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The FTSE 100 held firm after last night’s record close, with strength in banks and tech stocks offsetting weakness in the natural resources space.
Trade relations were front of mind for investors ahead of Donald Trump’s visit to Asia and a new fight between the US and Canada.
A lot is riding on Trump’s negotiations with China’s Xi Jinping as tensions have been riding high. The market would love clarity on trade agreements between the US and China, and the avoidance of sky-high tariffs. It’s impossible to say whether that will happen, such is the unpredictable nature of Trump, but any positive takeaways could have a major impact on financial markets next week.
Trump ending trade talks with Canada is alarming but not enough to trouble markets.
It looks like last orders for a small cap stock once popular with retail investors. The business formerly known as Revolution Bars slumped by 50% after flagging the need for additional funding and deciding to put itself up for sale.
The Revel Collective has struggled in recent years due to a shift in consumer culture, with less demand for late-night entertainment and more people choosing to cut back on alcohol. At the same time, costs have gone up across the industry, compounding problems for the heavily indebted business.
NatWest
Being fully privately owned seems to be suiting NatWest, with the company’s third quarter update the latest in the sector to help ease concerns about contagion from US private credit issues.
Traditional lending activities – in both the mortgage and corporate market – helped the company to beat quarterly profit forecasts by an eye-catching amount and have seen guidance for the full year on income and returns nudged higher.
NatWest has also managed to keep a tight rein on costs which has helped amplify its strong underlying performance.
Full privatisation should give the business a freer hand and CEO Paul Thwaite has already gone on the record about the potential for further M&A – after buying a majority stake in Sainsbury’s Bank and a part of Metro Bank’s mortgage book last year.
Having apparently failed with an £11 billion bid for Santander’s UK operations and looked at TSB before Santander itself took it over, investors will be expecting a major deal from NatWest at some point.
While this may generate excitement it could also engender some nervousness among investors with longer memories given previous acquisition sprees did not necessarily end well for NatWest in the past.
Intel
A fallen giant propped up by big investments from the Trump administration, Japan’s SoftBank and Nvidia in recent months, Intel almost had a spring in its step off the back of its latest quarterly numbers.
After a long period of disappointing the market, the chipmaker reported revenue ahead of expectations and posted a first quarterly profit since 2023. This helped extend an impressive run for the share price since the spring as investor faith in a turnaround under CEO Lip-Bu Tan solidifies.
Job cuts form a key part of Intel’s turnaround plan, and 30% of its workforce has been shed over the last year.
Tan still has a lot to do. There had been plenty of speculation that the manufacturing business would be sold off but there is domestic political pressure to make this unit work for strategic reasons.
The costs in upgrading manufacturing technology are likely to be significant and that could put pressure on Intel’s margins.
While sales of chips linked to AI have been buoyant across the industry, that has not been the case for the semiconductors used in smartphones and personal computers.
In that context, it was a positive to see an improved performance in PC chips – helped by upgrades to Microsoft’s operating system.
GSK
It feels like some of the big pharmaceutical companies are on a roll with successful drug trials, creating new products to help offset the loss of patent protection on treatments already being sold. Proving efficacy is one thing, getting them approved by the regulators is another as there are many hoops to jump through before treatments are permitted to be administered to patients.
GSK has reached a major milestone on its journey to service an important territory. The FDA, the US regulator, has approved GSK’s blood cancer drug Blenrep to treat multiple myeloma in what’s a slightly unusual situation.
GSK went back to the lab with the drug in 2022 after concerns about whether Blenrep was fit for purpose. Earlier this year, an advisory committee to the FDA found the risks of Blenrep outweighed the benefits, causing GSK’s share price to slump. The market took that advisory notice to mean the drug was unlikely to get approved, yet the regulator has now given it the green light.
Blenrep could be worth big bucks in annual sales to GSK in a country where it is ploughing billions of dollars into research, development and supply chain infrastructure.
This all sounds like good news, yet the market has given a negative reaction to the announcement, with GSK’s shares falling approximately 2% in early trading. Investors will be taking time to understand when this development will feed through into big profits, and it’s unlikely that any major earnings boost will happen at the click of a finger.
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...
