FTSE 100 flat as debt ceiling talks stall again, BT up as Drahi increases stake, SSP’s recovery takes shape and Zoom lifts forecasts

“The FTSE 100 was flat on Tuesday morning as the latest US debt ceiling talks ended with the impasse between Democrats and Republicans still in place,” says AJ Bell Investment Director Russ Mould.

“Experience tells investors that these stand-offs always end with a last-minute deal so the market is mostly taking this saga in its stride, particularly given commentary from both sides seems to be increasingly conciliatory.

“Just how close Washington must push for there to be a genuine fear of default is an open question, but right up to the eleventh hour, or in other words the end of this month, the expectation is likely to remain that a deal will be done.

“UK public borrowings increased more than expected at the start of the year as like many borrowers the government felt the pain of increased interest costs.

“Telecommunications giant BT was in demand as its largest shareholder Altice, a vehicle for Patrick Drahi, increased its stake to nearly 25%. Altice is continuing to deny any plans to make an offer for the business but the move will raise eyebrows, particularly given the national security sensitivities around BT and its assets entering foreign ownership.”

SSP

“SSP’s recovery is like your suitcase on the airport carousel – you always knew it would eventually arrive, but the wait was long and painful.

“Finally, after a few chaotic years for the business thanks to the pandemic, SSP is firmly in recovery mode with revenue, profit and margins moving higher. We’re not quite there yet for dividends, but the company hints it is only a matter of time before the shareholder reward is reinstated.

“With its finances being repaired, SSP can now accelerate efforts to put the focus back on growth rather than survival.

“Sometimes a period of hardship can benefit a business longer term as it provides a reminder to run operations as efficiently as possible. SSP is certainly going to be as lean an organisation as possible with the pandemic experience permanently lodged in its mind.”

Zoom

“While Zoom’s glory days during the pandemic may be behind it, the picture of a sustainable business at least flickered into life in its latest earnings update as it beat expectations and forecasts were lifted.

“However, early gains for the stock were pared back on hints its enterprise business – which serves big companies – is likely to experience slowing growth.

“The group’s overall revenue growth hit the slowest quarterly pace on record. During Covid growth really lived up to the company’s name but since then it has been more snail-paced.

“The company faces a significant competitive threat from larger, more well-resourced plays like Microsoft and the video conferencing market has the feel of a winner-takes-all environment.

“Being the market leader would create a virtuous circle. If a platform has the most users, then it will be the one most businesses use to connect with each other. This reinforces its position as a must-have product for firms and provides it with significant pricing power when it comes to securing subscriptions.

“Microsoft’s decision to introduce AI to its Teams platforms arguably gives the company another dimension relative to Zoom.”

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