FTSE lags rest of Europe, Frasers eyes world domination, GSK shares up on legal appeal, Prudential maintains guidance despite stalling growth and Hyundai to capitalise on hybrid boom

“After showing resilience in the face of volatility on global markets in recent months, the FTSE 100 was the odd one out on Wednesday among major European indices,” says Russ Mould, Investment Director at AJ Bell.

“It failed to hitch a ride that propelled markets in Germany, France and Spain. The FTSE 100 sat firmly on its hands as strength in healthcare and industrials was offset by weakness in commodity producers.

“Energy companies were dragged down by weaker oil prices while lingering concerns about metals demand from China continued to weigh on miners.

“Among small caps, shares in Focusrite were off key after the audio equipment specialist issued a profit warning, citing issues with shipping and product margins.

“The big event for investors around the world is Nvidia’s results after the US market close tonight. While earnings are expected to have soared, the outlook commentary will have a greater impact on the direction of its share price and the broader markets.”

Frasers

“Frasers has a ferocious appetite to rule the retail world. Despite already having fingers in many pies, it’s once again stretched its wings and swooped on yet another opportunity.

“This time it’s chasing business in Australia and New Zealand through taking a strategic stake in Accent, a distributor of well-known brands such as Hoka and Ugg, both of which are cleaning up in the footwear market.

“Planting flags in yet more territories is part of Frasers’ strategy to be a much bigger international player. It is now active in more than 20 countries and its goal is to provide consumers with access to the world’s most loved sports, premium and luxury brands.

“The investment in Accent makes perfect sense as it will enable Frasers to gain valuable insight into the Australian and New Zealand markets. As always, don’t expect this investment to lead to a full takeover of the company. That isn’t Fraser’s style. It only pounces on businesses when they are on their knees and going for pennies.”

GSK

“Legal issues around the Zantac heartburn drug continue to dominate the news agenda for GSK. The saga has been full of twists and turns, with investors trying to second guess if GSK will win or lose tens of thousands of lawsuits claiming Zantac caused cancer.

“The market has reacted positively to news that Delaware’s highest court will hear an appeal by GSK and other drugmakers who sold the product. It’s a positive step forward for the pharmaceutical giant but by no means the end of the story.

“The matter has become a major distraction for GSK’s management and many investors will be hoping it can agree a settlement and move on. GSK is adamant that it has done no wrong, saying there is no evidence that the product caused cancer.”

Prudential

“Prudential’s big pivot to Asia over the last decade, which culminated in the shedding of its US and European operations in 2021, isn’t playing out as the company would have hoped.

“The insurance giant went to less mature markets in the pursuit of growth, betting on an emergent middle class having increased appetite for financial products and services, but in key geographies like mainland China and Hong Kong, that growth is proving elusive. Zero-Covid policies didn’t help and the subsequent uncertain recovery in the Chinese economy has only compounded things.

“Prudential’s latest results compare unfavourably with Hong Kong-based insurer AIA which put up a big increase in profit for the first six months of the year.

“However, after a miserable run for the shares, the mildly positive reaction to Prudential’s numbers suggests the market is willing to give it the benefit of the doubt, helped by the fact full-year guidance is being maintained and by a material increase in the dividend.

“Chief executive Anil Wadhwani has only been in post for a little over 18 months so he is likely to be given time to turn things around, but he will need to demonstrate that the targets outlined for 2027 are credible before long.”

Hyundai

“At a time when car makers are generally struggling, the confidence on display from South Korea’s Hyundai is striking. Targeting a 30% increase from last year’s global annual sales total and unveiling a major share buyback – the company is clearly ready to put its foot on the accelerator.

“Hyundai wants to build on its already-strong positioning in hybrid vehicles which are proving popular with motorists unwilling to go fully electric due to infrastructure constraints, cost and range anxiety factors.

“The adoption of electric vehicles is falling below industry expectations and, as Hyundai is demonstrating, that requires significant flexibility as capacity is switched accordingly. Hyundai is also looking to position itself for the future by commercialising an autonomous driving vehicle foundry business.”

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