FTSE 100 lower after selling in US and Asia, Wizz Air and Ryanair see passenger boost, Renishaw shares down after cold water poured on takeover reports and Topps Tiles warns on profit

“The FTSE 100 took its cue from selling in Asia and the US overnight to trade lower on Wednesday,” says AJ Bell Investment Director Russ Mould.

“Up until now the market has been remarkably sanguine about expectations on when the first interest rate cut will fall consistently being pushed back. But investors’ patience may finally be running thin.

“Recent releases from the US suggest both that inflation is proving stubborn but also that the economy is proving remarkably resilient. This is creating a situation where central bankers can arguably afford to keep policy tight to ensure they really have slain the inflation dragon.

“However, the Federal Reserve has to balance that with the inevitable lagged impact of the sharp rise in interest rate hikes since 2021, with companies and individuals still in the process of rolling over on to higher interest costs.

“Employment data today and on Friday, a reading from the US services sector and a scheduled talk at Stanford by Jerome Powell may all help clarify in people’s minds what the Fed is thinking and whether there is still hope for a June rate cut.

“A profit warning from Topps Tiles suggests UK homeowners are still under too much financial pressure to spend freely on home improvement projects in the way they were a few years ago during Covid.”

Wizz Air / Ryanair

“Wizz Air and Ryanair reported a material increase in passenger numbers in March with the former helped by flights to Israel restarting despite the ongoing conflict in Gaza. The company also expects a boost from the Euros football tournament kicking off in Germany this summer.

“The travel sector has enjoyed an impressive recovery post-Covid with airlines boosted by some capacity coming out of the market as less financially robust companies were forced to exit. The key question now is: how long will travellers continue to stomach higher prices in order to jet away?”

Renishaw

“While Siemens may have poured cold water on speculation that it wants to buy precision engineer Renishaw, the latter still remains a prime takeover candidate.

“Renishaw ticks the right boxes to be a bid target. It has specialist skills and a long track record of generating value for stakeholders. Its fortunes are heavily tied to the semiconductor industry where the prospects are improving after a year of oversupply. Furthermore, 52.8% of the company is owned by Renishaw’s co-founders David McMurtry and John Deer, both of whom are in their 80s and want to sell down their positions.

“Three years ago, they put the company up for sale on the condition they would only sell to someone who respected the heritage and culture of the business. Reports suggested there were plenty of interested parties but keeping things ‘the Renishaw way’ might have been a hurdle that many didn’t want to clear. Perhaps there needs to be a degree of flexibility on this front if they want a deal to succeed.”

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