FTSE 100 rises
The FTSE 100 is up 0.2% this morning as the blue-chip index makes a positive start to the new trading week.
The move follows on from a positive session in Asia and comes ahead of a quiet day for the economic calendar, with markets bracing for a raft of updates from central banks this week when the US Federal Reserve, European Central Bank and Bank of Japan will all provide their latest interest rate decisions.
The Confederation of British Industry said Britain is likely to avoid a recession entirely this year after raising its outlook for the economy. The CBI said the economy is on course to grow 0.4% this year and 1.8% next year, up from its previous forecast for a 0.4% contraction in 2023 and 1.6% growth in 2024. It said Britain will sidestep a recession because energy prices are declining, supply chain disruption is easing and thanks to the reopening of China. That follows from other upgrades recently from the likes of the OECD and the IMF. Still, the CBI warned things remain tough for businesses and consumers as interest rates keep rising and the UK continues to underperform.
Read more: Why has the FTSE 100 underperformed and are UK stocks cheap?
FTSE 100 analysis: Where next for the UK 100?
The UK 100, which tracks the FTSE 100, has drifted between a ceiling of 7,650 and the June-low of 7,452 over the past two weeks. We are waiting for the index to break out of this range to decide where it is headed next.
A break above the ceiling would mean a move toward 7,710 is possible, marking the level of support that held throughout most of May. A move below the June-floor risks seeing it fall toward 2023-lows at around 7,307.
Top UK stock news
Shell is down 0.9% this morning on news it will scrap its target to cut oil production by 1% to 2% per year and keep output steady in an effort to regain investor confidence after coming under pressure following the poor returns seen from renewables, according to unnamed sources speaking to Reuters. CEO Wael Sawan will outline the plan at an investor day next week, when he will try to restore confidence by stating that a shift to clean energy cannot come at the expense of profits. He is expected to reiterate plans for Shell to become a net-zero emitter by 2050. Meanwhile, the Wall Street Journal said Shell is reviewing its chemicals business following the losses we saw last year. This is again thought to be in response to its lagging performance.
Oil prices are under pressure and down 1.3% this morning, with Brent trading at its lowest level since the start of June. That came as Goldman Sachs, which has one of its rosiest outlooks for oil prices, lowered its forecast for Brent over concerns about increasing supplies and waning demand. It now sees Brent trading below $90 a barrel by the end of the year. BP is down 0.6% in early trade.
Goldman Sachs also warned that property weakness in China could weigh on iron ore prices for several years, causing a drop in the steelmaking ingredient. It warned there are persistent problems in real estate within lower-tier cities and private developer financing. Rio Tinto is down 1.2% while Anglo American is down 1.4%.
Glencore is down 0.6% after announcing it has made a cash bid for the coal assets owned by Teck Resources. Glencore said its offer for a full blown merger with Teck remains on the table and that this is an alternative proposal to buy the coal business and combine it with its own coal assets before spinning them off. If successful, Glencore would spin-off the enlarged coal business within 12 to 24 months from the transaction closing. Teck has said Glencore is just one of several business interested in its coal assets.
Tesco is up 0.3%. The UK’s largest supermarket has been reported to the competition watchdog over its policy not to include unit pricing on its Clubcard loyalty scheme. The referral has come from consumer group Which?, that argues omitting the unit price can be a misleading practice in some cases. Tesco said it was disappointed with the move and said the claims were ‘ill-founded’.
Frasers Group is up 1.3% after confirming it has acquired a 18.9% stake in electronics retailer AO World, which is up 4.2% this morning, after purchasing 109.4 million shares at 68p each for a total of £75 million. Frasers Group said it has been discussing establishing a ‘strategic partnership’ with AO World for two years. ‘AO is a fantastic business with a clear strategy which is leading the market in online-only electricals. Through this investment, Frasers will benefit from AO's valuable know-how in electricals and two-man delivery, helping us to drive growth in our bulk equipment and homeware ranges. In turn, AO will have the opportunity to benefit from Frasers' expertise and ecosystem,’ said Frasers Group CEO Michael Murray. Sky News reported over the weekend that the AO World stake was purchased from Odey Asset Management.
The £2.2 billion takeover of Network International Holdings by Brookfield looks set to be untested after previously interested parties CVC Advisers and Francisco Partners Management said they do not intend to make an offer for the London-listed company. Brookfield has agreed to buy Network International for around 400p in cash. Network International is trading flat at 383p today.
Indivior is up 0.9%. The firm will start trading on the Nasdaq Global Select Market when it opens today. The pharmaceutical giant is maintaining its premium listing in London and will remain a member of the FTSE 250. It is not offering any shares as part of its additional US listing. Indivior said it will improve exposure in the US, which it said is its ‘largest opportunity market’.
Oxford Nanopore is up 0.8% after signing a research collaboration agreement with the Clinical Long-read Genome Initiative in Germany to study applications of nanopore-based sequencing to advance the understanding of rare disease. Four German university medical centres will use Oxford Nanopore’s technology to study unsolved rare diseases under a two-year pilot study.
Darktrace is trading 0.5% higher after launching new risk and compliance models to help its 8,400 customers address the risk of losing intellectual property and data through the explosion of interest around generative artificial intelligence. The new DETECT and RESPOND compliance models will introduce guardrails to help customers monitor and, when necessary, respond to generative AI tools and large language models.
Personal Assets Trust is up 0.9% despite underperforming the wider market in the year to the end of April, when its share price declined 4.4% and its net asset value per share dropped 2.2%. In the same timeframe, its benchmark, the FTSE All-Share, rose 2.4%. The firm said the pandemic, natural disasters, wars and political uncertainty in the UK have all created a challenging environment in recent years. It said it will pay a special dividend of 2.1p and ‘remains committed’ to paying an annual dividend of 5.6p.
Ocado Group has been upgraded to Neutral from Underperform by BNP Paribas, which has a price target of 365p on the online grocer. Ocado is the worst performer in the FTSE 100 since the start of 2023. Ocado is up 5.2% this morning at 406.50p.
ME Group has been given a Buy rating by Berenberg, which said there is scope for it to return significant sums to shareholders as it initiated coverage on the vending machine operator. The broker has a price target of 200p on the company. ME Group is up 2.1% at 163.2p today.
Segro has been downgraded to Neutral by Goldman Sachs, which has a price target of 800p on the company. Segro is down 1.1% at 791.6p today.
Great Portland has been downgraded to Sell from Neutral by Goldman Sachs, which has a price target of 44op on the property firm. Great Portland is down 2.4% this morning at 472.2p. .
