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Burberry leads FTSE 100 higher, mid-caps glide over sterling slip

07/16/2019 | 12:34pm EST
Traders work at their desks at CMC Markets in London

(Reuters) - London's main index rose on Tuesday as Burberry scaled an 11-month high after its first-quarter update showed new designs boosted sales, and a weaker sterling aided exporter stocks, while mid-caps rose in a rare break from the domestic currency.

The FTSE 100 added 0.6%, its best day in nearly 2 weeks, outperforming the broader European markets.

Gains in easyJet and Aston Martin helped the domestically-focused FTSE 250 <.FTMC> advance 0.4%, despite a hit to the local currency from mounting Brexit jitters.

Luxury brand Burberry jumped more than 15% on its best day ever, after it posted a stronger-than-expected rise in first-quarter comparable-store sales and affirmed its annual forecast.

"The big question facing Burberry has been to what extent the Chinese consumer is reining in their luxury buying ... Not so much, it seems," Markets.com analyst Neil Wilson said, as the company's revenue growth in China and across Asia improved.

Airline stocks climbed after Ryanair said deliveries of Boeing's 737 MAX planes may be delayed further, raising the prospects of easing over-capacity in the European market.

"It's just that reduced capacity is what is required for the industry - improved pricing environment which should be supportive of margins," Wilson said.

Shares in Europe's largest budget carrier, which cut its forecast for growth in traveller numbers next summer, and British Airways owner IAG gained 2.6% each.

EasyJet added 5.4% and was the biggest boost to the FTSE 250. Luxury automaker Aston Martin advanced 7.6% after a rating upgrade from Jefferies and a bullish view from Goldman Sachs.

The mid-cap index has broken ranks with sterling, defying its positive correlation with the UK's domestic currency. The index is up 12.3% this year while the pound has slipped 2.7%.

The currency slumped on Tuesday to a 27-month low against the U.S. dollar amid increasing concerns of a chaotic, no-deal Brexit.

Tour operator Thomas Cook, whose shares lost more than half their value last week, surged 11%. Wilson cited this to speculation that its proposed rescue deal with Fosun Tourism, which would significantly dilute the stakes of other shareholders, may not go through.

Mid-cap A.G.Barr lost more than a quarter of its value on its worst day ever, after the Irn-Bru maker warned that its annual profit would sink 20% compared with last year.

Fellow soft-drink makers Fevertree, Britvic and Nichols fell between 1.3% and 3.6%.

(For a graphic on 'Sterling vs FTSE 250', click

(Reporting by Shashwat Awasthi in Bengaluru and Josephine Mason in London, additional reporting by Muvija M and Yadarisa Shabong; editing by Arun Koyyur and Ed Osmond)

By Shashwat Awasthi

© Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
A.G. BARR P.L.C. 0.19% 523 Delayed Quote.-9.83%
ASTRAZENECA PLC 0.00% 8000 Delayed Quote.5.17%
BEST INC. 12.08% 2.97 Delayed Quote.-52.34%
BRITVIC PLC -1.43% 824.5 Delayed Quote.-8.84%
BURBERRY GROUP PLC 1.23% 1684.5 Delayed Quote.-23.61%
EASYJET PLC 7.78% 840 Delayed Quote.-41.03%
EURO / BRITISH POUND (EUR/GBP) 0.07% 0.891 Delayed Quote.5.09%
EURO / US DOLLAR (EUR/USD) 0.03% 1.19007 Delayed Quote.6.09%
FEVERTREE DRINKS PLC 1.00% 2424 Delayed Quote.15.81%
FOSUN TOURISM GROUP 1.30% 7.79 End-of-day quote.-30.32%
GLAXOSMITHKLINE PLC 1.02% 1380 Delayed Quote.-22.43%
HASTINGS GROUP HOLDINGS PLC 0.00% 249.6 Delayed Quote.39.29%
MAX CO., LTD. 1.95% 1467 End-of-day quote.-33.14%
MSCI UNITED KINGDOM (STRD, UHD) 2.05% 1007.138 Real-time Quote.-17.10%
NICHOLS PLC 2.75% 1120 Delayed Quote.-29.00%
PEARSON PLC 4.21% 652.8 Delayed Quote.2.48%
RISE, INC. 0.00% 24 End-of-day quote.-20.00%
RYANAIR HOLDINGS PLC -0.81% 15.395 Delayed Quote.6.08%
THE BOEING COMPANY 3.29% 218.49 Delayed Quote.-35.07%
THE GOLDMAN SACHS GROUP, INC. 3.79% 237.5 Delayed Quote.-0.48%
TOWNEBANK 7.06% 23.35 Delayed Quote.-16.07%
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