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- FTSE 100 up 20 points to 8,246
- Cable at 12-month high
- Superdry exits London Stock Exchange
Burberry at risk of sluggish luxury rebound
JPMorgan Chase (NYSE:JPM) has warned that the ‘re-acceleration’ of the luxury sector could be slower than anticipated, leading to downside risk for luxury stocks including Burberry.
The luxury sector has undergone a dramatic de-rating over the past year, due in no small part to a fall off in demand in the key China market.
“Based on current newsflow and latest sector trends, we think the re-acceleration might happen at a slower pace than what is currently factored into consensus and hence that earnings revision for the sector might still be skewed to the downside,” wrote JPM.
Although shares are trading at “more compelling levels” following the de-rating, JPM expects an “uninspiring” reporting season ahead and with earnings cuts likely, “we do not see a catalyst short term to turn more constructive for now”.
Burberry’s first-quarter trading update is due on 19 July.
Shares were up 0.8% this Friday, but remain 37% lower year to date.
FTSE 100 stays afloat
Blue chips remain in high spirits as midday approaches, with pharmaceuticals giants AstraZeneca PLC (LSE:LON:AZN) and GSK PLC (LSE:LON:GSK, NYSE:GSK) helping to keep the FTSE 100 in the green.
Though coming off morning highs of 8,275, the index is still 20 points higher from yesterday’s close.
Utilities stocks are providing some drags, with water big caps United Utilities plc and Severn Trent PLC (LSE:LON:SVT) falling 2% and 3% respectively, having been overbought on Thursday.
Ten million pints for the Three Lions
The British Beer and Pub Association expects pubs to rake in an extra £48 million on Sunday as the Three Lions seek Euro glory against Spain.
Landlords estimate an extra 10 million pints will be pulled from the pre-match build up through to the extended 1am closing bell.
Home Secretary Yvette Cooper is expected to pass a bill under section 172 of the Licensing Act 2003, allowing for a relaxation of licensing hours under “exceptional national significance” circumstances.
Former Tory Home Secretary James Cleverly initially proposed the measure if England managed to reach the finals.
Emma McClarkin, chief executive of the BBPA, said: “On what promises to be a hugely exciting day for the country we expect an incredible 10 million extra pints to be poured in our pubs this Sunday to toast England’s Euros final.
“A huge £48 million in additional trade for pubs and breweries will be generated by fans across the nation.
“As with the semi-finals, pubs will be licensed to stay open until 1am on Sunday night, giving fans even more time to enjoy the game, support our pubs and hopefully celebrate football finally coming home.”
Tesla downgraded
UBS has downgraded Tesla Inc (NASDAQ:TSLA) to sell following news reports that Elon Musk’s electric vehicle giant is delaying its much-hyped robotaxi event by two months.
Bloomberg reported that Tesla’s hotly anticipated ‘Robotaxi Day’ will not go ahead in August as planned, instead pushing the event back to October.
Over $60 billion was wiped from Tesla’s valuation following the report, with shares expected to fall again when markets open on Friday.
UBS also highlighted concerns that Model 3 price increases in Europe were less than the tariffs on China-made vehicles recently implemented by the bloc.
Graphcore boss rips into risk-adverse UK pension funds
Graphcore boss Nigel Toon has delivered a broadside to Britain’s pension funds as the chipmaker prepares to be taken over by Japanese conglomerate SoftBank.
Toon criticised UK pension funds’ risk-adverse approach to investing in British growth companies, saying they “tend to focus on cost rather than growth”.
In comments published by The Telegraph, Toon said: “We have about £4.6 trillion of capital managed in London as a result of pension funds and insurance. A tiny, tiny percentage of that goes into private companies today
Toon warned that pension funds are missing a “huge opportunity” in ignoring unquoted plcs and startups.
“Our pension funds tend to focus on cost, rather than on growth (and) performance,” said Toon. “That creates its own issues in terms of ‘what’s the future value of your pension going forward?’ And how do we expose some appropriate portion to the high-growth opportunities that some of these scale-up opportunities represent.
“I think there’s a massive opportunity to do that, but there’s a lot of structural things still, I think that needs to be fixed.”
Graphcore, which ambitiously aims to compete with global chipmaking titans like Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD), is being acquired by SoftBank at a reported $600 million valuation.
This falls far short of its $2.5 billion valuation in 2020.