FTSE dragged down by miners, SAP soars, Beazley relief after global IT outage update, reports suggest Alphabet’s Wiz bid has failed, Porsche cuts revenue forecasts and Compass lifts guidance

“The FTSE 100 was dragged down by a poor showing from the mining sector off the back of a weak copper price,” says Dan Coatsworth, Investment Analyst at AJ Bell.

“Copper futures have fallen by nearly 7% over the past five days amid concerns about sluggish demand from China as it struggles with a slowdown in economic growth. The market has taken the view that China isn’t digging deep enough with stimulus measures to fire up the economy and therefore commodities demand is at risk.

“Weak sentiment wasn’t restricted to metals demand. There were only 10 risers on the FTSE 100 on Tuesday morning and futures prices imply a weak opening for Wall Street later. It might simply be investors banking a few profits so they’ve got some readies to hand for trading stocks off the back of the new results season.

“We’re about to get another wave of corporate earnings from some of the stock market’s biggest names, including Coca-Cola and United Parcel Service at lunchtime and Alphabet, Tesla, Visa and Texas Instruments tonight. They should provide good insight into consumer and business spending patterns and confidence levels.

“In Germany, automobile stocks did their best to put the Dax into reverse amid bad news from Porsche but the index managed to push ahead thanks to a strong response to SAP’s second quarter earnings. Its shares hit a new record high after riding the AI gravy train. Cloud revenue jumped by a quarter as clients took steps to ensure they had the right infrastructure in place to run artificial intelligence applications.”

Beazley

“Investors have been fishing around for stocks that could be affected by last Friday’s global IT meltdown and Beazley had been seen as a potential loser. A lot of companies suffered considerable disruption thanks to a mess-up by cybersecurity provider CrowdStrike and many will try their luck at claiming on cyber insurance policies. As a specialist in the cyber insurance field, Beazley might be in the firing line if there is a deluge of claims.

“Beazley calmed market fears by saying there is no change to its full-year guidance as it currently stands. Whether that situation changes over the coming days is another thing. A lot of companies will still be getting their head around the full impact of the global IT outage and Beazley might simply be facing the calm before the storm.

“The flipside is that more companies might feel compelled to buy cyber insurance to give them protection against any future incidents, which could benefit Beazley.”

Alphabet / Wiz

“It seems that Alphabet’s quest to spend big on cybersecurity will have to wait until another day. Reports suggest Alphabet’s $23 billion offer for Israeli tech firm Wiz hasn’t been successful, with the target now likely to pursue an IPO instead.

“While Alphabet could theoretically buy Wiz once it is a listed company, it would probably have to pay a much higher price as shareholders would demand a bid premium.

“There was speculation that Alphabet would have a big fight on its hands with the regulators over any takeover of Wiz, given a widespread clampdown on big tech firms becoming too powerful.

“One has to wonder why Google doesn’t develop cybersecurity capabilities itself, given it seems to be a dab hand at most things, tech-wise. After all, Wiz was only founded four years ago and it managed to create a beast of a business in no time at all.”

Porsche

“Luxury car maker Porsche, hot off the heels of scrapping electric vehicle sales targets, has cut its revenue forecasts for the year thanks to supply chain issues.

“One of its European suppliers has been hit by flooding at a manufacturing site which impacted aluminium components. The impact isn’t huge but will nonetheless prompt disappointment among investors who have seen the shares stall over the last year following a promising start to life as a public company in the wake of its 2022 IPO.

“The company is looking to address some of its problems – replacing its boss in China where sales have struggled and introducing some pragmatism to its EV strategy.

“It’s no good producing lots of electric vehicles if the demand simply isn’t coming through at the trajectory which had been anticipated.

“Porsche, and majority owner Volkswagen, will hope the company’s credentials and brand will eventually enable it to join stock market darling Ferrari in the fast lane and not get stuck in traffic like fellow high-end vehicle maker Aston Martin.”

Compass

“Food service giant Compass continues to attract new business at pace, helping to support a second upgrade to annual forecasts this year.

“This suggests the company’s decision to ease prices in line with inflation is a good one as it helps drive loyalty among existing customers and attract new ones, bolstering an already strong market position. It also suggests a return to the office – as hybrid working policies are adjusted – is proving beneficial.

“The company and its management team see plenty more business to go after, with a large chunk of catering still done in-house.

“Compass has navigated the inflationary pressures of the last few years effectively through a combination of menu management, efficiencies and passing on costs where feasible. Its offering remains below high street prices – conveying a material advantage.

“It has also increased its presence in more defensive industries like healthcare and education which should make revenue and earnings more predictable.

“A strong balance sheet means there is scope for further capital returns to shareholders after the company concludes its current share buyback programme.”

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