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Another downbeat session on Wall Street yesterday was followed by heavier selling in Asia today and that set the scene for a meaningful drop in the FTSE 100.
As fears over an AI bubble build, there has rarely been more riding on an individual set of results than Nvidia’s on Wednesday.
Even a mild disappointment could reinforce the market’s worries and spark a wider sell-off. A raft of economic data from the US which was delayed by the government shutdown is set to be released through the course of this week – including September’s jobs numbers.
While these figures will cover a period which is now in the rearview mirror, they may still have some influence on how much the Federal Reserve is prepared to put its foot to the floor with rate increases.
A December cut was firmly being priced in by the market until recently but that now looks less certain after comments from Fed officials.
Nervousness about an economic stimulus package being primed by new Japanese prime minister Sanae Takaichi and about the country’s current spat with China over Taiwan saw heavy selling in the Nikkei 225.
Hong Kong shares were also lower, as were other Asian markets. Bitcoin continues to lose altitude with the cryptocurrency now below $90,000 for the first time in seven months.
Imperial Brands
In the wider market context, what appears a modest advance for Imperial Brands carries more weight.
At a headline level, earnings for the year to 30 September may have been materially lower thanks to higher tax and costs associated with the delivery of its 2030 strategy.
The underlying picture was better, and investors will have taken note of the solid growth delivered in next-generation products like vapes and e-cigarettes – with losses narrowing.
A steady increase in the dividend and continued buybacks reflect a resilient cash flow profile. Cash generation looks set to remain robust in 2026 with steady profit growth and double-digit expansion in sales of next generation products.
Replacing the revenue and cash delivered by its traditional tobacco business remains a huge long-term ask but, in the short term, it is not a surprise to see Imperial Brands’ defensive qualities find some favour among investors in choppy markets.
FirstGroup
Transport operator FirstGroup enjoyed a decent ride post-pandemic, but its latest financial results have knocked the company off track.
The market may be concerned about net debt moving materially higher and the reported cash outflow as the company continues to invest in its First Bus operation. Guidance for flat earnings for the next financial year will have done little for sentiment either.
FirstGroup’s continued commitment to growing the dividend and rewarding shareholders with buybacks suggests it is not fretting about its financial position.
The company is continuing its efforts to build out its open-access routes on the UK rail network in anticipation of the launch of Great British Railways, which will take franchised services into public ownership.
This hasn’t been without difficulty though, with FirstGroup warning last month it might have to appeal to the competition authorities if its latest bid to run a train service between London and Rochdale fails.
If FirstGroup’s efforts in open access are consistently frustrated it could look to expand overseas but this would come with the additional risk associated with navigating a transport network in another country.
Greencore
Ready meals group Greencore is working out the right ingredients for the next phase of its career.
It has struck a deal to sell a soup factory in Bristol to help satisfy the competition watchdog which had previously expressed concerns around Greencore’s takeover of Bakkavor. This news, together with upbeat financial results, has given the share price a tasty boost.
Greencore has served up a veritable feast for shareholders. Revenue, profit, cash flow and dividends are all up, while net debt is down. This puts the group in a strong position ahead of gobbling up Bakkavor and going even bigger in the convenience food market.
It made 764 million sandwiches and other food to go products over the past year. That’s a mind-blowing amount of bread and fillings. There is massive demand for these products and Greencore has positioned itself as the sandwich king.
This isn’t simply slapping two slices of white bread around a bit of cheese and mayonnaise. Greencore is constantly having to create new products to keep consumers interested beyond the core range.
The latest financial results show it is fit and healthy, and that status has helped to breathe new life into the share price following a recent pullback.
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...
