“The FTSE 100 ticked higher on Tuesday, despite modest losses on Wall Street overnight, as markets found a moment of calm after a series of big macro-economic and corporate announcements,” says AJ Bell Head of Financial Analysis Danni Hewson.
“Mining companies did a lot of heavy lifting for the index, as leading commodities consumer China took steps to bolster confidence in its currency and economy ahead of a big leadership summit which kicks off in Beijing in early March.
“Later tonight a reading of US consumer confidence starts the gun on some big releases across the Atlantic. These could offer insight on whether a soft landing can be engineered for the US economy.
“The latest estimate of fourth quarter GDP follows on Wednesday, and on Thursday the core PCE reading of inflation is published. This metric is closely followed by the Federal Reserve when it comes to making decisions on interest rates.”
Shein
“There continues to be speculation that online fashion giant Shein might consider London for its stock market listing.
“Having one of the most disruptive names in retail float in the UK would certainly do wonders to help fix the London Stock Exchange’s damaged reputation as a listing venue. Shein is now a household name in many parts of the world and the go-to website for teenagers and young adults seeking bargain clothes.
“Investor interest could be huge, which bodes well for attracting other names to list in the UK after a patchy spell that has seen a growing number of big stocks turn to the US as their main stock location.
“Shein wants to be seen as a global business and having a Western stock listing rather than one in China would position it differently in the eyes of investors. It would imply greater stock liquidity and higher levels of transparency and corporate governance.
“But if many companies are opting for the US to maximise the potential for higher valuations, why hasn’t Shein gone there? Avoidance of geopolitical clashes is almost certainly a key reason as relationships remain sour between the US and China. But choosing the UK over the US might also be down to more relaxed regulation.
“The London Stock Exchange has been moving towards a less onerous listing regime to attract more entrepreneurs and businesses from all over the world. In doing so, it risks attracting lower quality companies and that isn’t necessarily good for the UK stock market’s reputation longer-term, particularly if we find skeletons in the closet for some of these firms or investors have to put up with volatile earnings reports.
“Shein might be a well-known company but it still faces plenty of headwinds even if it chooses to list in the UK. A public listing will put a spotlight on its supply chain and the ethical and environmental issues that surround fast fashion generally. The clothing retailer has come under pressure from lawmakers to prove it does not use forced labour in the manufacture of its products. It has also been accused of copyright infringement, which presents another risk to investors.
“These issues will not matter to all investors – some will simply view Shein as a new opportunity to buy shares in a fast-growing name in retail and a company taking market share from competitors left, right and centre.”
Disney
“Some dismal box office showings from Disney meant someone probably had to fall on their sword and the head of live action films Sean Bailey is that someone.
“Under continuing pressure from activist investors, chief executive Bog Iger is desperately trying to fix up the House of Mouse. A process which is proving harder than he likely expected when he was greeted like a returning hero by the market in November 2022.
“His previous attempt to hand over to another Bob – Chapek – had not worked out and Iger was seen as a credible driver of the change the business needed.
“He has made progress, streaming isn’t racking up the same losses as it was before as costs have been cut and prices hiked, but there are question marks over a major investment programme in its parks division and continuing concern over the succession. Last year’s extension of Iger’s contract out to 2026 was seen as an admission there isn’t a clear plan in place yet.
“Nelson Peltz continues to push for a place on the board, while another activist on the register, Blackwells, has stuck its head above the parapet to say Disney should have a clearer artificial intelligence strategy.
“However, its contention this alone could more than double the Disney share price does not suggest this is a push for a sensible long-term strategy and more an attempt to get the company to cynically tap into the market’s unabated enthusiasm for all things AI.
“That doesn’t mean there isn’t scope for innovation at Disney. A recent tie-up with Epic Games – the company behind the hugely popular Fortnite – hints at ways the company could exploit its industry-leading intellectual property in a future encompassing virtual worlds and augmented reality.”
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