FTSE 100 rises ahead of crunch Fed meeting, GSK upbeat, Darktrace launches buyback after bear raid and Vodafone reports soggy growth

“The FTSE 100 moved higher on Wednesday morning, with today’s trading session in London sandwiched by strong gains on Wall Street overnight and the US Federal Reserve’s decision on interest rates later,” says AJ Bell Investment Director Russ Mould.

“A lot is riding on the Fed dialling back the pace of rate hikes to 25 basis points and there will also be plenty of attention on the surrounding messaging from chair Jerome Powell and his colleagues. Helping the market’s mood on Tuesday was data that revealed slowing US wage growth, another signal that inflationary pressures have peaked.

“Investors clearly hope we are getting closer to the point at which the Fed pivots away from rate rises and that it does so before too much economic pain has been inflicted.

“Entain was among the top gainers on the FTSE 100 as a winter World Cup helped draw in punters and drive earnings upgrades – though, given this is a one-off benefit, investors will want to see further progress on tapping the opportunity in North America and dealing with regulatory pressures.”

GSK

“After coming under considerable pressure from an activist investor to realise hidden value in the business and speed up growth, pharmaceutical group GSK has finally found the right medicine.

“Over-the-counter medicines business Haleon was spun off last year and GSK has now reported ‘a landmark year’ which includes record sales for its Shingrix shingles vaccine.

“Now a more focused pharmaceuticals group, GSK’s business model is all about keeping its pipeline of new treatments stocked and making sure existing treatments sell well before patents expire and generic versions flood the market. Its focus is on infectious diseases, HIV, oncology and immunology.

“Chief executive Emma Walmsley seems confident the company can do more than it has in the past. She’s got to be optimistic because in recent years critics have questioned if Walmsley is the right person for the job.

“The results from the reshaped GSK have been encouraging, but this is still early days for version 2.0. Developing drugs that work and having them approved for public use can be a long process and there is no guarantee of success.

“Walmsley is unlikely to ever be able to put her feet up and take a breather, but at least the company seems to be on a stronger footing so she can focus on strategy rather than mounting yet another defensive against unhappy investors.”

Darktrace

“Has this business got more skeletons in its closet than Tim Burton has featured on screen in his film and TV repertoire? Yet another hedge fund would think so, judging by the latest bear raid on the cybersecurity group.

“A year since ShadowFall had a pop at the business, along came another damning criticism of Darktrace earlier this week from Quintessential Capital Management which has raised questions about the group’s accounts.

“Naturally this has resulted in share price weakness in recent days, and it’s enough for Darktrace to launch a £75 million share buyback programme.

“This sends a message to the market that Darktrace’s management clearly thinks the shares are too cheap. It also reinforces the message transmitted earlier this week that the business doesn’t think it has done anything wrong, saying it has ‘full confidence’ in its accounting practice.

“However, the fact we’ve had two damning reports means a lot of investors will have lost faith in the business. A buyback might provide short-term relief to the share price but ultimately Darktrace needs to come up with some detailed responses to Quintessential’s accusations or investors are simply going to walk away.”

Vodafone

“To nobody’s great surprise, Vodafone has offered up soggy growth figures again.

“The telecommunications giant is trading just a little above all-time lows and has offered hopeless shareholder returns for more than a decade.

“The latest person charged with turning the ship around is Margherita Della Valle, though she has only had weeks in the job since the exit of Nick Read at the end of 2022 and is, for now, a temporary appointment.

“Though the company is sticking with its earnings guidance, the slowdown in third quarter revenue growth in Europe suggests there is some risk to forecasts.

“Germany seems to be the big culprit as Vodafone loses customers in that market – fixing that would be a good start for Della Valle.”

These articles are for information purposes only and are not a personal recommendation or advice.