Daily market update: Barratt Redrow, Heineken, London Stock Exchange Group

The FTSE 100 ticked higher on Wednesday, supported by gains in bank and resource stocks and chatter that London Stock Exchange Group has been targeted by activist investor Elliott.

A recovery in commodity prices after the recent volatility helped give the miners and energy stocks a lift. Oil was supported by US-Iran nuclear deal uncertainty, while gold moved back through $5,000 per ounce. On the flipside, companies caught up in AI disruption fears linked to the launch of new tools by Anthropic, apart from London Stock Exchange Group, were back in the market’s bad books.

Housebuilders were on the back foot thanks to poorly received numbers from Barratt Redrow. In a water utility sector dogged by controversy, Severn Trent’s latest update was the equivalent of the rain sounds people use to drift off to sleep. The company is executing on its investment plans without any apparent disruption, despite a change of CEO with James Jesic replacing Liv Garfield, and it is scoring well on environmental metrics.

The aftershocks from last year’s US government shutdown may only be mild tremors at this point but they are reflected in the slightly later than expected timing of today’s US jobs number. A weaker number than anticipated might raise expectations for a rate cut when the Federal Reserve next meets in March.

Barratt Redrow

Barratt Redrow’s first-half results have created some uncertainty about the outlook and helped shake the foundations of the share price.

Barratt says the outlook remains reliant on the spring selling season. While it still expects to deliver completions and profit in line with previous guidance, there’s enough caution and caveating in the statement to create some doubts. Margins are under pressure thanks to sales incentives and build cost inflation and reservation rates aren’t anything to write home about either.

The housebuilding sector was stitched up by the timing of last year’s Budget which created uncertainty during the key autumn selling period. That’s reflected in Barratt’s first-half numbers themselves which show a material drop in adjusted profit.

It’s clear that any turnaround in the fortunes of both Barratt and the wider industry is unlikely to be rapid. Management and shareholders will hope the stable if subdued backdrop gives way to something more positive in 2026.

The danger is the recent political instability pushes up borrowing costs even if the Bank of England does its bit by cutting interest rates. On a brighter note, Barratt has a strong balance sheet to help see it through any future turbulence and the integration of the old Redrow business seems to have gone smoothly.

Heineken

Heineken has found life harder going, with beer sales not flowing as much as the company would like. That’s put pressure on management to find ways to have more efficient operations and a leaner business, which ultimately spells job cuts.

The brewer is guiding for 5,000 to 6,000 redundancies over the next two years, which is an unpleasant situation for its workforce.

Sadly, this is becoming a trend across the business world globally, as many companies contend with rising costs and slowing sales growth.

Heineken’s investors have welcomed the job cut guidance, pushing up the share price on news that more costs will be coming out of the business.

All this means whoever becomes Heineken’s new CEO will walk into the top job with many difficult decisions having already been made. There is no news on who will replace Dolf van den Brink when he leaves in May, but the pressure is on to find a new leader fast, and one who can breathe new life into the beer giant.

London Stock Exchange Group

Dan Coatsworth, Head of Markets at AJ Bell, comments:

A near-40% collapse in London Stock Exchange Group’s share price in the past 12 months has put the company on the radar of activist investors. Elliott Management has reportedly taken a stake in the business, news of which triggered a bounce in the exchange operator’s share price.

Activists take stakes in a business so they can flex their muscles and demand an audience from management. Their typical approach is to push for change, whether that is new leadership, asset sales, or a reallocation of capital. The activist’s purpose is to buy cheap, drive up the share price and then get out for a profit. Sometimes campaigns can be sewn up in under a year, others take much longer.

LSEG is among the multitude of names seen as being at risk of being disrupted by AI, which is important because it has repositioned itself as a data company in recent years. It is also having to contend with lacklustre exchange operations where the flow of IPOs to replace those delisting through takeovers remains weak.

LSEG’s Refinitiv platform has a wealth of information about stocks, funds and bonds, enabling users to drill down into financial accounts and historical share price information, as well as see the latest trading activity, news feeds, and much more. Theoretically, AI could pull together some of this data by analysing company reports and news sources, but it is highly unlikely to be able to offer the richness of Refinitiv’s system.

Some activist campaigns are simple to understand. For example, Elliott wants BP to cut costs, improve cash flow, and focus on the core oil and gas business. Quite how it plans to whip LSEG into shape is less obvious. Reports suggest Elliott doesn’t want to break up the business or put it up for sale. That means the market will be watching closely for Elliott to spell out how it plans to refocus LSEG and make money along the way.