China gloom weighs on markets, airline stocks slip on Greek fire fears, investors snap up cinema shares after bumper Barbie weekend

“A weak showing from Hong Kong’s Hang Seng cast a dark cloud over the start of the new trading week, with the index falling 2.3% as investors dumped holdings in real estate, consumer cyclicals and basic materials companies,” says Danni Hewson, Head of Financial Analysis at AJ Bell.

“China’s post-Covid economic reopening is proving to be less robust than hoped at the start of the year, and now it seems that investors are growing tired of waiting for the Chinese government to announce new stimulus measures.

“There are concerns that the Chinese housing market will remain sluggish and that has weighed on sentiment towards all things related to real estate and construction, including miners over fears that commodities demand could weaken.

“Names like Glencore and Anglo American acted like an anchor on the FTSE 100, dragging the UK index down 0.2% to 7,647. Prudential was also caught up in the negativity around China, given it is a key territory for the life insurer. It was the same story for HSBC, slipping 1.3%.

“UK housebuilders and banks gave up some of their recent gains as investors locked in some profits after one of the best weeks for the FTSE in a long time.”

Airlines

“Airlines and holiday companies were out of favour after shocking news over the weekend about fires in parts of Greece.

“Reports of holidaymakers having to leave hotels and sleep in sports halls or on the street could cause others to think twice about booking last-minute breaks, for fear they too could get caught up in the chaos.

“Falling share prices for the likes of Jet2, EasyJet and TUI suggest investors are worried that they won’t achieve near-term earnings forecasts and they will potentially incur extra costs for having to run repatriation flights to bring customers home.

“This most recent episode is the latest in a string of problems for the airline sector. It already faces yet another summer of strike action, with European air traffic controllers and workers at Gatwick set to cause further disruption.”

Cinemas

“Reports that Vue cinemas saw its busiest weekend in four years had positive read-across to listed cinema operators. Despite the prospect of imminent delisting from the UK stock market, investors were still prepared to take the risk of trading shares in Cineworld, up 10% on the prospect that bumper ticket sales for Barbie and Oppenheimer will be good for earnings. Posh cinema chain Everyman also got a lift from the positive sentiment towards the sector, rising 2%.

“Cinemas across the country have been packed with people seeing what the fuss is all about with Barbie, giving the industry a much-needed boost. For some, it was the first time they’ve been in a cinema since the pandemic struck and a pleasant experience could encourage them to visit more often.

“Many film lovers even took the opportunity to check out other films over the weekend with the latest instalments of Indiana Jones and Mission Impossible providing entertainment to those who didn’t want the extremes of Barbenheimer.”

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