- FTSE 100 opens higher
- Bunzl banks on acquisitions, new buyback
- BHP doubles down on copper
- US markets await NVIDIA earnings
- Brent oil hovers buoyed by supply concerns
- Ocado’s tech goes live in Australia
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“UK markets have managed to build on Friday’s gains and opened higher after the long weekend. In corporate news, Bunzl has demonstrated exactly why boring can sometimes be best. Bunzl may not be a household name, but it’s a quality business in the global distribution sector that focuses on adding value through small acquisitions. The highly cash-generative business has been able to grow margins and start a £250mn buyback despite a tricky backdrop for organic top-line growth, and part of that’s down to the strong acquisition strategy. Committed investment in 2024 is already at record levels, and there’s no sign of it taking its foot off the gas with a promise to keep investing over the next few years to take advantage of its fragmented end markets.
BHP, the world’s largest miner, is doubling down on copper after its attempt to buy parts of rival Anglo American ended in failure. It’s a difficult arena to execute large-scale acquisitions, so making the most of existing assets is key. The plan is to double down on copper, given its major role in the energy transition and the weaker outlook for iron ore as China’s growth outlook looks murky.
Over in the US, both the S&P 500 and Nasdaq saw some profit-taking in yesterday’s trading with trading volumes down on recent levels. Markets are tentatively awaiting the most important results of the season, with NVIDIA releasing results after the close on Wednesday. It’s rare for a single stock to be such a major catalyst for the broader market, but that’s certainly the case here. Investors will be eager to see what the demand story looks like for the chips that power the AI revolution. The post-earnings call could even be more important than the number themselves, with CEO Jensen Huang likely to update markets on the medium-term outlook for its new chip lineup and broader commentary on demand for AI services.
Brent oil is holding on to its recent jump at around $81.4 per barrel. Supply concerns are dominating the narrative with escalating tensions in the Middle East, and a near-total production stoppage in Libya after its eastern-based government announced the closure of all oil fields due to political conflict.”
Aarin Chiekrie, equity analyst, Hargreaves Lansdown:
“Ocado and Coles delivered some fresh news this morning, announcing that both of their Customer Fulfilment Centres (CFSs) in Australia began operations in July. This is where Ocado charges third-party retailers to use its robotic systems. Hundreds of thousands of orders are processed each week, with the help of automated ‘bots’ scurrying around the trademarked grid systems. Australia is seen as one of the fastest growing markets in the world for grocery e-commerce, and the two new facilities will deliver significant improvements to Coles’ customers in terms of freshness, range and opportunities to trial new products. CFCs are seen as Ocado’s main route to future growth and profitability, so seeing more centres go live is good news for investors.”
