Market Report: US markets rally and UK staycations sink

by | Aug 8, 2023

Indigo Telecom Group
  • Wall Street rallies, China/HK swoon
  • Italian banks hit by extra tax
  • Glencore pays out $9.3bn
  • UK staycation boom busted
  • InterContinental Hotel revenues surge 29%

Steve Clayton, head of equity funds at Hargreaves Lansdown:

“US markets rallied last night with the S&P 500 index rising by 0.9%, outpacing the tech-heavy Nasdaq which only managed a gain of 0.6%. US investors might have been in an optimistic mood, but things were very different on the other side of the world. Economic data suggesting the Chinese economy is struggling weighed on sentiment in Shanghai and Hong Kong. Chinese exports were reported falling for the third month in a row in July. The Hang Seng China Enterprises index fell by over 2%.

Italy announced an unexpected new levy on the banking sector last night, with premier Giorgia Meloni’s government announcing that “extra profits” made by banks on the back of higher interest rates would be subjected to a 40% additional tax charge. The move comes in the wake of Italian banks increasing their profit guidance for the full year after surging first half profits.

Mining giant Glencore announced half year figures this morning. Operating in what the company described as a “normalisation of commodity market imbalances and volatility” the group reported a 20% decline in revenues to $107bn and a drop of 62% in the group’s net income, to $4.6bn. With debts equivalent to just two months of net income the group has decided to make an additional “top-up” distribution of $2.2bn to shareholders, taking total announced shareholder returns this year to $9.3bn.

The post-pandemic staycation boom looks to be over, according to employment agency Reed. They report that the surge in jobs in the UK’s coastal resorts that emerged at the end of pandemic has faded and job vacancy rates are now falling in a sample of 25 major coastal towns. Brits look to be returning to their favoured overseas holiday destinations, with fewer UK families opting to holiday at home. With many resort towns being marginal constituencies there could be political fallout if the reduction in job opportunities feeds through to voting intentions at election time next year.

Neatly underlining Brits’ waning enthusiasm for staycationing, Intercontinental Hotels Group (IG) this morning reports revenues surging 29% in the first half of the year with operating profits similarly boosted, up 30% to $479m for the half-year. Occupancy rates are almost fully restored to their pre-pandemic levels. IHG is driven by a lot more than UK tourist decisions; the group is far more exposed to the US and Chinese markets, with much of its pipeline of future openings located within Greater China.”

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