“The FTSE 100 ticked higher on Thursday morning after moderate weakness in the US overnight and mixed trading in Asia,” says AJ Bell Investment Director Russ Mould.
“Several stocks, including Barclays, were lower as they traded ex-dividend, but strength in Glencore as the Chinese market continued to rebound, as well as other names with links to the world’s second largest economy, helped give the UK’s flagship index a lift.
“A big release out later which investors will be watching closely is the core PCE reading of US inflation. This is the Federal Reserve’s preferred measure of prices. A higher-than-anticipated reading could put the final nail in the coffin of the idea of a pivot to rate cuts before the summer.
“London Stock Exchange Group may need to consider a name change given just 4% of its revenue comes from the bourse. It is seeing some signs of life in the IPO market which is good news for a pretty sickly UK market.”
Ocado
“If you squint your eyes enough then Ocado posted a rare profit for 2023 – although only once several exceptional items had been set aside.
“The most significant development is a maiden profit for the company’s technology solutions arm. This is the part of the business which created real excitement a few years ago, particularly when the online groceries sector reached a zenith at the height of the pandemic.
“The idea Ocado could licence its platform to help supermarkets around the world set up their own web-based solutions captured the imagination. However, despite agreeing some deals progress has largely been slow.
“Management at first blamed Covid restrictions for preventing it from meeting companies to agree contracts. Since then, the company has been plagued by operational issues, a patent dispute and surging costs.
“The company has also faced criticism from the partner on its Ocado Retail domestic operation, Marks & Spencer, so the market will be somewhat reassured to see signs of improvement on this venture with a return to underlying profit.
“One problem Ocado has faced is smaller basket sizes as, given the fixed costs involved in packing and delivery, people ordering less has a material impact on profitability. The hope will be that an improving economic picture allows shoppers to loosen the purse strings a touch and buy a bit more.”
International Consolidated Airlines
“British Airways owner International Consolidated Airlines may have reported a big surge in profit but the market does not seem overly excited by the news.
“The market’s lack of enthusiasm may reflect the slower return for business travel which is more important for the company than some of its rivals. It seems that while there has been some recovery in corporate travel, businesses are less likely to stomach the expense of regular air travel when video conferencing offers a much cheaper and quicker solution.
“It is a significant milestone to see group profit surpass pre-pandemic levels. The nagging question is how long the good times can last. Undoubtedly people have been prepared to prioritise travel and stomach a significant increased cost to jet away on holiday and, for now, the airline sees demand remaining robust.
“An increase in capacity may have an impact on pricing with geopolitical instability, volatile fuel prices and environmental concerns all potential sources of future turbulence.”
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