Tui bookings rise on demand for package holidays and higher prices – business live | Business

Richard Hunter, head of markets at interactive investor, has looked at the outlook for US interest rates, and the moves in UK stock markets.

The US consumer price index is expected later today, where a 0.3% rise is expected in November, annualised to 2.7%, and will be followed by a further reading tomorrow at the wholesale level. Barring any shocks, the likelihood of an interest rate cut is high next week, although expectations have been dialled back on the pace of reductions next year. The twin drivers of a surprisingly robust economy which has shown few signs of heading towards the previously feared recession, alongside some caution that the President elect is likely to introduce some measures which are inflationary, could well keep a lid on the monetary easing path.

In the meantime, the technology stocks which have been at the hub of market strength this year, continue to be in the headlines. Oracle shares dipped by 7% after a disappointing second quarter update, although they remain up by around 70% this year. Alphabet shares are now ahead by 34% in the year to date after a 6% pop in its share price following news that Google had made a major breakthrough in quantum computing power. The influence of mega cap tech stocks is blatantly obvious in the year to date performances, where the Nasdaq has added 31% and the S&P500 26.5%, as compared to a gain of 17% for the more traditional Dow Jones index.

European shares are drifting lower, with the UK’s FTSE 100 down almost 30 points to 8,251, a 0.36% decline. The German, French and Italian markets are flat at the moment. Hunter said:

UK shares also drifted in early trade as any recent year end ebullience has evaporated, at least for the moment. The risk off approach which has permeated investor sentiment has been driven by any number of factors, and the pressure has overspilled to a retailing sector which has increasingly borne the brunt of the potentially damaging measures previously announced in the budget. Both JD Sports and Primark owner Associated British Foods dipped in opening exchanges, with the mining stocks falling again in a sign of investor uncertainty.

The initial decline reduces the performance of the FTSE 100 in the year to date to an increase of 6.7%, with the FTSE 250 having added 6.2% in the same period. While both markets are increasingly accepted to be on extremely cheap valuations compared to global peers let alone historically, investors have continued to seek strong growth returns elsewhere, especially in the US where markets continue to test record highs.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, has looked at Tui.

Holidaymaker TUI delivered a strong finish to the year as full-year operating profits cruised ahead of market expectations. Consumers continue to prioritise travel, meaning more customers have been willing to pay higher prices to enjoy a break away from everyday life.

TUI owns an airline, cruise ships, hotels and resorts, giving more than 20 million customers the choice of over 180 destinations. In some ways, having a wide package holiday business makes it more defensible – there’s more to offer and a lot of cross-selling opportunities. But the drains on cash when you have planes, huge hotels and cruise ships to maintain and fill are enormous, so it was good to see occupancy rates across the business creep higher. Fewer empty rooms mean more efficiencies and higher profits.

Positive booking momentum continued into the new year too. In the airline segment, 62% of seats for the winter season have already been sold. Debt levels have been brought down to a comfortable level, and continued progress on this front could see dividends reinstated in the near to medium term.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:

Investors look set to show wariness ahead of a key inflation report due out in the US, while they await more detail about support for China’s struggling economy. The FTSE 100 is expected to open a little lower, as a wait-and-see mood prevails.

There’s hope in the air for more clues about China’s latest stimulus plan, which is helping lift markets mid-week. The FTSE is set to edge higher in morning trade as the Central Economic Work Conference begins with new targets expected to be laid out.

With the Politburo having announced a looser monetary stance will be adopted next year, investors are holding out for more fiscal support, bigger spending and lower borrowing. While the plans are still likely to be short on detail this week, the economic priorities set by the conference will be seen as an indicator of how far authorities are willing to go to bolster China’s domestic demand, in the face of looming US tariffs which are set to hamper exports.

Interest rate speculation in the United States is set to heighten when a CPI snapshot of inflation is released later, with the signs are that prices have become more stubborn. Although the consumer price index data, due out later, is not the Federal Reserve’s preferred measure of inflation, it still has influence.

If as expected, the headline rate creeps up a little, by 0.1% on the month, it is likely to increase bets of a rate cut next week. Markets are already pricing in a near 85% probability that the Fed will plump for another 0.25% reduction.

Crude oil prices are trading moderately higher this morning, with Brent crude futures up by 0.2% to $72.36 a barrel while US futures are at $68.76 a barrel.

Streeter said:

Oil prices have edged higher as the Israeli forces have attacked Syria’s naval fleet, amid the political vacuum following the collapse of the Assad regime. The uncertainty about what the future holds for the country, and the wider region has raised concerns about crude supplies. Expectations for firmer detail on China’s economic stimulus programme is also raising hopes of higher demand for energy in the world’s second-largest economy. Brent crude is nudging towards $73 a barrel, rising for the third session in a row.

Introduction: Tui bookings rise on demand for package holidays and higher prices