Market Report: Budget airlines tipped to fly whatever the weather

Things may have looked rather brighter on the blue-chip index last night after a volatile session finished with a major rally, but the possible effects of the worst-case scenario for the economy were still being mulled over in the City.

The fear that a fresh recession could be around the corner has been a major driver of the recent plummet in the global markets, and yesterday analysts were rushing to work out which stocks were best placed to weather such a situation if it occured.

One of them was Citigroup's Andrew Light, and he recommended the budget airlines to worried investors. Not only, said the analyst, did they "have by far the strongest balance sheets", but he also pointed out that "travellers, leisure and business, trade down in a recession, and leisure switches from long-haul to short-haul".

In addition, claimed Mr Light, "they would benefit most from lower oil prices... such that they can lower prices to stimulate traffic, as in previous recessions", and he picked out EasyJet, which flew up 20.2p to 330.6p.

Credit Suisse's analysts, meanwhile, were running their eyes over the capital goods sector with fairly optimistic results, claiming the "impact of a global recession may not be as bad as many currently fear". Changing their advice on GKN to "outperform" from "neutral", they said the car-parts maker did "have some 'recession' scenario protection" thank to its exposure to the aerospace industry, and it shot forwards 8.1p to 186.6p.

They also upgraded their rating for Morgan Crucible – up 6.4p to 270.9p – to "neutral" and calculated the potential downside for Spectris – up 13p to 1,289p – was less than the sector average. However, Spirax Sarco dipped 12p to 1,665p after the analysts warned demand for the engineer's products was "closely tied to levels of industrial production", cutting its rating from "outperform" to "neutral" as a result.

Elsewhere, the resilience of the advertising agencies was being examined by Deutsche Bank, which said the fact advertising spending had not yet recovered from its recent lows meant a downturn would not be as tough for the sector as the last time.

However, it still cut its estimates for the groups, saying they were "GDP proxies, so in this environment we are more inclined to favour those stocks in media which are not overly dependent on a benign macro [environment] to outperform". Nonetheless, WPP managed to ease up 9p to 613.5p while its mid-tier index peer Aegis creeped forwards 0.7p to 127.3p.

The markets appeared to be suffering from déjà vu in the first half of the session, as – just like on Wednesday – the banks quickly wiped out early gains thanks to mutterings from France. After Société Générale had denied rumours over its financial position the previous session, the stability of the French banks was still the subject of vague chatter, with reports claiming an Asian bank had decided to withdraw its credit lines to the country's major lenders.

Yet – with rumours emerging that a European ban on short selling was a possibility – the FTSE 100 ended up 155.67 points stronger at 5,162.83 as investors took heart from Wall Street, which was in positive territory after encouraging jobs data. As a consequence, Barclays, Lloyds Banking Group and Royal Bank of Scotland all managed to recover from early falls, climbing 14.15p to 177.85p, 1.36p to 32.21p and 0.98p to 25.27p.

Also bouncing back were the commodity stocks, with Essar Energy pushing forwards 20.8p to 282.9p, while Antofagasta jumped up 74p to 1,218p as copper prices were given a boost by an increase in the value of China's yuan.

Down on the FTSE 250, Premier Foods advanced 0.5p to 13.55p as investors reacted positively to the news that Michael Clarke – the new chief executive of the owner of Hovis – would be taking up his position next Tuesday, two weeks earlier than expected.

Meanwhile, despite announcing on Wednesday it was still set to meet its expectations for the year, TUI Travel continued to slide, falling 9.3p to 155p as its German parent company released its third-quarter figures. TUI AG was rather more downbeat, saying it no longer expected an increase in its full-year thanks partly to the recent unrest in the Middle East and North Africa.

The Takeover Panel's edict that Melrose – which closed 1p behind at 306p last night – must "put up or shut up" and make a formal offer for Charter International by 6 Septemberinitially saw the engineer drop as low as 622p, although it managed to recover by the bell, closing 21.5p stronger at 679.5p

The announcement that it had begun drilling at its Sapele-3 well off the coast of Cameroon was all it took for Bowleven to rocket up 16 per cent, with the oil and gas explorer shifting 18.75p to 135p on the Alternative Investment Market.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Sport
Kim Sears is reported to have directed abuse at Berdych
tennis
Arts and Entertainment
Cold case: Aaron McCusker and Christopher Eccleston in ‘Fortitude’
tvReview: Sky Atlantic's ambitious new series Fortitude has begun with a feature-length special
Voices
Three people wearing masks depicting Ed Miliband, David Cameron and Nick Clegg
voicesPolitics is in the gutter – but there is an alternative, says Nigel Farage
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
i100
News
people
ebooks
ebooksA special investigation by Andy McSmith
Sport
Chelsea manager Jose Mourinho
footballThe more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Life and Style
Vote green: Benoit Berenger at The Duke of Cambridge in London's Islington
food + drinkBanishes thoughts of soggy school dinners and turn over a new leaf
News
Joel Grey (left) poses next to a poster featuring his character in the film
peopleActor Joel Grey comes out at 82
News
i100
News
business
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee