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Index eyes record on 130-point gain; Hope for August rate cut

Published 22/04/2024, 15:50
© Reuters.  FTSE 100 Live: Index eyes record on 130-point gain; Hope for August rate cut

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  • FTSE 100 up 141 points at 8,037
  • Grocers, housebuilders among risers
  • Ocado (LON:OCDO) pressured to ditch London

Jefferies sees 67% upside in National Express owner

Jefferies analysts have said National Express (LON:MCG) owner Mobico Group shares are looking at a 67% upside, despite news of the company’s chief financial officer resigning on Monday.

Though Mobico was sent 9% lower following a delayed trading update and details of James Stamp’s departure, Jefferies batted off concerns in a note.

“An interim chief financial officer with turnaround experience [is] joining in mid-June,” analysts highlighted.

Attention will likely also turn to Mobico’s disposal of its North American school bus business in the meantime, analysts continued.

“Encouraging” first quarter trading should to aid its valuation, Jefferies said, with route recovery from new contracts slightly ahead of expectations, according to Mobico

“We continue to expect the disposal to prove a material positive catalyst, kick-starting a debt-to-equity value transfer, followed by a deleverage-driven re-rating journey,” analysts added.

A 100p share price target was laid out as a result, marking a 67% upside on Friday’s close.

Wall Street enjoys positive start

A positive start on Wall Street saw the Nasdaq add 105 points to reach 15,387, as the Dow Jones and S&P 500 climbed 25 and 18 points respectively.

Seemingly easing tensions in the Middle East aided gains early on as attention turned to a host of big names set to report this week, including big tech firms and oil majors.

Buoying index on Monday though was NVIDIA Corp (NASDAQ:NVDA), with gains of 4.3% coming after analysts reiterated backing for the chip firm following falls last week.

Salesforce Inc gained 2% early on following reports the company had stepped back from talks to take over data-management software firm Informatica. Inc (NASDAQ:AMZN) also supplied upward pressure, leading a rally by big tech rivals Alphabet (NASDAQ:GOOGL) Inc, Apple Inc (NASDAQ:AAPL) and Microsoft Corp (NASDAQ:MSFT) as traders geared up for earnings later this week.

“With updates from the likes of Microsoft, Meta, Alphabet, and Tesla [...] the so-called Magnificent seven remain in the limelight after a particularly torrid time for Nvidia and Tesla shareholders,” Scope Markets analyst Joshua Mahony commented.

“However, there is a fear that the AI premium paid for those big tech names could start to reverse unless we start to see those investments drive a meaningful improvement to the bottom-line.”

easyJet gains altitude as targets hiked by RBC

easyJet (LON:EZJ) PLC ascended 2.8% on Monday after RBC analysts hiked the airline’s profit forecasts and share price target.

Following slimmer-than-expected first-half losses, the bank lifted profit before tax forecasts by around 10% to £653 million for 2024, stretching to £714 million next year.

Lower fuel prices should help too, analysts from the bank added in a note, hiking easyJet’s share price target from 540p to 580p - 8% higher than Friday’s close.

“​​We see an encouraging outlook for UK travel demand,” RBC said.

“Whilst UK travel demand climbed a wall of worry amidst cost of living pressures in 2022 and 2023, some UK macro indicators have firmed at the start of 2024.”

This includes disposable incomes, which the bank noted were up 7% year on year in January and February.

Rebounding travel demand following the pandemic has boosted airlines over the last year, with short-haul recovering quicker than long-haul, but transatlantic carriers noting improving trends in recent weeks… Read more

easyJet climbed 2.7% to 549.55p on the news.

Ryanair (LON:0RYA) Holdings PLC (LSE:RYA) gained 0.9% in the meantime, while British Airways owner International Consolidated Airlines Group (LON:ICAG) SA (LSE:IAG) jumped 3.6%.

FTSE 100 nears high

The FTSE 100 rallied 144 points to 8,040 on Monday, taking the blue-chip index not far off its all-time intraday high of 8,047 and past its record closing value of 8,014.

Retailers largely buoyed the index, led by Ocado Group PLC, which was up 4.8% after weekend reports that a top shareholder had pressured the grocer to relist in New York.

Marks and Spencer (LON:MKS), J Sainsbury (LON:SBRY), and Tesco (LON:TSCO) climbed 3.9%, 3.9% and 3.6% respectively after a delayed trading update from Asda saw each granted positive commentary from analysts.

Among others, Vodafone Group PLC (LON:VOD), Pershing Square (NYSE:SQ), WPP (LON:WPP) and BT Group (LON:BT) enjoyed gains, with the latter reportedly having added a new interim strategy chief to its board.

Persimmon (LON:PSN) led housebuilders higher in the meantime after news house prices had jumped this month, aided by a rebound in sales activity.

Leading fallers was Fresnillo PLC (LON:FRES), after gold prices retreated from gains seen late last week as tensions between Israel and Iran appeared to simmer down.

FTSE 250-listed Tyman agrees to US takeover

Tyman PLC (LON:TYMN) has become the latest company to deal a blow to London after accepting a takeover offer by US rival Quanex.

Under the £790 million deal, door and window handle part maker Tyman will be taken private, seeing its shares leave the London Stock Exchange.

“In the context of a rapidly evolving North American marketplace, our board ultimately determined that this transaction is the best path to maximising value for Tyman Shareholders,” non-executive chair Nicky Hartery commented.

If approved, Tyman would join a growing wave of UK companies leaving London due to takeovers, including Spirent Communications (LON:SPT), Wincanton, Accrol Group, Mattioli Woods and SmartSpace Software recently.

Shares climbed 31% to 388p on the news.

Read more on Proactive Investors UK


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