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Ryanair profit warning drags down Easyjet shares
by Chris Marshall on Sep 04, 2013 at 09:00
UPDATE: A warning from Ryanair that it could miss its full year profit forecast hit shares both in the Dublin based budget airline and its FTSE 100 competitor Easyjet (EZJ.L) on Wednesday morning.
Ryanair shares tumbled 13% lower to €5.85 after the low cost carrier said it expects full year profits to be at the lower end of its €570 million to €600 million forecast, or could even fall below that range.
Other airlines fell in Ryanair’s wake. Easyjet fell 7.1% to £11.89, while British Airways owner IAG (ICAG.L) declined 4.2% to 282p.
Edgy investors shrink back from shares (08:18)
European shares slipped lower in early trade, as investors prepared for a barrage of important economic news and eyed growing US political support for an attack on Syria.
The FTSE 100 fell 0.3% to 6,446, having fallen 0.6% on Tuesday and 2.7% over the past month. Europe’s Eurofirst 300 dropped 0.1% to 1,210.
Weighing on sentiment, John Boehner, the Republican speaker of the House of Representatives, said he would back president Barack Obama’s plans for military action against Syria.
In addition, several London stocks were trading ‘ex dividend’ and subsequently weighing on the overall index. BHP Billiton (BLT.L), Aggreko (AGGK.L), ARM Holdings ARM.L), Croda (CRDA.L), IMI (IMI.L), Resolution (RSL.L), Serco (SRP.L), Shire (SHP.L) and Tui (TT.L) were all trading without their dividend appeal.
Asian stocks had been mixed overnight despite a rebound in China’s services sector adding to other upbeat data from the world’s second largest economy this week. The HSBC China services PMI rebounded to a five-month high of 52.8 in August, up from 51.3 in July.
HSBC’s Ma Xiaoping attributed the growth to the ‘impact of Beijing’s fine-tuning measures and an improvement in manufacturing activities’, adding that the pace of recovery would pick up ‘due to a rebound in the property market, filtering through of the VAT reform and Beijing's mini-stimulus’.
In addition to uncertainty over the impact of military action against Syria on the rest of the Middle East, there’s plenty more to keep investors anxious. Yesterday’s surprisingly strong ISM survey in the US offers more support for the Federal Reserve to start ‘tapering’ its asset purchases when the bank’s FOMC committee meets in two weeks. Friday’s jobs report will provide more clues on the fate of QE.
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- Bhp Billiton PLC (BLT.L)
- Aggreko PLC (AGGK.L)
- ARM Holdings PLC (ARM.L)
- Croda International PLC (CRDA.L)
- IMI PLC (IMI.L)
- Resolution Ltd (RSL.L)
- Serco Group PLC (SRP.L)
- Shire PLC (SHP.L)
- TUI Travel PLC (TT.L)
- Hargreaves Lansdown PLC (HRGV.L)
- Vodafone Group PLC (VOD.L)
- easyJet plc (EZJ.L)
- International Consolidated Airlines Group SA (ICAG.L)