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Travel shares were again having a strong day in London, but two big names in that sector, easyJet PLC and Carnival PLC, were set to get the boot from the FT100 index at the close of Wednesday trading due to what one analyst called the biggest reshuffle since 2009.
The FTSE 100 UKX, +0.50% jumped 1.5% to 6,160.47, while the British pound GBPUSD, -0.99% dropped 0.4% to $1.2280. The pound GBPUSD, -0.99% fell 0.6% to $1.2269
The pound’s losses came after the U.K.’s chief Brexit negotiator David Frost reportedly said the EU has to “evolve” in some areas of talks to reach a deal with Boris Johnson’s government. In other words, the two sides remain far apart.
Travel shares were on a tear Wednesday, on a continuing theme of countries reopening to tourism, with Germany and Spain both due to ease up some restrictions in coming months as the coronavirus pandemic recedes. Carnival PLC shares CCL, +3.55% surged nearly 15%, while easyJet PLC EZJ, +5.14% shares rose 8%. It’s those companies that are likely to be removed from the index when the FTSE 100’s quarterly reshuffle goes through at the end of trading.
That’s “thanks to the even bigger falls seen during the spring as their revenues dwindled to pretty much zero,” said Russ Mould, AJ Bell Investment Director, in a note to clients. “Centrica and Meggitt also look destined for the drop, as their market capitalizations leave them ranked way below the 110th place cutoff.”
Shares of British engineering group Meggitt PLC MGGT, +9.67% surged 10%, while multinational energy and services company Centrica PLC CNA, +2.02% rose 2.3%.
Likely to take the place of those companies are security software holding company Avast PLC AVST, -1.64%, household emergency repairs company HomeServe HSV, -2.28% , sports betting group GVC Holdings GVC, -1.23% and medical products and technologies company ConvaTec Group PLC CTEC, -2.53%.
But “Kingfisher KGF, +1.68% , Foreign & Colonial Investment Trust FCT, +0.37% , B&M European Value Retail BME, +0.16% and Direct Line DLG, +1.44% are all jockeying for position and sudden gains in their share prices could yet vault them into the UK’s premier index. The most at risk of demotion then would be ITV ITV, -0.09% and M&G MNG, +8.20% ,” Mould said.
