The strike action proposed by Unite is doing irreparable damage to one of the UK’s core brands. For a company that is losing around a million pounds a day, the next few weeks will cost ten times as much if the strike isn’t called off. The airline has had its fair share of making poor headlines with the fiasco over terminal five at Heathrow, regularly losing baggage and narrowly averting a strike over Christmas, all of which hasn’t helped promote a brand of reliability or efficiency. Whilst Willie Walsh has done well to bring the company back from the brink of going under with his cost cutting program, his continual battle with the unions is taking its toil.
If you’re thinking of booking a flight anywhere then BA’s is probably way down the list of airlines that you’ll go to and with way fewer people flying than a couple of years ago, their share of the holiday market is going to get smaller. Their life line is the foothold they have in the business sector of flying, but even this will get a knock. The thought of flying BA nowadays is fraught with either lost baggage or a cancellation due to strike action.
BA is a thorn in the side of Gordon Brown just when he doesn’t need it, but once again despite the troubles at the despatch box that Our Gordon has had recently, on the whole the polls are still very narrow which shows how little this dispute really means to the electorate. The real turning point will be next Wednesday when the Captain Darling’s budget is announced. The vast swathe of voters don’t necessarily care about the UK’s credit rating or how long it’ll take to bring down our budget deficit, but rather they care about the money in their pocket and the help they get from the government.
One thing is for certain and that’s that taxes aren’t going down. Motorists in particular will get another dent in their wallet come April when the extra 3p is lobbed onto the price of a litre. For those people complaining about 120p, you should try going to a petrol station in central London; I found myself having to fill up at the other day – 150p! Needless to say I filled up with just enough to get me to the nearest supermarket!
The market is being pushed higher mainly on the back of the bright news from Lloyds who said that they expect to return to profitability this year. Ever since HBOS was imposed on the bank during the credit crisis, it is now highly correlated to a recovery in the wider economy, in particular housing. Things are pointing in the right direction for the bank and as of this morning we’re only 14p off looking at gains on our stake in the bank.
So the FTSE is looking strong trading around 5665, but we’re now just below the major area of resistance around 5675-5700. This morning’s little move higher might be seen as a breakout by some technical analysts, but our clients are clearly not of that view as they continue to sell into the recent strength.
Triple witching today so 10am might provide a little volatility for the market as the March future contract expires.
On the currency front, the dollar is making back some of its recent losses and as usual it’s sterling that’s suffering the worst. Now around 1.5140 Cable couldn’t hold onto the dizzy heights above 1.5300. So the bears squeeze looks like it might have been short lived and they’ll be targeting 1.5050 next before a possible test of the lows.
The dollar’s strength this morning means a bit of weakness for gold and oil, which seem to be placid as we run into the weekend.