Daily market update: AstraZeneca, Vesuvius, AG Barr, Card Factory

Despite rising oil prices and bond yields and selling in Asia, UK stocks made decent progress.

Mining stocks did a lot of the heavy lifting as they recovered some of their recent losses. Utilities firms were headed in the other direction as investors reacted to news of Andy Burnham’s unveiling of GB Grid – a state-backed body intended to invest in the grid.

While the market reaction suggests this is not considered to be an existential threat just yet, there will be concern that this is the first step on the road to renationalisation of the electricity network and the country’s wider energy infrastructure.

Oil prices remained elevated, with little evidence to suggest there will be a breakthrough in the Middle East crisis in the near term, with the 10-year Treasury yield hitting a 19-year high. AI safety concerns received renewed prominence as OpenAI cancelled the release of a new model after it showed ‘higher levels of deception’.

These factors look set to prompt a downbeat start to proceedings on Wall Street later, with futures markets pointing to modest losses.

AstraZeneca

AstraZeneca is constantly looking for ways to develop its pipeline of new drugs and to bring more effective treatments to market.

The latest step forward is a $2 billion investment in Summit Therapeutics and a collaboration on developing gastrointestinal cancer treatments. In doing so, AstraZeneca provides important funding to Summit to accelerate its work.

Taking a stake in a partner is common in the pharma and biotech space, with the larger party effectively getting a seat at the table and being in prime position for a potential buyout down the line.

It is a lower-risk way of dipping the toe in the water. If the collaboration doesn’t yield the required results, then the larger party might just move on from the initial investment and not have wasted money from buying a company outright.

This is also standard practice in other industries such as mining and oil and gas, where the larger party is interested in something but wants to dig deeper before fully committing.

UK Takeovers: Vesuvius

Vesuvius is the latest UK stock to be on the receiving end of takeover interest, this time from quoted peer RHI Magnesita.

RHI first made an approach towards Vesuvius in March, and again in June, before a third attempt in August. This begs the question why this information was not disclosed to shareholders until now. Three approaches in six months shows persistence on RHI’s part.

AG Barr

AG Barr’s first-half results were lacking in fizz and left the shares flat.

The company still has some making up to do with the market after August’s revelation that it would take a £10 million hit from issues in its supply chain. At least Barr was able to provide some reassurance on the full-year outlook – reiterating guidance on revenue growth and margins.

A hike in the dividend reaffirmed the company’s cash generating credentials and management’s confidence in the outlook despite a tricky consumer backdrop.

Barr will hope that people are still prepared to splash out on a can of soft drink as a regular affordable treat even when household budgets are under pressure. To this point, its core brand Irn-Bru outperformed the wider soft drinks market but the weakness in its Funkin cocktail business saw an appreciable drop in sales.

Card Factory

Card Factory’s latest numbers were greeted warmly by long-suffering shareholders as they showed a crucial improvement in cash flow. They also showed last year’s acquisition of Funky Pigeon is providing some much-needed digital diversification.

Positive cash generation during a first half which traditionally sees cash go out of the door demonstrates the disciplined approach being adopted by management as did a tangible improvement in margin performance.

Card Factory stuck with full-year guidance and gifted investors a healthy increase in the dividend to convey management’s confidence in the outlook. After weak summer footfall put pressure on sales, CEO Darcy Willson-Rymer’s signalling of a return to like-for-like growth in recent weeks provided some reassurance that the picture is improving.

Whether Card Factory can build on this more stable base will depend heavily on the crucial trading period in the run-up to Christmas.

Anthropic

Anthropic looks to be pitching its stock market listing as a chance for investors to tap into the biggest economic transformation story since sliced bread.

Reports suggest its IPO prospectus is positioning AI as likely having a much greater impact on global economic activity than industrialisation, electricity and the internet.

Anthropic’s involvement in such a historic event will come at a big cost. Reuters says the IPO prospectus, which has yet to be released publicly, cites $518 billion spend on cloud, computing and infrastructure obligations in the coming years.

Massive spending would normally have investors running for the hills, but what’s capturing the market’s attention is Anthropic’s stellar revenue growth, up 12-fold in 2025. Admittedly, AI is moving at such a rapid pace that last year’s sales achievements relate to technology that is already outdated.

It’s rare to see companies grow at such a rate, and prospective investors might be hoping that Anthropic can sustain this momentum given it owns one of the leading AI systems.

Anthropic’s decision to focus mainly on enterprises could lead to more sticky revenue as businesses will want to give the technology time to transform their processes, rather than a consumer who might only want to use AI sporadically.

However, nearly one quarter of last year’s revenue reportedly came from two customers, implying concentration risks. Investors will be hoping that it broadens its client base quickly.

The elephant in the room is the risk that AI systems become too powerful for their own good. Lots has been said about whether a ‘kill switch’ might be needed for AI systems in general, and reports suggest Anthropic has acknowledged that its technology may pose ‘existential risks to humanity’ in its IPO prospectus. To say that is a ‘risk’ to the investment case is an understatement, to put it mildly.