Good morning and welcome to our ongoing coverage of the global economy, financial markets, euro area and business.
Gatwick Airport has warned that UK travel will continue to lag significantly behind Europe and the US if the government does not simplify travel rules (especially testing). Passenger numbers were “very low” for the first six months of the year at 569,000 and Gatwick made a loss of £ 245 million.
Like others in the travel industry, Gatwick does not require testing requirements for travelers from “green list” countries and for double-vaccinated travelers returning from amber countries; and a single lateral flow test for unvaccinated individuals returning from an amber target.
CEO Stewart Wingate says:
In the UK, we all enjoy more freedom because of our world-class vaccination program, but we run the risk of losing the advantage the vaccination program has given us for international travel. Our government must act now and eliminate unnecessary and costly PCR testing requirements for passengers, especially those who have been double vaccinated.
The recovery in UK aviation is well behind European countries like France and Germany, whose travel bookings averaged over 50% pre-pandemic levels, while in the UK they are around 16%.
An analysis by the Guardian suggests that passengers to the UK spent at least £ 500 million on PCR Covid-19 tests by private companies since mid-May – just to put extra costs on the NHS if companies fail to supply them.
Companies offering Covid testing to travelers can distort the market by not charging sales tax, the Guardian has noted, increasing pressure on the government to step in and regulate pricing.
It’s been a good week for shares, with the German Dax, European Stoxx 600 and UK FTSE-250 all hitting new record highs yesterday, while the FTSE 100 was a bit of a party player, closing 0.37% at 7,193. European markets are set for another profitable week.
On Wall Street, the Dow Jones and S&P 500 also posted new all-time highs despite a sharp spike in producer price inflation in July, which hit a record high of 7.8%. Markets were more encouraged by a decline in jobless claims over the past week.
Michael Hewson, Chief Market Analyst at CMC Markets UK, says:
The sharp rise in July PPI [producer prices index] seems to have taken the market by surprise after Wednesday’s data showed July CPI [consumer prices index] level. This sharp divergence between PPI and CPI has helped tarnish the waters a bit for the passing narrative as profit margins could come under pressure if not passed on.
For now, the markets seem to be working on the basic premise that a taper [of the Fed’s bond-buying programme] and get used to the idea, and as long as the discussion doesn’t move to the more sensitive subject of rate hikes, the current trend towards higher highs is likely to continue.
Asian markets lagged this week on concerns about rising Covid-19 infections and slow vaccination rates across the region. Japan’s Nikkei lost 0.1% and Hong Kong’s Hang Seng lost 1.1%, while other markets, including Australia, were positive by 0.5%.
Oil prices slide for a second day after the International Energy Agency warned that demand for crude oil and its products has slowed sharply as rising Covid cases forced governments in the Asia-Pacific region to reintroduce restrictions. Brent crude is down 0.8% to $ 70.74 a barrel, while U.S. crude is down almost 1% to $ 68.44 a barrel.
In the late breaking news last night Amazon made the surprising decision to relocate more than $ 1 billion in production Lord of the rings Series from New Zealand to the UK and turned down tens of millions of dollars in incentives to shoot the TV show in the same location as the blockbuster films.
- 10 a.m. BST: Eurozone trading for June
- 3:00 p.m. BST: U.S. Consumer Confidence in Michigan for July (Forecast: 81.2)