London markets open flat as travel sector rally loses steam

London markets posted a mixed performance yesterday as a rally among travel and airline stocks lost some steam.

The capital’s premier FTSE 100 index closed 0.16 per cent higher at 7,516.87 points, while the mid-cap FTSE 250 index, which is more aligned to the health of the UK economy, lost 0.53 per cent to finish at 23,771.18 points.

The City’s flagship indexes were weighed down by airlines, hotel groups and aerospace engineers paring back some of Tuesday’s gains during the opening session.

British Airways owner IAG, which finished top of the FTSE 100’s biggest risers on Tuesday, fell 2.03 per cent, but offset losses to close 1.45 per cent higher.

Short haul airlines easyJet and Wizz Air, which lined the top of the best performers’ table on the FTSE 250 at the beginning of the week, also sank back down during opening exchanges. However, each finished in positive territory.

A more muted session in London yesterday was driven by growing investor concern over intensifying inflationary pressures in the UK, according to analysts.

Russ Mould, investment director at AJ Bell, said: “If the UK markets started their first trading day of 2022 by climbing the wall of worry over Omicron, they took a slight stumble on day two as inflation concerns and speculation on interest rates returned to the fore.”

The pound gained ground on the greenback, strengthening 0.38 per cent to buy $1.3585.

Supermarkets led the FTSE 100 higher, with middle class favourite Ocado topping the best performer table by climbing 3.18 per cent. Miners also rallied.

The pound crept up on the greenback, strengthening 0.03 per cent to buy $1.3536.