FTSE 100 higher on commodity price strength, Disney shares down despite beating activist, Motorpoint sees pick-up in business and Future returns to growth

“The FTSE 100 ticked higher on Thursday as US markets enjoyed a better session overnight,” says AJ Bell Investment Director Russ Mould.

“Miners were in demand as commodities prices continued to surge – an inflationary development which might provoke some nervousness about the fate of long-awaited interest rate cuts.

“Federal Reserve chair Jerome Powell warned yesterday of a risk of having to delay cuts thanks to stubborn inflationary pressures, although there was enough to reassure investors that a rate cut is coming at some point this year.

“There was news of two material capital returns to warm the cockles of shareholders. Automotive engineer Dowlais outlined a £50 million buyback and events business Ascential set out further details on an £850 million windfall for shareholders relating to the sale of two businesses last year.

“Vodafone’s attempt to merge with rival mobile group Three is unlikely to be concluded any time soon amid news an increasingly strident CMA is set to conduct a full probe into the deal. Neither party could offer the necessary mitigations to convince the regulator consumers wouldn’t be worse off as a result of the merger.”

Disney

“Defeating an activist investor was meant to be a victory for Disney yet its shares ended the day 3.1% lower. That suggests the market was quietly hoping for a boardroom shake-up even though the company’s share price had been flying ahead of the proxy vote off the back of Bob Iger’s own efforts to revitalise the business.

“Trian Partners – the vehicle for activist Nelson Peltz – kept its chin up and its response to the defeat was spoken like a true gent, wishing the company and its stakeholders ‘all the best’. The mood might be different behind closed doors as activists don’t like to be put back in their box. If Iger doesn’t deliver on his promises and make Disney great once again, Peltz is going to be setting off fireworks and rolling up his sleeves for one almighty fight.”

Motorpoint

“Things are looking up for the used car sector after Motorpoint reported an improvement in trading in recent months. Consumers under financial pressure have been pulling back from making big ticket purchases. Some people need a vehicle to get from A to B no matter what’s happening in the world, but many can view a car as a non-essential purchase. They keep their existing motor and hope it lasts longer until they’re financially able to switch.

“Motorpoint sells nearly new cars so these can be meaningful purchases for households. This isn’t like buying a TV or new clothes – it involves shelling out a substantial amount of hard-earned cash so the customer needs to be sure they can afford it.

“The backdrop should improve further for Motorpoint once the Bank of England starts to reduce interest rates. That action could make households feel as if the worst is over and that they are able to get their finances back on track. It also helps that wage growth has been fairly decent, on average.”

Future

“After a torrid period for publishing group Future, the announcement of a return to growth offers some much-needed relief for shareholders.

“The company’s GoCompare price comparison site, which was seen as an odd fit when acquired in 2021, has provided some useful diversification at a time when advertising markets are difficult.

“Future built its success on buying up specialist magazine titles cheaply and plugging them into its existing platform in order to generate revenue from their content and brands through a mix of digital advertising, e-commerce and getting readers to click through to partnered retailers and events. However, a downturn in both marketing expenditure and the number of users on its various websites have thrown a spanner in the works.

“The company is seen as a victim of AI as there is an increasing risk people just use ChatGPT to ask about various topics rather than search for articles on Google – resulting in a drop in traffic to its sites.

“It is encouraging to see the company investing in its strongest brands and this appears to be having some benefit in terms of direct digital advertising in the US.

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