volumes this morning, Lloyds about twice its usual flows with the whole sector trading between 3.5% and 5.6% higher. Among travel stocks cruise operator Carnival is topping the gainers list in anticipation of the no-sail order by the US Centre for Disease Control being lifted in July.

British Land shares are holding up surprisingly well given that the company accumulated a net loss of £1.1 bn and wrote off a quarter of the value of its retail portfolio due to the pandemic. Like many other property owners British Land’s finances are being squeezed as commercial tenants whose businesses have been closed due to the lock down remain reluctant to pay their rents.

Asset manager St James's Place has gained close to 7% after it reported a small uptick in net inflows in April. The firm remains cautious about the outlook in the months ahead.

Brent crude has slipped 2%

After the recovery over the last week Brent crude is trading 2% lower this morning, mostly testing the edges of the current trading range between $35.4-$36.6. Over the coming days traders will try to second guess OPEC’s next decision in early June but for the moment no further output cuts seem to be on the table as both Russia and OPEC are gradually fulfilling their reduction pledges.

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