With the FTSE getting off to a slow start in today’s early morning trading, Susannah Streeter, head of money and markets, Hargreaves Lansdown, has shared her thoughts on the main movements as follows saying:
‘’Early gain for the FTSE 100 fizzled out and it’s so far failed to recoup Monday’s losses. Finding a stable foothold to reach higher ground for the internationally focused index looks set to prove tricky as uncertainty hangs around ahead of a key inflation reading out in the United States on Thursday. The Federal Reserve’s preferred measure of price temperatures, the personal consumption expenditures price index will be released, and investors will be highly attuned to clues about when interest rate cuts may come with key policymakers due to speak later this week. Smith and Nephew was one of the biggest risers on the FTSE 100 in early trade, with investors reacting to news of a continued recovery in margins.
Tobacco giants have largely shrugged off reports that ministers are considering introducing a new vaping tax at the Budget in March. Although the industry is jostling for position in the vaping market, given the volumes declines in tobacco, these products are still a relatively small part of the picture. Investors had also been expecting greater regulation in the sector, so a potential increase in tax isn’t a wild surprise and given they are global companies a change in UK fiscal policy won’t move the dial too much.
Brent Crude remains above $82 a barrel, as disruption to shipping in the Red Sea keeps supply concerns bubbling. There are some hopes that a temporary ceasefire in Gaza could be reached soon, with President Joe Biden confirming that Israel has agreed to halt attacks during Ramadan, although Hamas is still assessing the draft proposals.
A highly challenging period continues for asset manager Abrdn as it failed to stem money pouring out of its funds in the second half. However, investors are clearly encouraged by its turnaround efforts so far, with shares jumping in early trade. Costs reduced by £102 million in 2023, ahead of targets and deeper cuts are now on the way to try and shore up profits with 500 jobs set to go. A further £150 million is expected to be saved by the end of 2025. High inflation and worries about economic growth have been challenging for the asset management sector, and Abrdn has embarked on a deep cost-cutting plan to revive its performance. It sold off its US and European private equity arms but has been trying to keep revenue moving in the right direction through the acquisition of Interactive Investor. This should provide a relatively stable source of assets for the group, given its one of the UK’s biggest direct-to-consumer investment platforms, albeit in a highly competitive market. There is likely to be significant disgruntlement emanating from reports that the deteriorating performance hasn’t stopped the board awarding chief executive Stephen Bird an £800,000 bonus, particularly given the scale of the job cuts announced.’’
