FTSE 100 off to strong start ahead of ECB decision this week, Shein reportedly set to file for UK IPO and GSK hit by new Zantac ruling

“The FTSE 100 made a strong start to June with resources, energy and financial stocks among those making solid gains,” says AJ Bell Investment Director Russ Mould.

“Asian stocks had also moved higher overnight after Friday’s weaker-than-anticipated US inflation reading which suggested rising prices were not becoming as entrenched as some had feared.

“This week brings several key PMI surveys from the US and non-farm payrolls data on Friday, which is always influential as the earliest release based on hard data to offer a barometer of the health of the world’s largest economy.

“On top of this the European Central Bank decision is on Thursday, with its policy makers widely expected to steal a march on their counterparts in Threadneedle Street and at the Federal Reserve by cutting rates for the Eurozone

“Blackstone is looking to bring the protracted sales process for music royalty rights investor Hipgnosis Songs Fund to a swift end by slightly sweetening its existing offer.”

Shein

“Reports suggest Chinese fast fashion outfit Shein will file for a UK IPO, potentially as early as this week, in what would undoubtedly be a boost for a market which has been starved of big new issues in recent times.

“However, Shein may find the glare of a public market listing uncomfortable given concerns about its governance, supply chain and business practices. Boohoo’s recent history provides a salutary lesson here.

“Clearly London will want the IPO to be a success to help rebuild its reputation as a listing venue so there’s a lot riding on it for both parties.

“Shein is smart in its use of social media and has the ability to turn around new items incredibly quickly to suit customers’ shifting tastes. However, it may increasingly bump up against a change in attitudes in the West towards fast fashion – with Gen Z increasingly concerned about sustainability and less willing to take a disposable attitude to fashion.”

GSK

“Investors had reached a point of some comfort with GSK’s Zantac issue as a series of US lawsuits linking the heartburn drug to cancer appeared to be running out of steam.

“However, a judge in Delaware has thrown a significant spanner into the works by giving the green light for 70,000 cases to go forward and by allowing expert witnesses to testify in court that the drug may cause cancer.

“GSK and the other parties involved, Pfizer and Sanofi, have made clear they disagree with the ruling and GSK has said it will mount an appeal.

“However, in the short term this just pours more uncertainty over the investment case. An uncomfortable comparison for GSK management can be drawn with AstraZeneca, which has left its counterpart for dust in recent times and is forging ahead with ambitious growth targets.”

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