Jobs numbers in focus, Aviva takeover talk lifts shares and Wetherspoons bounces back

“A slowdown in US jobs growth is expected to be the talking point of the day when new figures are released,” says Russ Mould, investment director at AJ Bell.

“Nonfarm payrolls are expected to have increased by 170,000 last month, down from 187,000 in August and continuing a trend of sub-200,000 monthly gains. While the slowdown is notable, achieving such a figure would not be disastrous and so the market is likely to take the view that the economy is still resilient and interest rates will stay higher for longer.

“European equity markets were robust at the end of the trading week, including a 0.3% rise in the FTSE 100. Driving the UK blue chip index higher was M&A chatter around Aviva which gave a lift to multiple stocks in the financial sector. Miners were also in demand despite copper having a terrible week, down approximately 4% over five days. Copper inventory levels have been climbing while dollar strength is typically negative for commodity prices.”

Aviva

“Is Aviva the next FTSE 100 takeover target? The market certainly seems to think so, judging by the 7% share price jump on Friday. Chatter that foreign players Allianz, Intact Financial and Tryg are among the potential interested parties has fired up the shares, hot on the heels of a bullish broker note earlier this week.

“What might they see in Aviva? Well, the business is forecast to have strong free cash flow and excess capital and its valuation is cheap. It has slimmed down in recent years to focus on the stronger parts of the group and there is now an opportunity to increase its position in bulk annuities which looks like a more prosperous market thanks to higher gilt yields.

“Activist investor Cevian Capital is no longer on the shareholder register causing mischief and Aviva is left as one of many stocks on the UK market looking unloved but still offering the potential for long-term value generation.

“One of the obvious times to buy a company is when it has made solid progress with a turnaround programme as that de-risks the investment case. Aviva has cast off the shackles of being a conglomerate and sharpened its focus as a result of asset disposals and a new impetus to grow, making it a stronger business. Naturally, that makes it more appealing to a would-be suitor.”

Wetherspoons

“There may not have been the requisite upgrades to stoke a great deal of excitement among investors but pubs group Wetherspoons still served up a solid set of results.

“Significantly, the company could toast its first profit since covid-19 struck. The business has always been one which focused on growing volumes as opposed to protecting margins so that was a problem when a) restrictions meant people couldn’t go to its venues and b) it faced the significant inflationary pressures seen in the last two years.

“Both problems have eased and while it may have taken some time, Wetherspoons’ scale and resources meant it was always likely to have come out of the pandemic in better shape than a lot of its rivals, particularly smaller independent operators. The large number of exits from the pubs market over the last three-and-a-half years means its competitive position has been enhanced.

“Despite the pressures on household budgets there is still a residual clamour to go out and enjoy everything which was denied to people during covid and Wetherspoons, with its keenly priced food and drinks, is well placed to cater for that.”

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