China shares resume rally, GSK higher after settling Zantac cases, Uniqlo reports big profit growth, Warren Buffett seen as preparing new Japanese investment spree and Tesla prepares to unveil robotaxi

“Is the renewed rally in Chinese shares a dead cat bounce or the real deal? That’s the key question investors will be asking after stocks resumed their upward path after a big pullback yesterday,” says Russ Mould, investment director at AJ Bell.

“The market is eagerly awaiting a briefing from China’s finance officials this weekend with the hope they will unveil big fiscal stimulus to go alongside measures already announced to get the economy moving faster.

“Not everyone is convinced that the Chinese economy can be sped up with ease. It’s notable that shares in miners Glencore, Rio Tinto and Anglo American didn’t join in the party as Chinese stocks bounced back. Normally euphoria on the markets in that part of Asia lifts all boats in the mining sector, but not this time.

“Despite the retreat in mining shares, the resource-heavy FTSE 100 index still managed to push ahead. Leading the charge was GSK as investors raced to buy stock now that a major risk to its investment case has been removed. Settling tens of thousands of legal cases regarding its heartburn treatment Zantac means the market has better sight of financial liabilities linked to the matter. It also helps management to regain focus on the day job.

“Another leg up for the oil price gave a lift to BP and Shell as Brent Crude danced around the $77 per barrel mark. Great news for investors in energy stocks hoping for even bigger dividends, but bad news for consumers and businesses facing the prospect of higher heating and transportation costs.

“Centaur Media served up a monster of a profit warning as clients cut back on marketing spend. With guidance for trading conditions to stay tough for the near-term, it’s no wonder the shares have taken a dive.”

GSK

“Pharmaceutical firm GSK is looking to leave its litigation woes around its heartburn medicine Zantac behind with a $2.2 billion settlement to resolve the vast majority of cases, brought on the basis of an alleged link to cancer.

“The company has not accepted liability and today’s news is welcomed by the market for two big reasons. First, investors would have been pleased to see the company get this monkey off its back almost regardless of the cost. Second, while clearly a lot of money, estimates of how much GSK might have been on the hook for were substantially higher.

“Since Morgan Stanley estimated GSK’s liability could run to $27 billion in 2022, nearly £30 billion has been wiped off its market value.

“While some cases are still outstanding, it is a small proportion of the total and GSK will now seek to tidy up the loose ends.

“The company will hope the market is now of a mind to give it credit for the strategic progress it has made under chief executive Emma Walmsley. The underlying business has beaten expectations in three of the last four quarterly periods and is set to report its third quarter results at the end of this month.”

Uniqlo / fast retailing

“A lot of fashion retailers are finding life tough as people curb their spending yet Uniqlo is one of the lucky few to be staying on top. It continues to expand across the UK and beyond as parent company Fast Retailing seeks to become a much bigger player in Europe, North America and Asia. It now has more than 2,500 stores and plans to open a lot more.

“Full-year results show a business in fine fettle with profit storming ahead. This is despite investing in new store openings and automated warehousing.

“Uniqlo’s strategy is completely the opposite to the likes of Shein and Boohoo. There is none of this fast fashion to sell stuff cheaply, wear once and chuck. Uniqlo has sustainability at the heart of its business model and its aim is to sell products that will last a long time. That’s a refreshing approach and one that appears to be striking a chord with shoppers.”

Tesla

“News that Tesla has achieved record third-quarter shipments from its Shanghai factory thanks to Chinese subsidies provided a nice hors d’oeuvre for the big reveal of its robotaxi on Thursday.

“Founder Elon Musk has long teased the idea of Tesla delivering self-driving cars so today’s big unveiling represents a moment of truth. Describing it as a combination of Uber and AirBnb – with owners acting as landlords for their autonomous vehicles as they pick up and drop off fares – Musk has painted a colourful picture of the potential. Investors will now want to see the reality.

“There are still significant regulatory hurdles to clear, safety concerns to address and technological puzzles to solve. Driver assistance systems are now fairly commonplace, with supervision, but taking a human driver out of the equation represents another leap.

“If today’s launch underwhelms it could knock the recent rebound in the company’s shares off course, so the stakes are high.”

Warren Buffet / Berkshire Hathaway

“Warren Buffett’s investment vehicle Berkshire Hathaway looks to be doubling down on its Japanese bets. Having built up stakes in various Japanese trading firms in recent years, there are reports that Berkshire Hathaway has raised $1.9 billion through issuing yen-denominated bonds, implying that Buffett has his eye on making more investments in the country.

“Normally that would be seen as nothing out of the ordinary yet his previous investments in the country were thought to have had a major influence on the stock market, with many of his fans being drawn in to the opportunities on offer. If he goes shopping once more, there is the potential for another wave of interest from others.”

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