- FTSE 100 opens up
- US markets brace for potential summer slowdown
- Benetton board to address mounting losses and leadership changes
- Takeover talks for major UK corporates near key deadline
- Oil price rebounds amid OPEC+ speculation
- Rachel Reeves has sought to burnish her business credentials
Guy Lawson-Johns, equity analyst, Hargreaves Lansdown:
“The FTSE 100 has opened higher as the UK general election campaign gets underway. Last week’s election announcement is causing some short-term volatility in the markets, but longer-term investors can usually take this as background noise. Rishi Sunak is betting on a £2.4bn tax break to win the support of pensioners as he fights to stay in office. Meanwhile, the National Service pitch appears to be a defensive strategy to shore up core Tory voters as the Conservatives look set to gain an unprecedentedly low number of seats.
Shadow Chancellor Rachel Reeves has sought to burnish her business credentials with a letter signed by 150 business people supporting Labour’ approach to the economy. The list includes Karen Blackett, UK President of WPP, Matthew Freud, Chairman Freuds Group and Richard Walker, executive Chairman Iceland. Former senior execs from JP Morgan, Tesco Bank and Heathrow have also signed. Reeves will speak about her plans later today.
Overnight, the European Central Bank sent a clear signal that interest rates will be cut from their record highs next week. This comes amid warnings that cutting rates aggressively ahead of the FED could cause the euro to depreciate and inflation to flare up as imports become more expensive.
In the US, despite bright spots and a booming Memorial Day weekend for travel, the usual summer slowdown in stock markets may be more pronounced this year. Inflation concerns and an early presidential debate could weigh on a rally that has pushed the S&P 500 near record highs. With the S&P 500 trading at a premium compared to historical norms and few catalysts for further gains, the traditionally slow summer season could be more turbulent than usual.
The board of clothing retailer Benetton is expected to meet today to discuss a net loss of around €230mn for 2023. The company has seen losses mount as it’s struggled to compete with fast-fashion giants like Zara. Rumours suggest restructuring plans may include CEO Massimo Renon stepping down after four years and the injection of €260mn into the business. The next meeting of Benetton shareholders is scheduled for 18 June when Renon’s CEO mandate will not be renewed.
Meanwhile, bids for two of the UK’s largest corporate names, Royal Mail’s owner and Anglo American, face a crucial deadline this week. For both, the deadline to make firm offers or walk away is Wednesday. This comes amid a frenzy of takeover talk in the UK which continue to attract overseas interest.
Brent crude has continued its rebound from near four-month lows, settling around $83 per barrel. This comes amid expectations that OPEC+ will extend voluntary output cuts at its next meeting on 2 June. On the demand side, markets are also awaiting key US inflation data this week to gauge the direction of Federal Reserve monetary policy.”
