Proactive Investors –
- rises 27 points
- UK government promises regulatory reform to boost investment
- Bookmakers plunge on reports of new UK gambling tax
- Takeover offers upped for Mulberry and TI Fluid systems
US stocks start mixed, FTSE jumps
Wall Street has got off to a mixed start, with the retreating from the high at which it ended last week, but the broader S&P 500 rising 0.6% and the tech-fueled jumping 0.9%.
The small cap is up 0.3%.
Eight of the top 10 in the S&P 500 are in the green, with Nvidia (NASDAQ:) a big driver for the main indices, rising 2.3%.
Holding the Dow back are falls for Caterpillar (NYSE:) (down 3.6%), Boeing (NYSE:) (down 2.7%), Amgen (NASDAQ:) (down 1.7%) and Nike (NYSE:) (down 1.2%).
Investors in the US seem to like the look of the FTSE, with the index climbing faster, now up 0.3%.
Ring-fence to be torn down
The UK will ease bank ring-fencing rules soon, City minister Tulip Siddiq has told reporters on the sidelines of the London investment summit.
Ring-fencing rules were introduced in the wake of the 2007/2008 credit crunch and financial crisis to separate banks’ consumer lending operations from their investment banking arms.
There was no time scale given by Siddiq, with Reuters reporting that it would be “soon”.
Lots of people to meet at the International Investment Summit today, including the Lord Mayor of London @mrmainelli.
We had a good discussion about financial literacy and inclusion, which are priorities for me as City Minister. pic.twitter.com/DLDz9jC5YP
— Tulip Siddiq (@TulipSiddiq) October 14, 2024
Market confidence inches higher
The FTSE 100 is pushing higher, while US futures are also shifting towards a more positive, if still mixed, open in a couple of minutes.
London’s benchmark is at just over 8,265, up 12 points or around 0.1%.
In the US, Dow futures are still in the red but S&P 500 and Nasdaq futures are now both in the green, up 0.3% and 0.6%.
Revolut in retail push
Revolut is launching a new retail payment terminal, pitting the London-headquartered fintech disruptor in direct competition with established point-of-sale fintechs like SumUp and Square.
Following on from the launch of its first terminal in 2022, the ‘Revolut Terminal’ will support Revolut Pay, enabling over 45 million users to pay through the Revolut app.
“This is one of the major new bets that we have as a company,” Revolut’s general manager Alex Codina told CityAM.
Spanner in the TalkTalk takeover works?
Any potential takeover of internet service provider TalkTalk has hit a stumbling block after auditor Deloitte tendered its resignation after 22 years.
Although TalkTalk called it part of a planned rotation of advisers, one analyst voiced concerns over the resignation’s impact on TalkTalk’s future.
Deloitte’s resignation “reduces the chance that any company would want to take over TalkTalk”. according to analyst James Ratzer from boutique research firm New Street Research, whose comments are published in the Telegraph.
Recruitment slowdown amid economic uncertainty
Tying in with the government’s regulatory reform promises and the overall ‘on hold’ feeling in the UK as businesses await the 30 October Budget, there has been a bit of a wider global slowdown on hiring amid uncertainty about the global economic outlook, according to recruiter PageGroup PLC (LON:).
The FTSE 250-listed group reported a 13.5% fall in third-quarter gross profit, with falls in all of its main global markets, with the UK down over 13% but Asia Pacific the worst-performing market with a 16.8% decline.
“The conversion of interviews to accepted offers remains the most significant area of challenge as the ongoing macroeconomic uncertainty in the majority of our markets continues to impact candidate and client confidence negatively,” chief executive Nicholas Kirk said alongside the results.
That is the context for permanent recruitment continuing to be impacted more than temporary hiring, he said.
At the end of last week, recruitment sector rival Hays (LON:) continued a streak of poor quarters, with a 15% year-on-year fall in net fees.
US stocks set to start in red
US stocks are set to start the week in the red, like their UK cousins have mostly done so far today.
Futures for the S&P 500 are pointing to a 0.1% fall at the open, while are down 0.15% and are just below flat.
Many of the biggest of the big tech stocks seem to be expected to start higher, with premarket trading indicating Apple (NASDAQ:), Nvidia, Tesla and Meta Platforms all in the green.
This follows a positive close on Friday, where the Dow and S&P 500 made fresh record highs, at the end of a positive week with all the major indices posting gains of around 1%, and the Dow recording its fifth successive week of advances.
“Overall, the stock market is displaying significant resilience,” says market analyst David Morrison at Trade Nation, who points out that volatility is on the rise with the back above 20, indicating that investors are also adding hedges in the form of S&P put options.
Bond yields are also holding at higher levels, he notes, with the yield on the key 10-year Treasury note hovering around 4.10%, well above the 3.60% from this time last month.
“The third quarter earnings season has got off to a good start with positive reports from JP Morgan, Wells Fargo (NYSE:), the Bank of New York Mellon (NYSE:) and Domino’s Pizza – so far, only Delta Air Lines (NYSE:) has disappointed,” he says.
This week’s big US earnings updates include Goldman Sachs (NYSE:), Citigroup, Bank of America (NYSE:), Morgan Stanley (NYSE:), United Health and Netflix (NASDAQ:).
There are no reports due out today and the US bond market is closed for Columbus Day.
Monzo valuation confirmed
Monzo has risen to a £4.5 billion valuation, confirming reports from last week.
The valuation was used as part of an employee share sale, where staff were paired up with large investors keen to increase their stake in the digital challenger bank.
Monzo, which this summer hailed a first full year of profitability, says the sale has provided additional liquidity to employees while enabling investors to buy into its equity.
Since being founded in 2015, Monzo has secured close to $2 billion in primary funding from investors including Google (NASDAQ:)’s CapitalG, Tencent (HK:) and Passion Capital, including $600 million this year.
Monzo, along with the likes of Revolut, Starling Bank, eToro, SumUp and OakNorth are expected to be a rich source of IPOs in coming years as private equity investors cash in.
Mixed trading in Europe
Just past midday, the FTSE 100 continued to hug close to the flat-line, little moved at 8,248, down less than 0.1%.
Across the Channel, France’s is down 0.4%, while in Germany the is up 0.2% and the Spanish and Italian and benchmarks are also higher, both up 0.4%
The pan-European is just below flat, down less than a full point, top risers being Dutch life sciences group Argenx and French video games maker Ubisoft, while top fallers are London-listed bookies Entain (LON:) and Flutter (LON:).
Among the London mid-caps, with the down 0.2%, bottom of the fallers is Raspberry Pi (LON:), down 4.1%, followed by Close Brothers.
Top of the 250 is TI Fluid Systems (TIFS) after its takeover offer news earlier, up 19.5%.
Analysts at Jefferies say the 200p offer is “now in line with what we see as a minimum acceptable offer price”, having previously said they saw 200-245p as a sensible offer range, valuing the company in line with EU peers at the bottom end, and in line with EU & US peers at the top end.
However, they note that auto industry conditions have deteriorated further, so they see 200p as “still undervaluing the company, given TIFS’ favourable margin, growth & FCF profile/outlook relative to peers”.
Next best riser is Ashmore Group (LON:), which reported an increase in its assets under management in the past quarter, suggesting the appetite is improving for investing in emerging markets.
Investors turned off ESG investments after bad performance
Environmental issues are being overtaken in importance for investors by governance issues, according to research by the Association of Investment Companies (AIC).
Among older (aged 65 and older) investors, 31% felt ESG is “woke”, but among the more enlightened younger generations this falls to only 13% for those aged under 45.
The number of private investors who admit to considering environmental, social and governance (ESG) issues when investing has dropped for the third year in a row, with 43% of investors considering themselves “fans” of ESG investing, down from 60% in 2021, 51% in 2022 and 50% in 2023.
This may have been influenced by the performance of some ESG-focused funds and stocks in the past few years, as many have suffered amidst the higher rates of interest.
The AIC noted comments from one investor, who said: “I want to do good, and I understand ESG from that point of view, but it has to be a balance between that and getting returns. That is why we invest.”
Green investment confirmed
Other investments have also been unveiled at today’s summit, though ministers have acknowledged that much of this is not new today.
Investments confirmed today by Number 10 include from Spain’s Iberdrola (BME:), which has doubled its planned investment for the next four years up to £24 billion.
Denmark’s Orsted (CSE:) is “unlocking” £8 billion and GreenVolt £2.5 billion in offshore wind farms, though this is confirmed on the back of the successful offshore wind auction last month.
SeAh Wind UK, an arm of Korean giant SeAh, announced £225 million to build a wind technology manufacturing facility in Teesside.
It was noted that since the election, the government has launched Great British Energy, overturned the nine-year ban on onshore wind and held what it said a renewable energy auction round that was “the most successful …in history”.
£21bn of investment unveiled
Around £100 billion of investment has been pledged on the sidelines of the International Investment Summit being held by the government today.
Among that, Macquarie, a major investor in UK water companies and other utilities, has unveiled plans to pump £20 billion into its UK infrastructure portfolio, including support for England’s first reservoir in 30 years in the South-East, plus offshore wind, battery storage, gas transmission and broadband projects.
The Australian group also unveiled plans to invest in 650 electric vehicle charging points across its chain of Roadchef motorway service stations.
DP World has confirmed this morning its £1 billion investment in the London Gateway container port, after some behind-the-scenes efforts to diffuse a reported row.
DP chairman Sultan Ahmed bin Sulayem said: “I am proud of this major investment which underlines DP World’s long-term commitment to the UK.”
Starmer promises to ‘upgrade’ regulatory regime
Keir Starmer is now speaking to an audience of big businesses and investment groups at London’s Guildhall.
The PM’s inaugural speech at the summit includes a pledge to “rip out the bureaucracy that blocks investment”, including housebuilding, construction of data centres, warehouses and electric grid connections, and will “do everything in my power to galvanise growth including getting rid of regulation that needlessly holds back investment.”
The Prime Minister says the government will “upgrade the regulatory regime to make it fit for the modern age, making Britain fit to harness all opportunities”, including asking the Competition and Markets Authority to prioritise growth, investment and innovation.
“We’ve got to look at regulation where it is needlessly holding back the investment, to take our country forward.”
One of the major tenets of the general election pitch was that Labour tried to emphasise it would offer a more stable government (somewhat undermined by a loss of direction in recent weeks), and the PM says: “It’s not just that stability leads to growth – though we all recognise that. It’s also that growth leads to stability.”
LIVE: Keir Starmer’s speech at the International Investment Summit https://t.co/zVjxu5Jyyd
— Keir Starmer (@Keir_Starmer) October 14, 2024
UK investment summit
For those after more details on the government’s investment summit, I can tell you it’s an all-day event being held at London’s Guildhall, before select attendees don their best duds for an evening reception at St Paul’s Cathedral hosted by King Charles.
The event will include speeches from prime minister Keir Starmer and chancellor Rachel Reeves.
Starmer will also hold a conversation on stage with ex Google boss Eric Schmidt where GSK (LON:) boss Emma Walmsley will be in the role of moderator, directing questions about how the UK can seize the opportunities of AI to drive growth and productivity.
Reeves will take the stage with Aviva (LON:) boss Amanda Blanc in a panel discussion apparently including Larry Fink, chair of investment giant BlackRock (NYSE:), Universities Superannuation Scheme CEO Carol Young, and Brookfield Asset Management (TSX:) CEO Bruce Flatt.
For health sector investors, there is also a session called ‘unlocking the UK’s health data assets to deliver innovation’ that will feature the chief executive of NHS England, the head of research at Google’s DeepMind AI division and chairman of US pharma giant Eli Lilly (NYSE:).
Ticking the green energy box, the panel discussing decarbonising the National Grid (LON:) will include the chief executive of Octopus Energy and the managing director of Australia’s Macquarie Group.
‘Man who catch rocket with chopstick accomplish anything’
Did you see the SpaceX rocket action from the weekend?
The moment when the reusable Starship system’s Super Heavy booster rocket is successfully caught by giant robotic arms, known as “chopsticks”, was accomplished at the first attempt.
Among the major investors in the company is Scottish Mortgage Investment Trust PLC (LON:), where SpaceX represents 4.6% of its portfolio.
The SMT shares are down 1.1% this morning though, which is probably more to do with the 8% fall in Tesla shares on Friday. Tesla is a 4.2% chunk of the FTSE 100 investment trust’s portfolio.
Port investment
One of the companies at the UK’s International Investment Summit will be port operator DP World – although this would have been in doubt on Friday, when it was reported to be ready to boycott the event after comments by two senior government ministers.
The Dubai-based logistics giant, owner of ferry company P&O Ferries, was described by transport secretary Louise Haigh as a rogue operator and accused by Deputy PM Angela Rayner of “manipulation as an employer” after it sacked 800 workers via video call and rehired cheaper workers two years ago.
DP World apparently was prepared to scrap a £1 billion port investment on the back of the comments but this is now expected to still be one of the major announcements later today.
Stability on offer for investors
The government has pledged to “hardwire stability for investors” through a new industrial strategy and “rip out bureaucracy” for businsses.
These are some of the soundbites emerging from today’s International Investment Summit today, what is being described as the UK’s first industrial strategy in seven years.
Eight growth sectors will be in focus, the government says: advanced manufacturing, clean energy, creative, defence, digital, financial, life science and professional service sectors.
An interim industrial strategy advisory council, chaired by Microsoft (NASDAQ:) UK chief executive Clare Barclay, will also be set up in partnership with firms, unions and stakeholders.
“Our modern industrial strategy will hardwire stability for investors,” business secretary Jonathan Reynolds said, giving investors “the confidence to plan not just for the next year, but for the next 10 years and beyond”.
BA cancellations
British Airways owner International Consolidated Airlines Group (LON:) and Rolls-Royce Holdings PLC (LON:) shares seem to be down on news about delayed aircraft parts.
IAG said on Friday that it has changed its flight schedule because of delays in the delivery of engines and parts from Rolls-Royce, particularly those for the Trent 1000 engines used by its 40-strong fleet of Boeing 787 aircraft.
“We’ve taken this action because we do not believe the issue will be solved quickly,” a British Airways spokesperson said in a statement to Reuters, adding that most affected passengers were offered a flight on the same day.
The Financial Times said BA was cancelling hundreds of winter long-haul flights due to the delays.
