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Investors will breathe a sigh of relief that the market sell-off has lost momentum.
Pockets of Europe and Asia were up on Wednesday, and futures prices imply a similar trend when Wall Street opens later today.
It’s the good news everyone wanted. The key question is whether this is simply the calm before the storm. Nvidia reports tonight and the slightest bit of news to disappoint investors has the potential to whip up a tornado across global markets. Investors will be hanging on Jensen Huang’s every word and looking for clues that big investment in AI is worth it.
Huang is an eternal optimist and Nvidia has a habit of smashing earnings expectations. Therefore, investors might be digging deeper than usual into the numbers to spot any signs of weakness, rather than simply being swayed by the headline narrative.
The gold price perked up, which suggests that investors are still hedging their bets and adding safe-haven elements to their portfolios just in case there is bad news around the corner. A stronger precious metal price gave a lift to FTSE 100 miners Fresnillo and Endeavour, which in turn boosted the overall UK index. Consumer staples and tobacco were also in demand, which also suggests investors are loading up on defensives as protective measures against any further market weakness.
Recent IPO Beauty Tech rallied after saying it would beat market expectations. That’s positive not just for the company but also the reputation of the UK market. Several other names to have floated recently in London have yet to capture the market’s interest, so Beauty Tech serving up good news offers a reason to stay positive on new listings.
Meta Platforms
A ruling in a US district court has handed a significant victory to Meta Platforms as an antitrust case which threatened a split with WhatsApp and Instagram is effectively dismissed.
The outcome will have been cheered in other big tech boardrooms as the Federal Trade Commission’s efforts to rein in their power suffers another significant blow. In September, a federal judge determined not to order Google to sell its Chrome web browser despite the company losing a separate antitrust case.
Legal action has been looming over Meta. The shift over the last five years – with TikTok emerging as a serious rival to Meta’s own social networks – seems to have informed the judge’s thinking in this case.
Separately, it emerged Meta’s chief revenue officer John Hegeman is leaving the business after 17 years to launch his own startup.
With the threat of potentially having to offload WhatsApp and Instagram seemingly removed for the time being and an enforced change in the boardroom, Meta may look at a refresh of its monetisation strategy for both apps.
While it has begun to tap the commercial potential of WhatsApp, particularly in emerging markets, there could be a material opportunity for Meta given how ubiquitous the messaging platform has become.
Lloyds
Having seen several smaller fintech competitors emerge in recent years and big tech firms muscling in on the mobile payments space, Lloyds is looking to step up its game through the acquisition of digital wallet provider Curve.
No price tag has been disclosed but, in purely financial terms, this looks to be a modest deal both in the context of the upfront cost and the immediate impact on earnings.
However, Lloyds will hope the deal can give it an edge as it adds a platform to its mobile banking services which allows users to integrate bank cards, loyalty cards and other alternative methods of payment in one place, with money-saving tools and loyalty rewards offered on top.
An optimistic reading is that a combination of Lloyds’ credentials as a well-established financial institution combined with the convenience factor offered by the services provided by Curve could prove to be a winner.
The dominance of this space by the likes of Apple Pay and Google Pay could represent a significant hurdle to Lloyds’ ambitions given their heavyweight backing.
Severn Trent
One of the longest-serving CEOs in the FTSE 100 is set to depart as Liv Garfield announces plans to step down after more than 11 years at Severn Trent at the end of 2025. Through her time in the top job, she has delivered a respectable total return in excess of 100%.
This is despite her tenure encompassing the disruption of Brexit and, in the water industry specifically, significant operational and financial issues.
Garfield’s time in charge is certainly a story with two distinct halves, with the shares struggling to make a lot of progress in the last five years – although they have stayed afloat more successfully than a lot of rivals.
She is departing on a high with first-half profit gushing higher as the company has managed to keep a tight rein on financing costs. The full-year outlook on several key metrics has also been upgraded.
In this context, it’s not a surprise to see some market disappointment at the news of Garfield’s departure with internal appointment James Jesic facing the task of delivering on a huge investment programme.
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...
