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Home Banking Market Report: FTSE 100 remains upbeat, AstraZeneca and Glencore in the spotlight

Market Report: FTSE 100 remains upbeat, AstraZeneca and Glencore in the spotlight

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  • FTSE 100 maintains gains on economic hopes and digests AstraZeneca deal
  • Savills profits slump 64% amid tough housing market conditions
  • Glencore faces pressure to move primary listing to Sydney
  • Oil surpasses $84 on heightened US demand

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: 

“The FTSE 100 has broadly held onto its gains as investors continue to cheer the news that recession looks like a thing of the past. Hopes of interest rate cuts this summer have been raised, and while there is certainly no guaranteed course of action, the market’s forward-looking eyes seem to be focussed on a brighter near-term, even though there hasn’t been a fresh injection of enthusiasm in early trading. The market’s also reacting to news that AstraZeneca has struck a deal to buy French company Amolyt Pharma for $1.05bn. The deal adds weight behind Astra’s rare disease division, and includes a hypoparathyroidism treatment currently in Phase III trials. This addition to the pipeline looks to be potentially lucrative.

Estate agent and property services specialist Savills has seen its profits slump as it pays the price of restructuring. Costs associated with getting the business ready to weather a downturn have been eyewatering. The group’s also facing significantly lower transaction volumes as higher interest rates across the world, and broader geopolitical uncertainty have swept demand away. There are green shoots appearing, especially in the UK commercial market, which has allegedly repriced to a point that looks attractive, which should help stimulate demand. There’s also growing hope that more palatable interest rates will start to trickle down to housing activity fairly soon. While Savills has seen a large reduction in its net cash position, the group still has an incredibly robust balance sheet, allowing it flexibility in tough times. As a market leader, Savills has a head start, but there is also a growing awareness that the estate agent market is ripe for significant disruption, so even the biggest fish in the pond needs to remain nimble.

Mining giant Glencore is facing pressure from an activist investor to change its primary listing from London to Sydney. Commentary included accusations that London is no longer the home of mining, which doesn’t quite reflect the significant other names in the sector still housed by the city. But it does speak to the growing pressures faced by policymakers to make London a more attractive place to list. Glencore’s performance has been dented by lower commodity prices, particularly in its coal portfolio in recent months. Disappointing share price performances are often a trigger for activist attention, and there are also some Glencore specific reasons for the weakness in valuation. A change of listing won’t magically fix these, but arguably could help the group refocus. The bigger question marks centre around calls for Glencore’s coal business to remain in the portfolio. It’s been broadly expected that Glencore would look to de-merge these assets at some point, so pressure not to do this means a strategic rethink could be on the cards, if the activists can drum up enough shareholder support. 

Brent crude has surpassed the $84 a barrel mark as an unexpected drop in US inventories tipped the supply and demand scales. This signals heightened demand for the black stuff, which also feeds into growing optimism for economic rebounds. Ukrainian drone strikes on Russian refineries, and Middle East conflicts, are also propping the price up this week.”

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