Market Report: Burberry enjoys gains on emerging market hopes

Burberry was in fashion on the FTSE 100 last night as investors bought in on hopes of continued demand from emerging markets. The high end retailer, known around the world its for distinctive camel, red and black check patterns, has been notching up sales thanks to continued demand for its pricey products; emerging markets have been an important driver, as Burberry hawked its coats and handbags to the swelling ranks of the newly rich in fast-growing countries like China.

Last month, it published another confident update and beat quarterly sales forecasts, though there were concerns among some about the impact of the grim state of the global economy. Ahead of the update, signs of weakness in the Chinese economy were partly responsible for declines in shares of luxury goods retailers such as Burberry at the end of September.

But the worries took a back seat yesterday, as investors bought in the read-across from the German fashion house Hugo Boss, which upped its earnings outlook yesterday. Boss said it expected Asian sales to almost triple by 2015, with China playing a starring role. This refocused minds on the opportunities for London-listed Burberry, which enjoyed strong gains throughout the session before closing at fourth place on the FTSE 100, up nearly 4 per cent or 49p at 1,402p.

Overall, the market was strong, with the blue chips gaining 56.52 points to 5,567.34 last night, although traders highlighted the fact that, with the European debt crisis still unresolved, volumes remained low.

Italy was under the spotlight, as Prime Minister Silvio Berlusconi, who has been at the focus of market concerns about Rome's ability to implement structural reforms, faced a key parliamentary poll on budget policy. In the end, he won the vote but lost his parliamentary majority.

The result led to some losses on the benchmark index, but not enough to take into negative territory as traders awaited clarity on the political situation. The mid-cap FTSE 250 index also closed higher yesterday, gaining more than 1 per cent or 117.1 points to 10,419.34.

Lloyds was the strongest of the blue chips, rallying by more than 4 per cent or 1.21p to 28.9p despite posting a third-quarter loss. The jump was put down to the positive outlook on margins, which analysts said was supporting investor sentiment around the stock. The remainder of the sector was also firm, with Royal Bank of Scotland gaining 0.08p to 22.33p and Barclays adding 2.65p to 182p.

Weir, the pumps and valves business that fell back despite posting a confident update on Monday, regained its composure, rising by 51p to 1,911p, after Credit Suisse reiterated its positive stance.

The broker also raised its target for the stock to 2,050p as it blamed profit-taking for the weakness on Monday. "A strong share price performance over the last month and management maintaining rather than upgrading... profit guidance contributed to [the fall]," its analysts said.

On the downside, AstraZeneca took the FTSE 100 wooden spoon last night, with disappointing news on an experimental antidepressant drug from the pharma group and partner Targacept dampening the mood around its shares. The treatment failed to meet its goal in a clinical trial, helping to send Astra down by more than 3 per cent or 93.5p to 2,873p.

But the trial result wasn't the only factor weighing on the stock. Also muddying the waters was some negative comment from Morgan Stanley, whose analysts lowered their recommendation on Astra to "underweight" from "overweight", with a revised 3,200 target price, against 3,570p previously.

They were more positive on blue-chip rival GlaxoSmithKline, which was 18p better off at 1,390p after Morgan Stanley upgraded its stance to "equal weight" from "underweight".

Further afield, the chip designer Imagination Technologies shrugged off some questions about its valuation, with the stock rising by a healthy 10p to 470p despite UBS analysts initiating coverage with a "sell" recommendation.

The broker said it considered Imagination as "a high-quality company", similar to FTSE 100 listed ARM, "but in graphics". However, the shares did not reflect the competitive risks in its markets, it warned. "With its price to earnings multiple in the top half of its historical range... and limited estimates upside, we believe outcomes are biased to the downside," the broker explained, setting a 400p target price on the stock. ARM was 3.5p higher at 600p.

The Superdry retailer Supergroup continued to rally ahead of this morning's second-quarter trading update, gaining another 11.2 per cent or 73p to 725p last night, while Premier Foods, which jumped on Monday after announcing an agreement with lenders to defer an upcoming covenant test, added a further 3.1 per cent or 0.114p to 3.812p.

Suggested Topics
PROMOTED VIDEO
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
News
i100
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
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

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world