Markets jittery ahead of US jobs data, 7-Eleven owner rejects bid, Darktrace CEO quits, Berkeley sticks with profit guidance as UK house prices near record high, Next 15 hit by loss of major contract

“Today’s release of new US jobs data could have a significant influence on the direction of shares around the world. Concerns about economic weakness in the US have already led to two big shockwaves on the stock market in the past few months, and there is a potential for more tremors if the data looks bleak,” says Russ Mould, Investment Director at AJ Bell.

“Futures prices point to a weak opening for Wall Street on Friday, including a 1.2% decline in the Nasdaq. That factor, along with a tick-up in the gold price, suggests that investors are extremely nervous. Add an increase in the Vix measure of market volatility into the mix and you’ve got a potential recipe for an extremely choppy session today.

“The Federal Reserve looks hard at employment trends when it decides on interest rates and jobs data is also important to the US presidential campaign. The Democrats have been bigging up a resilient economy and Kamala Harris won’t want to see a big slowdown in the country, as that could fuel Donald Trump’s criticisms of his election rival.

“America added a lower-than-expected 114,000 jobs in July, which has encouraged hopes for interest rate cuts. The market consensus for August is 160,000 job additions and for the unemployment rate to fall from 4.3% to 4.2%.

“Watch out for any revisions to the historic data. Downward changes to preliminary estimates tend to portend of a slowdown or recession.”

7-Eleven

“It looks like Couche-Tard will have to dig deeper with its offer to buy the Japanese owner of convenience chain 7-Eleven or admit defeat. Its $38.5 billion bid has been turned down by Seven & i Holdings on the grounds that it isn’t in shareholders’ best interests and that the deal would be subject to scrutiny by the competition watchdog in the US.

“The latter is a key sticking point. Even if Couche-Tard offered more money, there is no guarantee the acquisition would pass the competition test given that the enlarged group would dominate the US convenience store market.

“Normally in these situations, the bidder would have to agree to sell part of its estate to get the deal over the line. However, it wouldn’t be surprising if Seven & i digs in its heels and refuses to be bought at any price. There isn’t a culture of Japanese companies of this scale being bought by foreign entities.”

Darktrace

“Under normal circumstances, the immediate departure of a FTSE 100 chief executive would be cause for concern. However, in Darktrace’s situation, it’s less of a surprise given the company is on the verge of being taken over.

“It’s normal for a takeover to lead to a change in management as the new owner tries to push through their vision for the company.

“Poppy Gustafsson has done well to build up Darktrace to one of Britain’s biggest cybersecurity names, but she now steps aside and is replaced by Jill Popelka.

“Popelka might have been an internal appointment, moving up from chief operating officer, but the fact she was only in the previous role for three months looks like it was always a temporary position before taking the top spot.”

Berkeley / UK House Prices

“In a UK housing market where supply and demand dynamics are very supportive it does not take a lot to stoke prices and the average cost of a home is now close to its June 2022 record high.

“A first cut to interest rates in the current cycle by the Bank of England has helped with pushing mortgage costs lower and provided buyers with the confidence to press ahead with purchases.

“The upcoming Budget, which has been trailed as being a miserable affair, may knock confidence but on the flipside at least one further rate cut is expected before the end of the year.

“Berkeley is seen as one of the best quality operators in the housebuilding space and the company has its usual mix of good visibility on revenue and shareholder returns, underpinned by a strong balance sheet.

“Under its late founder, Tony Pidgley, the company had a reputation for being spot on with calling shifts in the housing market.

“Berkeley has welcomed the proposed planning reforms unveiled by the Labour administration and it will be interesting to see what the company has to say when it announces its first-half results in December, and whether it is looking to ramp up its building efforts and/or land investments.”

Next 15

“It is always dangerous if a business is reliant on a single client or contract for a big chunk of its revenue and shareholders in Next 15 have had a painful reminder of that fact this morning.

“The digital communications and media firm’s loss of a major contract for its Mach49 consulting business is a significant blow. Rough calculations suggest it will result in a 12% hit to consensus forecast revenue for the January 2026 financial year.

“The current year is also expected to face an impact and worryingly other parts of the business are finding life difficult too.

“The group will need to find a way of giving the market some reassurance when it announces its first-half results later this month.”

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