All eyes are back on the Middle East after renewed tensions despite efforts to bring the war to an end.
Brent crude oil nudged up 0.4% to $72.26 per barrel after a weekend of fighting. The scale of the price hike wasn’t as bad as it could have been, helped by reports the US and Iran would stand down once again. Investors will want greater reassurance that the ceasefire is lasting and not a flash in the pan.
Investors keenly watched South Korea as it unveiled plans for $576 billion worth of investments to strengthen the country’s chip manufacturing and AI capabilities. The country is determined to be the epicentre of AI-related tech manufacturing and fight off competition from Taiwan, China and Japan.
Samsung Electronics and SK Hynix have ridden the AI boom and are central to South Korea’s new AI push with investment in new factories. Investors must decide if this money is being spent wisely, particularly as markets have been jittery of late around the scale of investment in all things AI and whether the potential returns are worth it.
BT / Verizon
BT’s board have taken the view there is strength in numbers judging by the move to partner up with Verizon.
The two companies are combining their international operations, no doubt with the hope this joined-up approach will appeal to multinational organisations looking to streamline their supplier roster. It will create opportunities to achieve cost efficiencies and economies of scale.
The market doesn’t know what to think of the deal, given the share price barely moved on the news. Investors might simply view it as a tidying-up exercise rather than being a strategic game-changer.
British American Tobacco
Major investments in technology continue to prompt significant headcount reductions in global companies as they strive for greater efficiencies.
British American Tobacco is the latest name to ramp up the use of technology to help its business run more smoothly and be able to launch new products faster.
Unfortunately, that push is coming at the cost of 5,500 jobs which are going by the end of the year. A further 3,500 roles have already moved to strategic partners, implying significant change in the business.
The scale of cutbacks is a sign of the times, and the trend is worrying for the state of the labour market.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
