MARKET REPORT: Airlines take off after bumper summer forecast

Airline shares rallied higher as analysts predicted the industry headed for a “big summer of profitability.”

Investment bank JP Morgan said European airlines should take advantage of holidaymakers flying into the sun after the industry took a beating when Covid measures brought travel to a halt.

It raised Easyjet from ‘underweight’ to ‘neutral’ and increased the target price from 370 pence to 530 pence. Shares in the budget airline, up more than 50 percent so far this year, rose 0.2 percent, or 1 pence, to 489.5 pence.

IAG, which owns British Airways, gained 2 percent, or 2.95 pence, to 148.65 pence after JP Morgan reiterated its “neutral” rating, while Wizz Air added 1.7 percent, or 49 pence, to 2,919 pence.

The FTSE 100 fell 0.3 percent, or 21.06 points, to 7831.58 and the FTSE 250 rose 0.2 percent, or 40.04 points, to 19,248.01.

Official data in the US showed that economic growth slowed more than expected in the first quarter as consumers increased spending, but companies retreated from equipment investments.

On a peak day of results in London, companies flooded the market with updates. Among them was RS Group, an industrial distributor, who agreed to buy rival Distrelec for around £323 million. It rose 1.4 percent, or 12.6p, to 908.4p.

Asset manager St James’s Place ended the first quarter of 2023 with £153.6 billion in assets under management, up 4 percent from the same period a year ago, but less than the £154.7 billion analysts had expected. It fell 3.7 percent, or 46 pence, to 1193.5p.

Schroders reported assets under management of £746.3bn in the first three months of this year, up from £737.5bn at the end of 2022, and said finance chief Richard Keers will retire after a decade.

His replacement, Richard Oldfield, will join from PwC on October 2. Shares fell 0.7 percent, or 3.3 pence, to 478 pence.

Revenue at WPP rose 2.9 percent in the first quarter of 2023 as the advertising giant kept hopes it could grow between 3 percent and 5 percent this year.

Stronger growth in the UK offset lower spending from some US technology customers. Shares fell 4.3 percent, or 40.8p, to 916.2p.

Stockwatch – Hotel Chocolat

Hotel Chocolat warned that sales and profits would be lower than hoped after a gloomy Easter.

The luxury confectioner said it was unable to get some products on the shelves during the main trading period.

The earlier profit forecast of £4m to £7m for the year to the end of June depended on Easter performance.

The company now only expects to break even.

Shares fell 8.6 percent, or 15 pence, to 160 pence.

Shares fell 8.6 percent, or 15 pence, to 160 pence.

Glencore pressured Teck Resources to accept its takeover bid after the mining giant urged its Canadian coal and metals rival to “participate constructively” in talks.

Teck, which has rejected Glencore’s approaches, scrapped a shareholder vote on its own plans to split the company in half.

Observers wondered if Teck didn’t have the support he needed to push through with his plans. Glencore fell 1.7 percent, or 8.2 pence, to 473.2 pence.

Taylor Wimpey rose 0.1 percent, or 0.15 pence, to 125.75 pence after becoming the latest homebuilder to report a recovery in the property market amid improved mortgage availability.

Warnings of weaker-than-expected volumes weighed on DS Smith, even though the packaging giant’s profit forecast of between £850m and £860m for the year to April 30 will meet analysts’ forecasts of £854m. Shares fell 2.2 percent, or 6.9 pence, to 304.6 pence.

At Howden Joinery, the kitchen fitter pushed for UK sales to rise year-round after falling 1.6 percent like-for-like in the 16 weeks to April 15. Shares rose 1.2 percent, or 8 pence, to 676.6 pence.

There was better news for Inchcape after the car dealer praised an ‘excellent start to the year’ as an improvement in supply boosted sales in the first quarter by 50 per cent to £2.7 billion. Shares rose 4.1 percent, or 31 pence, to 795.5 pence.

But Capricorn Energy fell 10.3 percent, or 25 pence, to 217.6 pence after it said it would scale back all exploration spending outside Egypt and could sell its UK assets.

It hopes to return £461 million to shareholders over the next 12 months through special dividends and a share buyback.