Airlines fly high on strong demand prospects

Airlines flew to the top of the FTSE 100 on Tuesday after broker Exane upgraded its rating on Germany’s Lufthansa, setting a positive tone for the European airline sector.

“We firmly stand by our view that European and global demand will remain stubbornly strong, notwithstanding the potential impact of geopolitical events,” the Exane analysts wrote.

As a result, International Airlines Group, the owner of British Airways, was the biggest gainer on FTSE 100 with its shares increasing 4.4 per cent to 551.5p.

The next biggest gainer was low-cost operator EasyJet, which rose 3.2 per cent to £10.90.

Burberry shares rallied after the world’s biggest luxury goods group LVMH beat expectations for its first-quarter sales — the first sign of a rebound in demand for the sector this year.

The British luxury retailer’s shares were pushed up 1.3 per cent to £17.84 in sympathy.

“Burberry’s strong performance today comes on the back of the very strong LVMH first-quarter sales figures announced after they closed last night,” said Julian Easthope, managing director of European luxury and global brands equity research at Barclays.

“This is the first company to report the start of 2017 and the fashion and leather goods operation was some 6 per cent ahead of consensus at 15 per cent organic growth with the industry benefiting from a pick-up in Chinese spending globally,” he added. “Burberry reports next week with the market assuming it will benefit from the same trends.”

Miners were also among top gainers, after yesterday’s gold price-related falls: precious metal miners Randgold and Fresnillo rebounded 3.4 per cent to £74.80 and 2.9 per cent to £16.29, respectively.

Meanwhile, Antofagasta climbed 1.7 per cent to 865.5p and Rio Tinto 2.2 per cent to £33.33.

Bunzl’s shares climbed after its “hold” rating was restated by Shore Capital. The distribution company’s shares rose 1.2 per cent to £23.61.

“We believe that the first quarter has likely seen a noteworthy performance,” said Shore analyst Robin Speakman in a note.

“At the organic level, the performance is coming off a notably stronger fourth-quarter result up to December last year with more robust like-for-likes particularly noted in North America and in continental Europe.”

Similarly, Aviva had its price target raised by analysts at Deutsche Bank, which resulted in its shares increasing 1.9 per cent to 522.5p.

“The main positive in today’s results was the better than expected solvency ratio, equivalent to £1.1bn of potential excess capital,” said Deutsche analyst Oliver Steel in a note.

Rolls-Royce’s shares rose 2.1 per cent to £814.16 after the company announced that it had signed a deal with Norwegian shipbuilder to supply its automatic crossing system.

Overall, the FTSE 100 was up 0.7 per cent to 7,398.92 by mid-session, a three-week high.

One of yesterday’s top gainers, Hikma Pharmaceuticals, was today’s biggest faller — its shares dropped 0.8 per cent to £19.30.