“The FTSE 100 overcame a modest drop at the open to trade broadly flat after weakness in the US last Friday and subsequent falls in Asia at the start of the new week,” says AJ Bell Investment Director Russ Mould.
“The UK index’s limited tech exposure may have spared it from losses given the weakness on Wall Street originated in that sector. Artificial intelligence star Nvidia was a notable underperformer as investors absorbed a mixed jobs report.
“The influential non-farm payrolls data was a real curate’s egg of a release. The headline number was higher than expected but revisions to previous data suggested the unemployment rate was at its highest in two years. Lower wage growth will have encouraged the idea rate cuts are on the way but the hints at a cooling economy suggest the landing may not be as soft as the market would have liked.
“Tuesday’s inflation report from across the Atlantic will help shape the narrative for markets this week. Any signs inflation is proving more stubborn to shift than expected, even in a deteriorating economic environment, could present the Federal Reserve with something of a conundrum.
“The appointment of administrators at Bidstack could lower the curtain on what is one of the UK stock market’s more curious and ultimately unsuccessful recent stories. The company looked to sell advertising within video games. The key point being these ads were integral to the gameplay rather than taking you out of the game to market a product.
“An interesting idea certainly, but the failure of desperate attempts to find a buyer – with around 200 potential bidders approached – suggests there was never really a fully viable business.
“It’s not a great look for the London market that remote meetings specialist LoopUp sees a better prospect of raising the money it needs by withdrawing from public markets. It shows just how difficult times are for UK-listed companies at the small cap end of the spectrum.”
Currys
“The decision by Elliott Advisors to withdraw bid interest in Currys doesn’t mean the target is no longer in play. Chinese group JD has already expressed interest and Elliott’s recent approach may have put the electricals retailer on the radar of others.
“There is logic in wanting to own Currys. It is the last major UK-wide seller of electricals still with a physical store presence. There are still plenty of people who like to go into a shop to get advice or technical assistance, compare products in person, and be able to collect items without having to risk a courier losing or damaging their goods during transit.
“The business has been through a significant restructuring programme and is starting to see some rays of light in terms of the recovery story.
“Elliott says Currys’ management refused to engage which at that point would normally see a bidder go hostile in their attempt to succeed with a takeover. Instead, it has just walked away which suggests that its original approach was highly opportunistic in the hope Currys could be bought on the cheap. Elliott’s statement implied it wanted more information on the group before considering a higher price but it couldn’t get the necessary details.
“Investors like Elliott typically want to pay as low a price as possible with the intention of potentially breaking up the group or driving big changes to realise hidden value in the business.
“Some of Currys’ biggest shareholders have already gone public and said Elliott’s 62p per share offer significantly undervalues the group. It’s no wonder that Currys’ management didn’t even want to give Elliott time for a coffee let alone open the books to let the suitor undertake due diligence.
“Reports based on conversations with big shareholders and analysts suggest 75p is a more realistic takeout price, which effectively gives any other interested parties a starting point for negotiations if they want to throw their hat into the ring.”
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