“The FTSE 100 dipped despite a strong showing in Asia and the US last night, dragged lower by some heavyweights like Rio Tinto and AstraZeneca putting up modest losses,” says AJ Bell Investment Director Russ Mould.
“Globally, investor sentiment has been lifted by comments from Federal Reserve chair Jerome Powell that he and his colleagues are not far off having the comfort to cut rates and that he understands the risk of cutting rates too late. Chinese markets were lifted by government pledges of support for the tech sector and better-than-expected trade data.
“Later today, non-farm payrolls data from the US will offer insight into the US labour market where conditions have been tighter than anticipated in recent months. A higher reading than the 198,000 forecast might undo some of the optimism engendered by Powell’s comments.
“Events and professional information group Informa was lifted by a healthy increase in the dividend which suggested management is feeling confident about the outlook for the business, with an increase in guidance for 2024 driven by strong growth in overseas markets.
“It is telling the company expects to be able to reward shareholders with further generosity in terms of dividends and share buybacks. When it isn’t being decimated by the pandemic, the events industry is typically cash generative and Informa’s latest numbers are testament to this.
“Wholesale retailer Costco took a dip in after-hours trading in New York after revenue came in short of forecasts, but its results were hardly disastrous as it demonstrated tight control of costs and a big increase in takings from membership fees – offering a more predictable stream of income into the future.”
Frasers
“Frasers has taken enough bets on vulnerable companies over the years to know that you win some, you lose some. Its acquisition of Matches falls into the latter category as the business has gone into administration less than three months after being acquired. That’s possibly the fastest failure in the Frasers empire, but the parent will simply move on and look for the next opportunity.
“Given the timescale, it’s unlikely that Frasers will have had time to make sweeping changes in the business since purchase. The announcement about its administration is worded in a way that puts all the blame on Matches’ management as if the company was run at arm’s length.
“Matches has been hit by the slowdown in luxury goods and appears to have buckled under the pressure. It was always a bold move buying a platform during a downturn. The trick is to buy at the bottom when everything looks bleakest, yet the downturn in the luxury goods sector still looks like it is playing out.
“Frasers knew it wouldn’t be an easy ride as it bought a business that had already been loss-making for several years. The deal was pitched as giving Frasers an opportunity to develop relationships with luxury brands, yet the feedback in the market was that certain brand owners didn’t like the new owner’s method of seeking big discounts.
“Investors don’t seem too distressed by Frasers’ hiccup, with the shares slipping 1.1% in a falling market.”
These articles are for information purposes only and are not a personal recommendation or advice.