Daily market update: European markets, Balfour Beatty, TUI

European stock markets remained in a holding pattern as investors digested the latest events in the Middle East.

Yet more attacks on shipping suggest there is no end in sight to the conflict. The renewed tensions have put oil back on an upwards path and muddied the waters with regards to inflation expectations and what that means for interest rates. The Federal Reserve will be watching events closely alongside data later today on US consumer prices which are expected to have edged up slightly in July.

There are 35 days until the Fed’s next interest rate decision and markets are divided as to whether it will hold rates firm or push through a quarter percentage point increase.

The FTSE 100 was flat at 10,835 with industrials and basic materials doing the heavy lifting to offset a sluggish showing from healthcare and consumer cyclicals.

Balfour Beatty

Balfour Beatty’s shares jumped by 10% after it said full-year performance would be ahead of previous guidance. It has benefited from stronger demand for building-related work in the US and from UK power transmission projects.

Its position in the UK is particularly interesting, with Balfour involved in efforts to build the next generation of power stations. The government’s defence investment plans also align with Balfour’s key skills, including infrastructure work. Balfour Beatty has a messy history clouded by controversies, but the business now looks to be in a better place.

TUI

Dan Coatsworth, head of markets at AJ Bell, comments:

Softer demand and higher fuel costs have clouded the situation for TUI. The failure of US-Iran peace talks to end the Middle East conflict has thrown a spanner in the works for the travel industry, and operators are having to take it one day at a time.

In July it looked as if the Iran war was on the cusp of ending, and oil prices had fallen back to pre-conflict levels. That gave hope to airlines and holiday companies that the summer season wouldn’t be a write-off. Worries about potential fuel shortages down the line started to fade, and travel bookings picked up.

Unfortunately, tensions have once again become elevated in the Middle East. That’s led to a rebound in oil prices. High temperatures across major holiday destinations and wildfires have made matters worse and caused anxiety among holidaymakers.

TUI is keeping its chin up, saying people are still travelling – they’re just booking at the last minute. Investors aren’t buying into management’s confidence, with the shares falling on the latest results.