Lufthansa shares rocked by profits warning
Ouch! Shares in German airline Lufthansa are sliding, after it posted a shock loss for the last quarter.
Germany’s biggest airline made an adjusted loss of €336m in January-March, down from a profit of £52m a year ago. It blamed rising fuel costs and downward pressure on fares, which has sent a shiver through the travel sector.
Lufthansa shares have slumped 5% at the open in Paris. In London, easyJet have lost 1.4%.
Falling fares is excellent news for passengers, especially those who’ve put off booking holidays because of Brexit. But it also suggests an overcapacity problem in the airline industry, which has already seen several airlines collapse in recent months.
If the City predictions are correct, the UK’s jobless rate will remain at its lowest level since Harold Wilson was prime minister in 1975.
Introduction: UK jobs report and German ZEW survey
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
A flurry of fresh economic data from the UK, Germany and the US will give us a fresh insight into the health of the global economy today.
In the UK, the big event will be the unemployment report for the three months to February. It’s likely to show the jobless rate has stuck at its lowest level in over 40 years at just 3.9%, in the face of relentless Brexit drama.
Wage growth (excluding bonuses) is also expected to hold steady at 3.4%, meaning earnings would be outpacing inflation.
Marc Ostwald of ADM Investor Service predicts that UK firms also kept hiring workers, though at a slower rate than last year.
For all the chatter about weak and/or cautious UK business investment, restrained by a lack of clarity on Brexit outcomes, the UK labour has proved impressively resilient, and today’s report is not expected to alter that perception.
Employment is seen posting a solid 171K gain, slower than the prior 222K but nevertheless strong, and Average Weekly Earnings are forecast to hold around their post GFC cyclical highs at 3.5% y/y headline and 3.4% ex-Bonus, while Vacancies seem likely to remain very robust, having posted a new all-time / cyclical high of 870K in January.
A particularly strong jobs report could pile pressure on the Bank of England to consider raising interest rates, while a weak report may create concerns that the economy is faltering.
The latest survey of German economic sentiment, from the ZEW Institute, could also move the markets. Economists predicts that investors and analysts will be gloomier about the current economic situation, but more optimistic about future prospects.
A new healthcheck on the US manufacturing sector is expected to show a small pick-up in industrial production last month, up 0.2% despite the US-China trade war.
On the City front, security firm (and takeover target) G4S is reporting results, along with fashion chain JD Sports, retailer Card Factory, recruitment firm Hays and construction firm Galliford Try.
- 9.30am BST: UK unemployment and earnings report
- 10am BST: ZEW index of German investor confidence
- 2.15pm BST: US manufacturing report