- FTSE opens down 0.4%
- Chip stocks rebound in Asia, the Kospi snapping a three-day losing streak
- OpenAI confidentially files for IPO
- GSK agrees to buy Nuvalent in $10.6bn deal
- Trading statement from UK housebuilder Bellway
- UK retail sales rebound strongly
Anna Macdonald, Investment Strategy Director, Hargreaves Lansdown:
“The FTSE 100 has opened down 0.4%. While US markets staged a partial recovery overnight, investors remain cautious after the sharp selloff at the start of the week. The mood is one of tentative stabilisation rather than outright confidence, with attention still firmly on the outlook for AI valuations and interest rate expectations.
Asia-Pacific equities bounced back strongly, with MSCI’s regional gauge rising 2.5% after its steepest fall since March. South Korea’s Kospi surged as much as 8.5%, snapping a three-day losing streak, as dip-buyers returned to semiconductor names. SK Hynix jumped 16%, reflecting renewed conviction in the AI trade after a pullback. The rally mirrors gains in the US, where the Nasdaq 100 rose 1.6% and a semiconductor index climbed more than 5%, suggesting investors are not yet ready to abandon the theme despite recent volatility.
OpenAI has taken a first step towards a potential IPO, filing confidentially for an IPO. They said ‘We expect it to leak so we’re just announcing it. We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company’. The move comes shortly after a $122bn private fundraising round that valued the business at around $852bn, giving it significant financial flexibility. However, competition is intensifying. Its rival Anthropic recently surpassed that valuation following its own fundraising. Both companies remain lossmaking. Lower-cost competition is also emerging, particularly from Chinese models offering far cheaper processing, which could challenge pricing power even if they lag on cutting-edge capability. Interestingly, AI technology has contributed to a record level of Chinese exports in May. Also behind the record number was a boost to renewable energy exports, as countries around the world try to reduce reliance on more volatile oil and gas supplies.
GSK has agreed to acquire US-based biotech Nuvalent for around $10.6bn, paying a roughly 40% premium to its prior share price. The deal strengthens GSK’s position in targeted cancer therapies and reflects the first major acquisition since Luke Miels became CEO, and the first step in his push to rebuild the company’s drug pipeline. The transaction will be funded through a mix of cash and debt, with the company maintaining its investment-grade credit profile and reiterating its commitment to a 70p dividend in 2026. The move signals continued confidence in using M&A to drive growth, while retaining firepower for further deals.
Bellway reported robust trading overall, with a stronger start to the spring selling season compared to late 2025. However, demand softened through April and May as rising mortgage rates weighed on affordability. Reservation rates remain ahead of earlier levels in the financial year, supported in part by incentives averaging around 5%. At the same time, cost pressures are building, with higher fuel and energy prices feeding through to materials and supply chains. Despite this, Bellway is continuing to return capital, with its £150m share buyback progressing and an increased dividend underlining confidence in the balance sheet.
UK retail sales rose 3.7% year-on-year on a like-for-like basis in May, comfortably beating expectations of a modest 0.6% increase and marking the strongest growth since April 2025. The rebound follows a sharp 3.4% decline in April, with spending boosted by warm weather and early bank holiday activity. Food sales climbed 3.9%, helped by barbecue demand over the holiday period, while non-food categories, including clothing, outdoor goods, and home products were up 3.5% as consumers leaned into summer spending. However, the picture wasn’t uniformly strong. Travel spending fell 5.8% for a third straight month, with airline expenditure down 12.9%, pointing to continued pressure on discretionary big-ticket spending. Barclays noted that around two-thirds of consumers are adjusting their finances amid broader economic uncertainty, with concerns ranging from rising living costs to geopolitical tensions.”
