FTSE 100 breaks losing streak, Bitcoin hits new record high, Croda top FTSE riser, Aquis takeover, government sells more NatWest shares and Direct Line still in the repair shop

“Bitcoin always seemed a likely beneficiary of a Trump victory and so it is proving as the cryptocurrency hits a new record high,” says AJ Bell Investment Director Russ Mould.

“It’s not just the incoming occupant of the White House which has helped Bitcoin, there have also been down-ticket victories for candidates who have a positive stance on the asset class. Notably, one of its main critics, Senate banking chair and Democrat Sherrod Brown, fell to his Republican opponent and a crypto fan Bernie Moreno.

“The FTSE 100 broke its losing streak to trade higher on Monday with healthcare and financial stocks doing much of the heavy lifting. There was wider optimism across Europe as stocks recovered from a rocky week but Asian markets remained on the back foot as China disappointed on stimulus.

“Chemicals firm Croda topped the UK’s flagship index. The shares have had a tough year so the third-quarter sales growth and retained profit guidance contained in its latest update were well received by relieved investors.

“Could AIM have a more substantial rival after Swiss bourse operator SIX’s acquisition of Aquis? Possibly, although the UK operator of the rival exchange for junior companies appears to have been snapped up more for its market infrastructure and technology.”

Natwest

“The government has taken advantage of NatWest’s share price having just traded at its highest level in nine years to offload a £1 billion stake in the bank.

“Its stake has now been reduced to 11.4%, having sold the stock back to NatWest at 380.8p per share. That’s marginally below the 396.6p intraday high recorded on Wednesday 6 November, itself the highest level recorded for NatWest’s shares since hitting 415.99p on 26 February 2015.

“Rachel Reeves is vindicated in her decision in July to scrap a ‘Tell Sid’ public offer of the government’s remaining stake in NatWest. Ditching the share sale was one of the first things she did after Labour won the general election, saying it was ‘a bad use of taxpayers’ money’ as the initiative – created by the previous government – was expected to offer the shares at a potentially large discount to the market price to incentivise take-up by the public.

“By sitting tight and waiting for the market to strengthen, and restricting the sale to institutional investors, Reeves has so far managed to get a better price for the shares. Whether that trend continues remains to be seen.

“The Budget revealed that the government intends to ramp up borrowing ahead of receiving a big increase in tax revenue. That news pushed up gilt yields and had changed the outlook for interest rate expectations. The market now thinks rates could stay relatively higher for longer, which creates a more favourable backdrop for banks’ ability to charge higher rates for lending.

“While NatWest is still subject to headwinds from regulation in the banking sector, having a broader shareholder base is seen as a positive from an investment perspective. It means there is no longer dominant party with too much influence on the business.”

Direct Line

“It may have made some progress in putting 2023’s annus horribilis behind it but insurer Direct Line is still finding life tough judging by its latest update.

“The company is looking to streamline the business, an obvious response at times of corporate strife, but it also has work to do to shore up its customer base in its core motor division with many balking at the level of increases they have faced on their insurance premiums.

“The rate of loss seems to be slowing as some of the big price hikes have already been put through. These were a consequence of the significant claims and cost inflation faced by the industry coming out of the pandemic. It also makes sense that Direct Line is exercising some discipline and not being too aggressive on price after the trouble it got itself into last year.

“A new management team is at the wheel and initiatives like launching the brand on comparison sites may help.

“It’s worth noting that while motor accounts for more than half of revenue, that still leaves a significant portion of the business including its Green Flag rescue services and home division which is chalking up reasonable growth in premiums and seeing a much lower rate of decline in the number of policies.”

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