US rally fails to lift Asia & Europe, Prudential tops FTSE 100 risers, Direct Line gets new boss and The Works sees profits plummet

“A decent showing on Wall Street last night failed to lift the spirits across Asia and Europe on Wednesday, with most of the key indices struggling to find direction,” says Russ Mould, Investment Director at AJ Bell.

“A decline in the latest US job opening figures raised hopes the Federal Reserve will not rush to raise interest rates in the near-term. That led to a 1.7% rise in the Nasdaq and a 1.4% hike in the S&P on Tuesday, helped by Tesla soaring by 7.7% and Nvidia adding a further 4.2%.

“European indices were mixed, however, with the Dax slipping 0.1% on Wednesday morning, whereas the FTSE 100 gained 0.4% to 7,497.

Prudential

“Leading the UK index was Prudential, which has shifted focus in recent years away from the US and Europe and now has its eyes firmly fixed on Asia as the key driver of earnings growth. Its latest results went down well with investors, helping to put some strength back into the share price, which has been weak for much of 2023.

“While demand has been strong in Hong Kong, mainland China has not delivered the boost for the company that many people had expected this year following the relaxation of Covid rules. In theory, the long-term prospects for Prudential in the country look good as growing wealth should equate to greater demand for the financial services it offers. However, success does not come at the click of a finger and, like many big companies of its ilk, patience is required.

Direct Line

“Direct Line’s new chief executive looks like a safe pair of hands. Adam Winslow joins from Aviva and is well versed in the challenges facing the UK general insurance market.

“Direct Line has struggled over the past year or so due to unfavourable weather causing a spike in home insurance claims and inflationary pressures making it more expensive to support car insurance customers. Winslow will need to find ways to improve Direct Line’s balance sheet and reinvigorate the brand.

The Works

“The cost-of-living crisis should have been a tailwind for discount retailers such as The Works, as more shoppers seek bargains. Sadly, ongoing cost pressures have meant The Works’ profit is significantly lower than a year ago. That’s had a knock-on effect with a sharp cut in the dividend – a toxic cocktail which has led to a slump in its share price.”

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