Could Top Q1 Footsie Stocks Continue Their Run?

The past three months have demonstrated strong performance from UK equities, though the upside appears driven by exogenous factors. Still, certain companies could continue outpacing the market.

New Highs in Sight?

After closing just shy of an all-time high at the end of Q1, the FTSE 100 index broke its February 2023 record this week. However, it failed to hold onto those gains through the close and has since hovered slightly lower.

Commodities have contributed to both the breakthrough and the inability to sustain the new peak, as crude prices rose ahead of the OPEC+ meeting on Wednesday before reversing on Thursday. Yet, tightness in the commodities market remains unresolved, and a weaker dollar could resume its upward trend. This leaves the short-term trend hanging on significant US employment and inflation reports this and next week. However, in the medium term, some UK equities could still benefit.

Standout Performers in Q1

Antofagasta

Commodity price increases benefited miners in particular. However, Antofagasta's 32% gain in Q1 is especially impressive. The Chilean copper producer benefits from a weaker peso, helping to contain costs while copper prices rise due to renewable energy demand. Though Chile's economy is improving, its central bank is expected to keep easing in the coming months, potentially lowering production costs at Antofagasta's primary mines. As a result, its share price could maintain the trend seen in Q1.

Rolls Royce

Rolls-Royce also performed well in Q1, being the top spot in the FTSE 100 over the three months of 2024. Its 44% gain comes after a more extensive 326% increase over two years as restructuring lowered costs, restoring profitability. The company expects continued upside from these efforts, albeit at a more modest pace as cash flow growth moderates. However, should the company decide to reinstate dividends, it could provide a further boost.

International Airlines Group

International Consolidated Airlines Group, owner of British Airways and Iberia, saw gains of over 20% in the last month after EU regulators paused reviewing its AirEuropa acquisition. Beyond its consolidation in the European budget sector, IAG earnings rebounded substantially above pre-pandemic levels, with profits reported above 2019. Expected further industry consolidation positions the company favourably in the trans-Atlantic market to sustain growth into the higher travel summer season.​

IAG Breaks Triangle

IAG seems to have recently broken an upper triangle trendline, projecting a measured-move of approximately 50% to 240 GBX. However, if bulls fail to sustain upward momentum, it could equally reverse prices from current levels below the 100 GX mark in the long run. The stock could face significant resistance levels at 195 and 225 GBX should it maintain a trend above the 2023 high of 175 GBX, whether it sustains it now or following a correction. Support could be found around 150 GBX if the share price pulls back, with a breakdown below 125 GBX potentially opening the door to further declines and invalidating long-term upsides.

Source: SpreadEx / IAG

Key Takeaways

The past three months showed strong UK equity performance, driven partly by commodities and a weaker dollar. This benefitted miners like Antofagasta and Rolls Royce, which gained over 30% and 40%, respectively. Meanwhile, International Airlines Group rose over 20% after Europe's regulators paused its AirEuropa acquisition review. Profits exceeding pre-pandemic levels positioned it favourably in trans-Atlantic travel into the summer, with a technical triangle breakout supporting such thesis unless losses prevail.