The FTSE 100 made a solid start to Budget week as oil prices eased back and despite weak trading across Asia.
The key yardsticks for how markets are feeling about the UK ahead of Chancellor John Healey standing at the despatch box – the pound and gilts – are holding steady two days out.
The political situation is more volatile in Brazil, with the surprise victory of incumbent Luiz Inacio Lula da Silva in a knife-edge presidential election over his opponent Flavio Bolsonaro – perceived as more market-friendly – putting futures in Brazilian currency, bond and equity markets under pressure.
Brent crude oil prices pulled back a touch from their highs above $118 late last week, levels last seen in the early stages of the Iran conflict. The continuing recovery in exports from the Middle East is helping to douse some of the concern about the potential for renewed US-Israeli strikes on Iran.
This allowed travel-related names to regain some ground in early trading in London, with miners, financials and defence stocks also in demand.
Energy names were underpowered as investors reacted to the pullback in oil. US futures pointed to a brighter outlook on Wall Street after last week’s volatility.
Computacenter
There may be wider doubts about the sustainability of the current AI spending splurge but for now Computacenter is one of a small but successful cohort of UK-listed names benefiting from the theme.
A big upgrade to full-year profit guidance is matched in significance by a huge uplift in the order book to record levels, up by a third since the end of June.
Computacenter is effectively acting as a middleman in the AI infrastructure build-out, procuring, assembling and installing the complex hardware required to run artificial intelligence models.
One modest downside of how dominant this work is becoming for Computacenter is that it is typically lower margin than areas like software sales and the provision of other tech-related services.
Having been seen as being at the dull end of the technology space, Computacenter’s recent growth trajectory has been anything but. Next month’s strategy day is management’s opportunity to show this isn’t just a flash in the pan.
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...