StockMarketWire.com - UK markets make a relatively passive start to the VE Day shortened trading week as the UK sketches out how it plans to end the lockdown.

Nobody doubts that it is going to take a long time to get back to any real normality, a tricky problem that is facing the entire global economy, and it remains a major reason why equity markets are not finding a straight line back to where they were pre-crisis.

Risk sentiment is currently being led by deteriorating US-China relations although there remains concern over the financial health of aerospace firm Rolls-Royce and travel and leisure stocks on Monday, offset by a general rise in pharmaceutical and healthcare stocks.

At midday, the benchmark FTSE 100 index was trading around 0.2% lower at 5,750.24, but mid cap stocks were under more intense selling pressure. The FTSE 250 had fallen 1.3% to 15,937.05.

TRAVEL DRAGS

Cruise operator Carnival headed the FTSE loser board, down a sharp 9% at 910.6p, with investors continuing to fret over the wider holidays industry.

Chiming with that gloomy mood are airlines stocks, where EasyJet and International Consolidated Airlines, which operates British Airways and Iberia, were down 7.5% to 525.2p, and 4% to 205.7p respectively after Franco-Dutch carrier Air France-KLM gained approval from the EU competition commission for €7bn of state aid.

German carrier Lufthansa is also looking for a €10bn state aid bailout to keep operating through the crisis, in what Ryanair chief executive Michael O'Leary has said amounts to industry 'doping' which distorts the competitive landscape for independent operators.

Planes engine maker Rolls Royce is also sharply lower, down 9% at 284.5p, after admitting that it was considering laying-off up to 15% of its workforce, around 8,000 jobs, as customers cut aircraft production and airlines remained largely grounded.

Shares in BAE Systems were also lower, down 1.6% to 495.1p despite confirmation the firm had completed the $275m acquisition of Raytheon's airborne tactical radio unit which provides essential systems to the US defence industry as well as large aircraft manufacturers.

MANUFACTURING SURPRISE

Shares in Tate & Lyle drifted 3% lower to 673.8p despite revealing that for the 12 months to 31 March 2020 each of its business units had 'exceeded the prior year's performance,' meaning results would be slightly ahead of forecasts.

Regarding trading in April, weaker bulk sales of sweeteners to bars and restaurants were offset by higher demand from food and beverage producers as shoppers filled their cupboards with packaged foods.

Shares in car dealer Pendragon dropped 4% to 7.87p after the company revealed that it had held merger talks with rival Lookers, on the basis 'that such an exploration would have proved beneficial. '

But those talks came to nought and have now ended, suggesting Lookers was less keen. Lookers shares stayed largely flat at 23.8p.

Follow auto dealer Inchcape lost 1.4% to 487p, even as it appointed former Fujitsu executive Duncan Tait as its chief executive.

Tait had been responsible for the Japanese IT services giant's American and European operations.

Online trading platform IG rose 1.8% to 762p after announcing it had appointed former bank executive Charlie Rozes as chief financial officer.

Rozes had previously been CFO of Barclays' UK retail and business bank. More recently he was finance director of Jardine Lloyd until its acquisition by Marsh & McLennan.

Premium chocolate maker Hotel Chocolat made modest 0.8% gains to 332.5p after it reported that it had been overwhelmed by online orders over Easter, its second busiest trading period of the year. Analysts at Liberum estimated that the gain in online sales may have offset more than half of lost in-store sales.

SMALLER COMPANY WRAP

Shares in insolvency litigation finance specialist Manolete sharply reversed an earlier slump to jump nearly 8% to 480p after it revealed a surge in case enquiries and new signed cases since the start of the year.

Case enquiries increased by 129% to 238 cases by the end of April, while new cases signed increased by 115% to 58 cases. Chief executive Steven Cooklin said he expected 'an unavoidable knock-on effect for the UK economy' from the coronavirus which would lead to an increase in case referrals to Manolete in the months to come.

Industrial and property services firm Hargreaves Services announced the conditional exchange of a major commercial property development contract at its Hatfield site and said business was progressing more or less as expected.

The firm said that all business areas were trading in line with forecasts bar the property unit where the sale of residential land to Bellway and Cruden Homes at its Edinburgh site had been pushed back from this month.

Shares in Hargreaves Services rallied nearly 7% to 220p.

Science Group dropped 6.5% to 180p on announcing that it was unlikely to complete the manufacture of ventilators for the UK government, despite having already started making the devices, owing to a lesser demand.

Pharmaceutical services company Open Orphan rallied 10% to 9.9p after it said chief executive Trevor Phillips was standing down.

Open Orphan also announced that it had signed a new contract with a US biotechnology company for the provision of a respiratory syncytial virus human challenge study.

Language services provider to the entertainment industry Zoo Digital made near 3% gains to 77p, after it said it had experienced a 'reassuring resumption in demand' following a softening of trading that occurred from March.

Simulation and training solutions provider SimiGon jumped nearly 8% to 7p, having won a contract extension from the US Air Force worth up to $2.1m.

Healthcare and industrial company Scapa slipped 1% to 108.8p after the heads of its two core divisions both resigned.

Preventative healthcare programme provider Premier Veterinary fell 7.5% to 36p, even as it guided for a narrower first-half loss amid a rise in revenue.

Premier Veterinary also saw the rate of sales growth slow in April as the Covid-19 crisis weighed.


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