MARKET REPORT: Airlines take off after bumper summer forecast

Airline stocks cruised higher as analysts predicted the industry was set for a ‘great summer of profitability’.

Investment bank JP Morgan said European airlines should benefit from holidaymakers jetting off into the sun, after the industry took a battering when Covid measures brought travel to a standstill.

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

British Airways owner IAG gained 2 per cent, or 2.95p, to 148.65p after JP Morgan reiterated its ‘neutral’ rating, while Wizz Air added 1.7 per cent, or 49p, to 2919p.

The FTSE 100 fell 0.3 per cent, or 21.06 points, to 7831.58 and the FTSE 250 was up 0.2 per cent, or 40.04 points, to 19,248.01.

Sunny outlook: Investment bank JP Morgan said European airlines should benefit from holidaymakers looking to jet off into the sun

Official figures in the US showed economic growth slowed more than expected in the first quarter as consumers spent more but businesses pulled back on investing in equipment.

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

Wealth manager St James’s Place ended the first quarter of 2023 with £153.6billion of funds under management, up 4 per cent on the same period a year ago, but short of the £154.7billion analysts expected. It sank 3.7 per cent, or 46p, to 1193.5p.

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

His replacement, Richard Oldfield, joins from auditor PwC on October 2. Shares dipped 0.7 per cent, or 3.3p, to 478p.

Sales at WPP rose 2.9 per cent in the first quarter of 2023 as the advertising giant remained hopeful it could grow between 3 per cent and 5 per cent this year. 

Stronger growth in the UK offset lower spending from some US tech clients. Shares slid 4.3 per cent, or 40.8p, to 916.2p.

Stock Watch – Hotel Chocolat

Hotel Chocolat warned its sales and profits would be lower than hoped following a dismal Easter.

The luxury confectioner said it failed to get some products on to shelves during the key trading period.

Its previous forecast for profits of between £4million and £7million for the year to the end of June was dependent on its performance over Easter.

The company now expects to merely break even.

Its shares tumbled 8.6 per cent, or 15p, to 160p.

Its shares tumbled 8.6 per cent, or 15p, to 160p.

Glencore piled pressure on Teck Resources to accept its takeover bid after the mining giant urged its Canadian coal and metals rival to ‘engage constructively’ in talks. 

Teck, which has rejected Glencore’s approaches, axed a shareholder vote on its own plans to split the business into two.

Observers wondered if Teck did not have the necessary support to press ahead with its plans. Glencore fell 1.7 per cent, or 8.2p, to 473.2p.

Taylor Wimpey inched up 0.1 per cent, or 0.15p, to 125.75p after it became the latest housebuilder 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 £850million and £860million for the year to April 30 will meet the £854million expected by analysts. Shares sank 2.2 per cent, or 6.9p, to 304.6p.

At Howden Joinery, the kitchen fitter insisted UK sales should rise throughout the year following a 1.6 per cent like-for-like fall in the 16 weeks to April 15. Shares rose 1.2 per cent, or 8p, to 676.6p.

There was better news for Inchcape after the car dealer hailed an ‘excellent start to the year’ as an improvement in supply helped revenue soar 50 per cent to £2.7billion in the first quarter. Shares increased by 4.1 per cent, or 31p, to 795.5p.

But Capricorn Energy plunged 10.3 per cent, or 25p, to 217.6p after it said it will scale back all exploration spend outside Egypt and could sell its UK assets.

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