Proactive Investors -
- FTSE 100 up 10 points to 8,0745
- Tesla to rally
- Bitcoin surges above $90,000
1.56pm: Shein risks delivering another Deliveroo (LON:ROO)
A Shein initial public offering on the London Stock Exchange (LON:LSEG) could be next year’s answer to Deliveroo PLC (LSE:ROO)’s disastrous 2021 flotation, AJ Bell’s investment director Russ Mould has warned.
Food-delivery group Deliveroo famously fumbled its market debut that year, lending it the unfavourable title of worst IPO in London’s history.
A combination of bad timing, an inflated valuation and concerns over workers’ rights caused the stock to collapse by a third in the opening minutes of trading.
Deliveroo’s usage of the controversial ‘gig economy’ employment model in particular caused many investors to shun the company.
This, according to Mould, should give Shein pause for thought.
“One can only imagine the number of questions from prospective investors, given uncertainties around business practices, supply chains, corporate governance, alleged intellectual property infringement, costs, margins and tariffs.
“All these need to be answered before Shein has a chance of getting its IPO away,” he stated.
He continued: “Under normal circumstances, Shein’s position as a fast-growing retailer expanding across multiple geographies and taking market share from established players would have made it a no-brainer for investors.
“However, there is an element of ‘it’s too good to be true’ with Shein that makes it a harder investment decision.
“Many people think there is a catch with how it is able to sell goods so cheaply – namely that it is using a supply chain that relies on workers that are poorly paid and poorly treated.
“Shein will need to rigorously prove this is not the case if it is to win over investors for the IPO.”
Although Shein has not confirmed a London IPO, the rumour mill has gone into overdrive.
A report from The Times published on Monday indicated that the fast-fashion giant will carry out investor roadshows in the coming weeks to test the waters ahead of its planned £50 billion listing in the first quarter of 2025.
1.19pm: Blue chips fall back
The FTSE 100 has reversed from intraday highs to slip into the red by a handful of points.
At the time of writing the, the blue-chip index was trading six points lower at 8,057, with B&M European Value Retail SA (LSE:BME) the biggest faller.
Housebuilders including Vistry Group (LON:VTYV) PLC (LSE:VTY) and Taylor Wimpey PLC (LSE:LON:TW.) also feature among the biggest daily fallers, while Melroe Industries plc tops the risers list with a 6.8% gain.
US stocks are expected to slump when trading commences acoss the pond, with the exception of certain megacap tech stocks.
Tesla Inc (NASDAQ:TSLA) is tipped to open nearly 6% higher on reports that president-elect Donald Trump will prioritise loosening the legal framework around self-driving cars.
12.49pm: Trump will cause UK GDP slump, warns Centre for Economics and Business Research
US president-elect Donald Trump’s tariff policies could deliver a 0.9% blow to the UK’s gross domestic product, according to the Centre for Economics and Business Research (CEBR).
CEBR’s estimate is based on Trump’s proposed policies of a 60% levy on Chinese imports and a 20% tariff on other imports.
These measures could heavily impact UK sectors like automotive, machinery, and pharmaceuticals, warned analysts.
These industries rely significantly on exports to the US and could face heightened trade barriers under the proposed policies.
A scenario analysis from the National Institute of Economic and Social Research (NIESR) supports these concerns, estimating that 10% tariffs could decrease UK economic growth by 0.7 percentage points.
The UK could mitigate this by pursuing a UK-US Free Trade Agreement, suggested CEBR.
When former trade secretary Liz Truss attempted to kickstart FTA negotiations in March 2020, she suggested that the UK economy would benefit from a £3.4 billion boost from a deal.
12.30pm: US tech stocks to gain, Dow Jones faces losses
The tech-focused Nasdaq 100 index is expected to surge up to 90 points, or around half a percentage point, when US markets open on Monday.
On the flip side, the Dow Jones Industrial Average, which is in the midst of welcoming chipmaking giant Nvidia Corp (NASDAQ:NVDA) to its ranks, is expected to fall more than 100 points, or a quarter of a percentage point.
The broader S&P 500 is also tipped to open a quarter percentage point lower.
US stock indexes swept to record highs across the board earlier this month following Donald Trump's presidential election victory over Kamala Harris.
They have since seen a sharp correction, although Nvidia’s star power could encourage markets higher if it managed to deliver another resounding revenue beat in Wednesday’s third-quarter earnings.
11.39am: Bitcoin back above $90,000
Benchmark cryptocurrency bitcoin surged back above $90,000 this morning after retreating from record-high prices late last week.
Bitcoin has been on a tear since Donald Trump’s sweeping victory in the US election.
Trump campaigned on a pro-crypto platform and promised to keep burdensome regulation out of the burgeoning digital currency sector.
Spot-bitcoin exchange-traded funds raked in billions of dollars worth of inflows following the election, signalling large-scale institutional demand for the cryptocurrency.
ETF flows did, however, start to taper off after the initial flurry of FOMO.
The BTC/USD pair is currently trading near the $90,700 mark, which is less than 3% off the all-time high of $93,265 reached last Wednesday.
11.27pm: Melrose’s ‘encouraging’ results bolstered by aftermarket earnings -analysts
Melrose Industries (LON:MRON) PLC (LSE:MRO, OTC:MLSPF)’s robust aftermarket business has more than offset ongoing volume constraints in its original equipment segment, according to analysts.
The GKN (LON:GKN) Aerospace parent reported “industry-wide supply chain issues” in a trading update for the period between 1 July and 31 October, but forward guidance has kept it on the good side of City brokers.
“The key point is that 2025 should improve substantially, with less restructuring cash outflow, resolution of GTF, and higher profit. The ongoing buyback is a slight offset, but core cash is strong,” said analysts at Peel Hunt (LON:PEEL).
They reiterated their buy rating on Melrose shares with a 650p price target.
Stifel called the results “encouraging”, adding: “Once again, performance is driven by the AM (aftermarket) business within Engines… In this period we think that it is the defence rather than the civil markets which have been the standout performer.”
Analysts at Stifel said Melrose’s shares “look cheap” compared to its peers. They also gave the stock a buy rating with a 650p price target.
Both brokers complemented Melrose’s optimistic cash flow projections.
The stock rallied 6.3% to 520.2p on Monday.
10.58am: B&M down 5%
B&M European Value Retail SA (LSE:BME) is currently the worst performer in the FTSE 100 set today, with the discount chain operator dipping 5% to 359.55p.
The company announced a £250 million refinancing through to 2031, with proceeds also earmarked for general corporate purposes, store openings and inventory.
Elsewhere in the FTSE 100, housebuilders Vistry Group PLC (LSE:VTY), Taylor Wimpey PLC (LSE:TW.) and Barratt Redrow (LON:RDW) PLC (LSE:BTRW) are down in the low single digits, as are real estate trusts Land Securities Group PLC (LSE:LON:LAND) and British Land (LON:BLND) plc.
The entire FTSE 100 index is currently up 20 points to 8,084.
10.10am: Reeves’ Budget will cause elevated insolvency levels, warns Begbie Traynor
Begbies Traynor (AIM:LON:BEG) expects the recent rise in National Insurance rates and predicted slowdown in interest rate cuts to boost business at its core insolvency arm.
“Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates are likely to extend the period of elevated insolvency levels," said executive chairman Ric Traynor.
Labour chancellor Rachel Reeves’ tax-heavy Budget has been widely criticised by leading industry bodies for the burdens it has placed on businesses.
Hospitality groups including Premier Inn-owner Whitbread PLC (LSE:LON:WTB) and JD Wetherspoon PLC (LSE:LON:JDW) warned of inevitable business failures and job losses, while JD Sports Fashion PLC (LSE:LON:JD.) chairman Andrew Higginson sounded the alarm over price hikes among retailers due to soaring costs.
9.39am: Melrose surges as bullish forecast offsets supply-chain woes
The market reaction to Melrose Industries PLC (LSE:MRO, OTC:MLSPF)’s latest trading update suggests that the aerospace manufacturing giant’s forward guidance more than offsets ongoing supply-chain issues.
Melrose highlighted the “industry-wide supply chain issues” in an update for the period between 1 July and 31 October.
However, the cautious statement also came with some bullish financial guidance for the year ahead.
The FTSE 100-listed group reaffirmed its full-year adjusted operating profit guidance of £550 million to £570 million.
For the following year, Melrose anticipates achieving an adjusted operating profit target of £700 million.
Melrose also expects a significant improvement in its cash flow position in 2025 following the completion of restructuring programs and the resolution of ongoing operational issues.
Following the trading update, Melrose shares surged 7.2% to a three-and-a-half-month high of 524.6p each.
The wider FTSE 100 blue-chip index is currently up 13 points to 8,076.61.
9.11am: Shein targeting 2025 IPO in London
Fast-fashion giant Shein is targeting a £50 billion initial public offering on the London Stock Exchange in early 2025, according to a report from The Times.
The Chinese-founded e-commerce company has long had designs on a London IPO despite a litany of controversies regarding forced labour in its supply chain and poor environmental credentials.
It initially wanted to float in New York, but faced intense scrutiny from lawmakers.
According to The Times, Shein is working with Goldman Sachs (NYSE:GS), JP Morgan and Morgan Stanley (NYSE:NYSE:MS) on the float.
Shein’s UK business reported revenue of £1.55 billion last year, with pre-tax profits more than doubling to £24.4 million.
Shein was valued at $66 billion earlier this year in a funding round.
8.47am: Energy prices to rise from January, predicts Cornwall Insight
Cornwall Insight has forecasted an increase in energy bills for January to March 2025, estimating an annual cost of £1,736 for a typical dual-fuel consumer.
This marks a 1% rise compared to Ofgem’s October price cap, which sets a maximum limit on the rates energy suppliers can charge for each unit of gas and electricity, and their standing charges.
Cornwall’s prediction “reflects the volatility of the wholesale market, driven by factors such as geopolitical and supply concerns, maintenance on Norwegian gas infrastructure, weather-related disruptions, and other smaller influences”, the research firm stated.
Craig Lowry, principal consultant at Cornwall, said the lack of a fall in energy prices will be "disappointing" for households. There “doesn't seem to be any sign of a return to pre-energy crisis levels”, he told the BBC.
Cornwall Insight’s Default Tariff Cap Predictor, which forecasts Ofgem's quarterly price cap, examines the factors influencing household energy bills.
The upcoming price cap for January includes a standing charge of £0.61 per day for electricity and £0.32 per day for gas. Unit rates are set at 24.83p per kWh for electricity and 6.33p per kWh for gas.
8.30am: House prices fall
Prices of houses put up for sale online fell by over £5,000 in November, according to online estate agent Rightmove PLC (LSE:LON:RMV).
A typical family house costs £366,592 down by £5,366 or 1.4% month-on-month.
Late autumn and early winter normally see weaker prices, said the website, but this is the second month in a row that the movement has been larger than usual.
In October. prices increased by 0.3% compared to 1.3% typically for the month on average.
Tim Bannister Rightmove’s director of property science said: “The big picture of market activity remains positive when compared to the quieter market at this time last year.
“This sets us up for what we predict will be a stronger 2025 in both prices and number of homes sold, particularly if mortgage rates fall by enough to significantly improve affordability for more of the mass market.”
8.21am: FTSE 100 gains
The FTSE 100 enjoyed a 16-point bump when trading commenced on Monday, bringing the blue-chip index to 8.080 at the time of writing.
Melrose led the charge with an 8% rally as the manufacturer’s ongoing supply-chain issues were offset by bullish forward guidance.
Entain (LON:ENT) plc, Anglo American PLC (LSE:LON:AAL), GSK PLC (LSE:LON:GSK, NYSE:GSK) and Glencore PLC (LSE:LON:GLEN) are all up in the low single digits.
8.08am: Boohoo (LON:BOOH) raises £400,000
Boohoo Group PLC (AIM:BOO) has raised roughly £400,000 from a share offer to small investors, as part of the £39.3 million fundraise it announced last week.
The online fashion group, which issued the shares at 31p per share, said it will use the funds entirely to pay off debt.
Boohoo has been at pains to reduce debt after suffering mounting losses over the first half of the year.
The group is facing an ongoing campaign from major shareholder Frasers Group PLC (LSE:LON:FRAS) to appoint Frasers’ founder Mike Ashley as chief executive.
Frasers has accused Boohoo’s board of having an “utter disregard for shareholder views”.
Frasers stated earlier this month: “We continue to believe strongly in the potential of the Boohoo business and the quality of its brands.
“However, the directors have pushed Boohoo into a terrible refinancing, while refusing to engage properly with Frasers on it.
7.47am: FTSE 100 set for flat open
Pre-market trades suggest a flat opening for the blue-chip index when markets open today.
According to FTSE 100 futures contracts, the index will open at 8,063, matching last Friday’s closing price.
7.27am: Melrose results marred by ongoing supply-chain issues
Melrose Industries has reported “industry-wide supply chain issues” that continue to constrain production volumes in its Engines and Structures divisions.
The FTSE 100-listed manufacturer highlighted the ongoing issues In a trading update for the period between 1 July and 31 October.
Despite these disruptions, the company reaffirmed its full-year adjusted operating profit guidance of £550 million to £570 million.
Looking forward, Melrose expects a significant improvement in its cash flow position in 2025.
This projection is attributed to the completion of restructuring programs and the resolution of ongoing operational issues.
Chief executive Peter Dilnot stated: "It's encouraging that we remain on track to deliver on our full-year expectations, despite the industry-wide supply chain challenges.
“This reflects the strength of our businesses and the balanced position we have with original equipment headwinds. As we move into 2025, we enter a period of significant and sustained cash generation for many years ahead.
“I am confident that Melrose's established capabilities, technology leadership, and industry relationships with the world's leading aircraft and engines will create substantial value in the future."
Melrose anticipates achieving an adjusted operating profit target of £700 million next year.
5am: Melrose to report
Melrose is set to kick off the week's proceedings with an update on Monday, alongside the likes of Big Yellow Group (LON:BYG).
Aerospace sector supply issues are set to be in focus when Melrose updates... Read more
Announcements due:
Trading updates: Melrose Industries PLC (LSE:MRO, OTC:MLSPF)
Interims: Big Yellow Group PLC, Polar Capital Holdings PLC, Sirius Real Estate Ltd (JO:SREJ)
AGMs: Celsius Resources Ltd (LON:CLAC), Ground Rents Income Fund PLC, JPMorgan (NYSE:JPM) Asia Growth & Income PLC, Mountview Estates PLC