Airlines suffer after ‘green list’ disappointment

European markets are on the back foot in early trade, with the FTSE 100 providing the one area of strength in an otherwise lacklustre start. Energy prices have come into focus following a cyberattack on the main fuel pipeline in the US.

• FTSE 100 leads the way on an otherwise poor European open.

• Airlines weaken on ‘green list’ disappointment.

• Energy prices rise after cyberattack on US pipeline operator.

European markets have kicked off the week in somewhat indecisive fashion, with brief record highs in the FTSE 250 fading as the index turns negative. Interestingly, the FTSE 100 has proven an outlier, with the index gaining ground despite Friday’s sterling strength carrying into today's session. Friday's US jobs report did little to help bolster confidence that the US economic recovery is underway, with huge slump in payrolls serving to further the narrative that the March reading was merely a stimulus-fuelled one-off. Nonetheless, initial weakness in yields has been recovered, with markets aware that any near-term weakness is likely to prove a good buying opportunity despite the lumpy nature of the recovery.

Airlines are on the back foot in early trade, with the government ‘green list’ of travel destinations leaving a lot to be desired. While initial confusion over Grant Shapps’ decision to only name three of the twelve ‘green’ travel locations, it was soon justified when realising that just four of those 12 nations do not require quarantine upon arrival. Thus, airlines are once again on the back foot, with the hopes of a sudden surge in demand being dampened by government policy for now. Instead, airlines are having to ramp up flights to the likes of Portugal, while hoping that the list will increase as we progress through the summer.

Commodity prices are in the headlines once again, with energy prices surging after a weekend cyberattack against the largest US fuel pipeline. An unexpected cybersecurity breach at Colonial Pipeline highlights how susceptible their US energy system is, with the firm supplying half the fuel for the East coast. Crucially, there are still questions over how long this outage could last, with that longevity playing a key role in determining the price impact of the attack. The existence of plentiful gasoline inventories does limit the impact of this attack for now, although the issue could become more pressing with each day that passes without resolution.

Ahead of the open we expect the Dow Jones to open 70 points higher, at 34,848.