Daily market update: SoftBank sells Nvidia stake, SSE, Taylor Wimpey

The FTSE 100 continued to tick towards the 10,000 mark as it eked out some modest gains to trade at fresh all-time highs on Wednesday.

UK stocks made progress despite some volatility in the AI space in the US and Asia overnight. SoftBank’s decision to sell its entire stake in Nvidia dragged the chip maker lower and also saw selling in the Japanese tech investor.

This, plus the negative reaction to yesterday’s weaker than expected full-year guidance from AI infrastructure provider CoreWeave, suggests some growing nervousness about valuations in the artificial intelligence space.

Corrections are a healthy and necessary fact of life in financial markets but investors will be wary of any signs this is turning into a pronounced sell-off.

For now, we are not really in that territory but the stakes are ratcheting up ahead of Nvidia’s third-quarter earnings update on 19 November.

A key vote in the House of Representatives is the next hurdle to clear as efforts to end the US government shutdown continue.

Assuming the situation is resolved, the markets will then have to absorb a flood of US economic data, including third-quarter GDP.

However, as many of these figures will be fairly historical when they are released, they may be dismissed as noise by markets which are typically forward looking and trying to anticipate future conditions in the economy.

SSE

Investors are energised by SSE’s £33 billion plan to upgrade Britain’s electricity network.

This enthusiasm comes despite the dilution implied by raising £2 billion in fresh equity to help fund the enormous investment, a considerable advance on its previous plan to commit £17.5 billion by 2027.

The promised growth alongside this spending is clearly helping the market warm to the deal, with the intention being to continue growing dividends too.

The fact that a good portion of the £33 billion is being funded by cash flow from SSE’s existing assets lends credibility to the plan and to its pledge to keep increasing the payout.

While the roadmap unveiled today is undoubtedly eye-catching, delivering it by the end of the decade will be a challenge and shareholders and stakeholders will be keeping a beady eye on SSE’s progress on this front for delays and any cost over-runs.
  
First-half results were overshadowed by news of the fresh medium-term strategy. Profit was appreciably lower, though this was anticipated as a result of lower hedged prices and less favourable weather.

Taylor Wimpey

The Budget must surely now be rivalling the Boogeyman as the thing beginning with B which engenders the most fear. Housebuilder Taylor Wimpey is the latest company to bemoan the impact the run up to this fiscal event is having on trading.

A double-digit drop in sales rates in the key autumn period is worse than that reported by rival Barratt Redrow recently, which may raise some questions among investors.

House prices are proving reasonably resilient, supported by strong underlying supply and demand dynamics, but build costs are continuing to creep up which could put pressure on margins.  

For now, Taylor Wimpey is sticking with its full-year guidance for completions and operating profit.

While Taylor Wimpey welcomes the government’s efforts to reform the planning system, it’s clear that like many businesses and individuals it is craving some certainty. For better or worse, that will be delivered on 26 November.

Taylor Wimpey and the housebuilding industry will also be hoping that there is a measured response to the Budget in the gilt market, given the impact this has on mortgage affordability and availability. It will also be hoping that the Bank of England pushes through with another rate cut in December.