Proactive Investors -
- FTSE 100 down 44 points at 7,640
- Entain (LON:ENT) slips after warning of soft online gaming revenue
- Aviva (LON:AV) swoops for AIG (NYSE:AIG)'s UK protection business
Wall Street set to follow the UK and Europe lower
Across to the Wall Street now, and the concerns over China's property sector look set to keep US stocks subdued when trading begins on Monday.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.1% lower, while those for the S&P 500 fell 0.1%, and contracts for the Nasdaq 100 futures were down 0.2%.
Aside from the Evergrande worries which we covered earlier, Amazon (NASDAQ:AMZN) is in the news.
It plans to invest up to $4 billion in artificial intelligence start-up Anthropic, as the big tech group steps up its rivalry with Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL) and Nvidia to get AI companies using its technology.
The deal, announced on Monday, will see Amazon invest an initial $1.25 billion for a minority stake in Anthropic.
Both companies will later have the option to increase the total to $4 billion, they said.
Shares of Disney, Paramount and Warner Bros. Discovery were higher in premarket after Hollywood writers and studios reached a tentative deal that would end the Writers Guild of America’s strike.
Disney rose 1.2%, while Paramount and Warner Bros. Discovery gained 3.5% and 4.1%, respectively.
UK set for sluggish growth in 2023 and 2024
While worries about a deep recession have largely gone away, the prospects of high interest rates and low productivity are expected to hold back growth in the UK, according to KPMG.
The UK economy could struggle to keep its head above water in the second half of 2023, it thinks.
"Our forecasts show real GDP growth slowing to just 0.4% in 2023 and 0.3% in 2024." the accountancy firm said.
What are the prospects for the UK economy? Read our new UK #EconomicOutlook for our latest forecasts for growth, trade, inflation and unemployment ????Check out the full report here: https://t.co/nFkvnq1hC3 pic.twitter.com/W71fOpFqNZ
— KPMG UK (@kpmguk) September 25, 2023
"And uncertainty around the upcoming general election and strength of demand suggests that risks are skewed to the downside," it warned.
KPMG said inflation may only return to its 2% target by the latter part of 2024, especially if businesses continue to pass on higher costs to rebuild margins.
But it expects a cooling labour market to see a gradual fall in pay growth.
Chinese jitters keep blue-chips lower
Blue-chips are still nursing losses knocked by renewed concerns over the Chinese property sector.
“China is set to go down in history as being 2023’s biggest disappointment for investors," according to AJ Bell's Russ Mould.
"Having started the year in everyone’s good books amid expectations of a big economic rebound, the Asian superpower has failed to deliver," he explained.
"Economic growth has become a struggle compared to the levels it generated a decade ago and government stimulus initiatives have lacked bite.”
The latest woes have come as ailing property firm Evergrande warned it was struggling with its debt restructuring plan following poorer-than-expected sales, causing its shares to dive 22%.
"Investors are losing faith in China and this situation is only going to make matters worse for the markets," Mould said,
Morgan Stanley nudges up AstraZeneca and GSK targets
AstraZeneca PLC (NASDAQ:AZN) remains a bright feature in the FTSE 100 which continues to nurse heavy losses today.
Broker Jefferies has upgraded the stock to buy from hold while Morgan Stanley (NYSE:MS) and Berenberg have reiterated their positive stance on the pharma giant today.
Morgan Stanley expects EU biopharma to offer a safe haven from weakening growth/higher real yields.
“Whilst we continue to favour growth / innovation narratives in biopharma over the long-term, we expect investors to reward earnings upgrade stories - Novo Nordisk (CSE:NOVOb), Novartis (LON:0QLR), AstraZeneca - in the near-term,” it said.
“Our top picks remain AstraZeneca in large-cap biopharma, Lonza in Life Sciences and Indivior and SOBI in mid-cap biopharma,” it said.
The investment bank rates AstraZeneca overweight and has nudged its price target up to 12,900p from 12,700p.
It has also raised its price target to GSK (rated equal weight) to 1,585p from 1,440p to reflect a stronger than anticipated uptake of RSV vaccine Arexvy and positive FX movements.
In Europe, the bank has upgraded Novartis to equal weight from underweight.
Shares in Astra Zeneca rose 1.2% to 11,168p, GSK (LON:GSK) was little changed at 1,527p, while Indivior fell 0.7% to 1,779p.