Market Reacts to Swine Flu Outbreak with Volatile Trading

Strategic Insights -

The spread of swine flu triggered a reaction in the market yesterday, with travel and hotel groups particularly affected. However, a rise in pharmaceutical stocks and defensive sectors helped to limit the damage. Analysts noted that companies involved in the tourism industry, such as cruise operators and tour operators, were the most vulnerable to the outbreak. Meanwhile, vaccine manufacturers like GlaxoSmithKline saw a significant increase in value, with the company stating it was working to increase production of its Relenza drug, which has some effect on the new flu strain.

Key Takeaways:

  • Travel and hotel groups were severely impacted by the swine flu outbreak, with Carnival and InterContinental Hotels leading the fallers.
  • Pharmaceutical stocks rose in value, with GlaxoSmithKline increasing by 57p to £10.63, while AstraZeneca added 89p to £24.83.
  • Defensive stocks such as utilities and insurance companies were in demand, with National Grid and Aviva seeing significant gains.
  • Companies with exposure to the tourism industry, such as cruise operators and tour operators, were seen as the most vulnerable to the outbreak.
  • Vaccine manufacturers like GlaxoSmithKline were amongst the few gainers in the market.
  • Analysts noted that the perceived vulnerability of ships to the spread of infections made Carnival the most immediately vulnerable stock.
  • InterContinental Hotels was down 28.5p to 643.5p, while Thomas Cook fell 12.5p to 270.25p and rival Tui Travel lost 9p to 262.75p.

Statistics:

  • Carnival lost 132p to £18.07.
  • GlaxoSmithKline rose 57p to £10.63.
  • AstraZeneca added 89p to £24.83.
  • The FTSE 100 recovered from falls, adding 11.02 points to 4167.01.
  • Aviva was up 13.75p to 287p.
  • National Grid was up 23p to 558p.
  • Scottish & Southern Energy added 38p to £11.03.
  • Water group Pennon added 10.75p to 433.25p.

Sources:

  • "Shares end volatile day in positive territory" by Nick Fletcher, Financial Times (note: date not specified in original text).
  • Evolution Securities, quoted in Financial Times.
  • GlaxoSmithKline, quoted in Financial Times.
  • Panmure, Deutsche Bank, and UBS, quoted in Financial Times.
  • Aviva, quoted in Financial Times.