Proactive Investors -
- FTSE 100 slips back, down 18 points
- JD Sports rises as announces European expansion
- Pearson sees opportunites from AI
Pearson highlights AI opportunities
Pearson PLC (LON:PSON) has highlighted the opportunities offered by AI as it moved to reassure the market after concerns that the new technology could hit the company.
The education publisher said AI will “further strengthen the company's position as a digital-first learning company focused on delivering an unmatched experience for the consumer across their lifetime of learning.”
Andy Bird, Chief Executive, explained AI has played an important role across its product portfolio for many years.
He expects it “to create significant positive opportunities for Pearson, due to our unrivalled depth of content and data.”
He said the firm will embed this technology across key products throughout the portfolio in a way that enhances the teaching and learning experience and has several projects well underway,
Pearson said it remains “on track to achieve our 2023 guidance” and is confident of meeting financial expectations for the medium term.
The reassuring words have certainly helped. Shares are 3.9% higher at 850p. Meanwhile, the FTSE 100 has slipped back, now down 18 points.
FTSE hovers around opening levels, UK rate call in focus
The FTSE 100 is see sawing either side of the opening line in early exchanges with Thursday's interest rate call on the horizon.
Victoria Scholar, Head of Investment, interactive investor said: "Focus is on the Bank of England’s monetary policy decision on Thursday with expectations for a further quarter point increase to 4.5%, marking the twelfth consecutive rate rise."
"Goldman Sachs (NYSE:GS) has warned that the UK bank rate may need to increase further to 5% by August ‘amid ongoing inflationary pressures,’ she noted.
Economists at Citi expect a 25 basis point rate increase on Thursday and feels a further 25bp rise is "likely" in June given the Bank of England "remains lumbered with inflationary risks that can only be evaluated in a backward-looking manner."
"By August, we think a window for a credible pause may still emerge," Citi said.
JD Sports continues to lead the way in the FTSE 100, up 2.8%, after its proposed expansion into Europe was well received but Direct Line's cautious outlook is weighing on Admiral PLC which has fallen 2%.
Matt Britzman, equity analyst at Hargreaves Lansdown (LON:HRGV) feels "the road ahead continues to look bumpy for Direct Line."
"Just as weather-related claims ease back to more normal levels, there’s little in the way of a let-off for the Motor division as damage-related claims tick higher."
"Add in claims inflation that continues to run at high single-digit levels, and the outlook for insurance profitability gets a little murky," he commented.
British Airways (LON:ICAG) owner, IAG, has made further gains after Friday's results with broker Liberum raising its price target to 350p from 240p.
Shares rose 1% to 151.50p.
FTSE little changed at the open
The FTSE 100 made a subdued start after the long weekend as investors look ahead to US inflation figures on Wednesday and the UK interest rate decision on Thursday.
At 8.15am, London’s blue chip index stood at 7,782.15, up 3.77 points, or 0.048% while the FTSE 250 was down 17.11 points to 19,435.39.
JD Sports Fashion PLC (LON:JD) made a bright start to the day with shares rising 3.5% after the sports retailer unveiled the planned acquisition of Groupe Courir in France for an enterprise value of €520mln.
Based in France, Courir is a leading player in the European sports footwear and clothing sector with 313 stores bannered across six countries.
Analysts at Peel Hunt said, “We expect further M&A to follow – JD is keen to continue its expansion into most of its current territories and Courir fits the bill.”
The group said the deal will need EU approval and completion is not expected before the second half of 2023.
Régis Schultz said: "We are delighted to announce the proposed acquisition of Courir, a business that is held in high regard in the European sportswear community.”
Heading the other way was Marshalls with shares tumbling 12% after it warned that trading in the year to date has been weaker than originally anticipated.
In a trading update covering the first four months of the year, the building materials company said that on a like-for-like basis, group revenue contracted by 14% reflecting the uncertain macro-economic climate, a reduction in new house building and continued weakness in private housing RMI activity.
Direct Line Insurance Group PLC was another stock on the wane.
The share price of the online insurer fell 5% after it warned of a further adverse claims in its motor business.
““We have experienced further adverse claims development in respect of late 2022 and early 2023 in Motor (including Commercial Motor) particularly in relation to damage. This is expected to put pressure on earnings in 2023 including from prior-year reserve releases,” the online insurer said in a statement.”