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FTSE 100 Live: Stocks fade as birthday celebrations fall flat

Published 03/01/2024, 11:01
Updated 03/01/2024, 11:10
© Reuters.  FTSE 100 Live: Stocks fade as birthday celebrations fall flat

Proactive Investors -

  • FTSE 100 down 40 points at 7,682
  • Food price inflation falls to 6.7% in December - Kantar
  • Entain (LON:ENT) appoints activist investor to board

Will Fed minutes confirm 'dovish pivot'

The FTSE 100 has taken a turn for the worse with markets firmly in cautious mode.

Part of that is due to nerves ahead of the release of minutes from the last Federal Reserve meeting.

Neil Wilson at Finalto explains the minutes are going to be important since they will “colour in the details from the Dec meeting – if you recall this was when Jay Powell went all dovish and tried to kill ‘higher for longer’.”

Wilson pointed out this triggered a big rally for risk assets as money markets significantly brought forward expectations for rate cuts in 2024.

“Therefore, they are important since the market reaction to the meeting and press conference was as big as it was. Stocks are priced for a perfect landing and rate cuts – surely we can’t get both…?”

Wilson suggested the minutes can do a couple of things.

They could “confirm the dovish pivot in all its glory”, or more likely in Wilson’s view, they may confirm that members were maybe “not all quite as dovish as Powell sounded at the post-meeting press conference.”

The minutes will be released after the London close.

Sandler appointment at Entain welcomed

Victoria Scholar, head of investment, interactive investor thinks news that Eminence Capital founder, Ricky Sandler has been appointed a non-executive director of Entain could pave the way for a divestment of its state in US betting joint venture BetMGM, something he previously suggested.

Scholar said his role could also help to appease other activist investors who were unsure of Jette Nygaard-Andersen, who quit at the end of 2023.

She was criticised for her handling of the takeover of STS Holdings, Poland’s largest bookmaker and her leadership has been clouded by a Turkish bribery scandal, Scholar noted.

Analysts at Jefferies saw the announcement as a "positive share price catalyst" but pointed out comments from Sandler that he looking foward to achieving "long-term success" and creating "lasting value" may imply that a short-term solution may not be top of Eminence’s agenda.

GSK boosted by Jefferies upgrade to 'buy'

GSK is enjoying a good morning, with shares up 1.9%.

Jefferies has taken a more positive view of the pharmaceuticals giant, upgrading to ‘buy’ from ‘hold’ and increasing its price target to 1,900p from 1,550p.

It has moved AstraZeneca PLC (LON:AZN) the other way to ‘hold’ from ‘buy’ and cut its price target to 11,000p from 12,500p.

Astra still has its supporters though with UBS reiterating a ‘buy’ rating and Barclays (LON:BARC) an ‘overweight’ rating.

Elsewhere, Deliveroo is up 1.1% after positive comments from Jefferies (buy) andf Morgan Stanley (NYSE:MS) (overweight).

Heading lower are shares in Burberry, down 2.1%, after Stifel downgraded to 'hold' from 'buy' with a revised 1,550p price target, down from 1,950p.

"We see the progress on Burberry’s turnaround and elevation journey as being held back by an adverse external environment in 2024," the broker said.

"It is still early days in Daniel Lee’s era and worsening sector trends since last September will likely make it tougher for Burberry to decouple from the sector trends and deliver the proof points that investors have been waiting for," Stifel reckons.

Read more on Proactive Investors UK


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