Rightmove rejects fourth bid, Stellantis and Aston Martin warn and JPMorgan Global Growth & Income outperforms

“The weighting of Asia-focused financial stocks and resources companies in the FTSE 100 mean its fortunes have strong ties to the Chinese economy,” says AJ Bell investment director Russ Mould.

“The continuing excitement about the impact of Beijing’s stimulus efforts helped the index to a steady start on Monday, despite the downgrade to UK GDP.

“Further signs of weakness from Chinese factory surveys only add to the sense that the country’s authorities will keep their foot on the gas in terms of measures to boost the economy. Indices in China enjoyed strong trading overnight ahead of a week-long holiday to mark 75 years of Communist Party rule in China.

“It was a different story in Japan, where stocks took a dive after the ruling party chose Shigeru Ishiba to succeed Prime Minister Fumio Kishida – Ishiba is seen as being less friendly to the markets than his main rival, Sanae Takaichi.

“In the UK, ahead of a crunch Budget in a month’s time, the Office for National Statistics revised down its estimate of growth in the three months to 30 June to 0.5% from the previous 0.6%. However, house prices continue to move higher according to Nationwide data, suggesting the gloomy messaging from Chancellor Rachel Reeves and other Labour figures hasn’t knocked a recent recovery in the property market entirely off course.

“Vodafone’s merger with Three, currently mired in regulatory scrutiny, won’t need approval from shareholders according to the company. This follows the change in the London market’s listing rules earlier this year, although it could be moot, with a CMA decision due on 7 December.”

Rightmove

“We’re into the final stretch in the race to buy Rightmove. REA has until 5pm today to make a formal offer, and it’s going to have to radically change the price and structure of the deal if it has any chance of winning over Rightmove’s board.

“Given that four proposals have been rejected, one would have thought REA had got the message by now that Rightmove shareholders want a whole lot more money. Normally by this point in the proceedings the suitor would accept defeat and retreat with its tail between its legs. Yet REA has shown a dogged determination to secure the prize so you cannot rule out one final attempt before the clock strikes five.

“A 3% decline in the share price in early trading on Monday implies some investors are banking profits while the stock remains elevated by the live bid situation. It also suggests that the market doesn’t believe REA will come back with anything good enough to win the deal, given how the price is trading below the latest rejected offer level.

“Rightmove could come out of this situation in a better position than pre-bid. The fierce takeover interest will have reminded the market there is something special about this company and that could draw in a new pool of investors.”

Stellantis

“A slowdown in the global automotive sector and having to spend big on revitalising two core brands have put a dent in Stellantis’ bonnet. The hazard lights were flashing on its share price as investors baulked at the scale of the warning.

“Trying to make the Jeep and Dodge brands fit for the modern age is a challenge in itself, let alone trying to do it in a market where consumers are less willing to upgrade their vehicle because of financial constraints or concerns. Competition is also brutal, including a concerted effort by Chinese auto companies to grab market share around the world.

“This is further evidence that the auto industry is going through one of its toughest patches in years. Vehicle manufacturers have ploughed millions of dollars into developing electric vehicles as the industry experiences its biggest transformation in decades. Unfortunately, buyers haven’t come out in force, leaving the manufacturers in a tricky spot.

“Drivers want prices to come down on electric vehicles and charging infrastructure to improve; manufacturers are cutting prices but they don’t want to go too far as they need to avoid diluting margins too much. At some point balance will be restored in the market, but for now, the warning from Stellantis is not an isolated incident for the industry.”

Aston Martin Lagonda

“Aston Martin’s attempts to rebuild some credibility with the market after a disastrous period as a public company over the best part of six years are up in smoke thanks to its latest profit warning. 

“Just 11 weeks after posting its first half results the company is forced to downgrade guidance – perhaps most significantly, the company no longer expects to post positive free cash flow for the second half of the year. While the company’s statement looks to paint this as ‘strategically’ realigning planned volumes, in truth the company is a victim of weak Chinese demand and supply chain issues.

“The acknowledgement from recently appointed CEO Adrian Hallmark that ‘near perfect execution’ was required to meet the plan for 2024 suggests a failure on the part of the previous management in managing market expectations.

“Ambition is all very well but, given Aston Martin’s track record, a dose of realism is what’s required. Hallmark’s experience at Bentley, where he steered the business to a meaningful increase in profit, means he will likely be given some time to set and execute on his own plan which, for his and the company’s sake, needs to be achievable.”

JPMorgan Global Growth & Income

“Investment trust JPMorgan Global Growth & Income is increasingly popular with retail investors looking to cast their net wide and get exposure to companies around the world. It’s grabbed a chunk of the space once dominated by Scottish Mortgage until the tech-focused trust went through a difficult patch a few years ago.

“The JPMorgan trust’s latest full-year results are a reminder why it is making new friends and keeping old ones happy. A 28% net asset value total return significantly beat the 20.1% return from the MSCI AC World index, while shareholders are also being treated to a 23.6% higher dividend.

“Whereas Scottish Mortgage is about backing what it believes will be tomorrow’s market leaders, the JPMorgan trust is more flexible in its approach. A cautious tone has seen the latter take a more defensive stance, something which Scottish Mortgage might not be able or willing to do at the flick of a switch.”

These articles are for information purposes only and are not a personal recommendation or advice.