FTSE higher despite selling in US and Asia, HSBC’s retail rethink, Broadcom shares soar on AI boost, Tullow in takeover talks, cracks on display at Portmeirion

“Despite weakness overnight in the US and Asia, UK stocks ticked higher on Friday, lifted by gains for financials and some areas of the retail sector,” says Dan Coatsworth, Investment Analyst at AJ Bell.

“The Budget continued to be blamed for the UK’s fragile economic performance as official figures showed GDP unexpectedly contracted in October, having also done so in September. This led to weakness in the pound, which can be helpful to the FTSE 100 given the relative boost it affords its dominant overseas earners.

“More positively, there was a slight uptick in consumer confidence as the Christmas trading period entered its final knockings.

“US stocks endured a modest sell-off in the latest trading session on Wall Street as factory gate prices came in hotter than expected. Given these often feed into higher consumer prices down the line, this release raised concerns about fresh inflationary pressures in the economy.”

HSBC

“HSBC’s new chief executive Georges Elhedery was quick to put his mark on the bank by recently announcing plans to split HSBC geographically into eastern and western-facing businesses. That was seen as the first in a series of steps to sharpen HSBC’s focus and give it new energy.

“The CEO’s next move wasn’t expected to be communicated until next February, yet it seems we’ve had a tiny peak into what might be on the cards.

“A report in the Financial Times suggests retail banking operations outside of the UK and Hong Kong could be scaled back as HSBC seeks to further reduce costs and focus on more profitable customers.

“That suggests places like Mexico, Malaysia and Indonesia could have a reduced presence from the bank as it pursues wealthier individuals rather than people wanting everyday banking services.

“This is certainly one way to differentiate HSBC from the crowd, but it’s also a risky move given the bank has always made a big thing about its global status. Mass-market banking might be hard work but scale matters in this industry.”

Broadcom

“Broadcom has hit the magic 10 quarters in a row where it has beaten earnings expectations. The latest triumph was down to customers needing the appropriate infrastructure to support generative AI.

“Clients have been jumping up and down with excitement at how AI could supercharge their earnings and they’re spending big on kit to act as the backbone for their grand plans. This hive of activity has also put Broadcom on investors’ radar as an alternative way to play the AI boom than just Nvidia.

“AI demand is the battery pack that will keep Broadcom jumping and it’s become so important that the company will now split its semiconductor sales guidance into AI and non-AI segments. It’s a big turning point for Broadcom but this transparency could backfire if AI growth rates fail to impress in the future.”

Tullow Oil

“Tullow is a stock market story come full circle. Starting out as a small cap oil and gas play, a series of big discoveries in Africa helped propel the company into the ranks of the FTSE 100.

“Having subsequently lost its touch in prospecting for hydrocarbons, seen sentiment towards its sector sour and fallen into financial difficulties, Tullow’s life as a public company could soon come to an end in reduced circumstances.

“The identity of the bidder, US operator Kosmos Energy, is no great surprise given it is partnered with Tullow in Africa. Tullow’s shares are up 25% over the course of the week as speculation built about a possible deal, which explains why they have barely budged on confirmation that discussions have begun.”

Portmeirion

“The latest update from heritage pottery outfit Portmeirion reveals more cracks than a hastily glued-together teapot.

“It would be quicker to list what hasn’t gone wrong for the company as the update is truly a nightmare before Christmas.

“Portmeirion has faced supply chain disruption in Asia, an impact from port strikes in the US and destocking in South Korea.

“It’s all added up to a profit warning which has smashed the share price. The company has taken costs out of the business and says it remains confident in the ‘medium-term outlook’. However, it has quite the repair job on its hands to restore investors’ confidence in the business.”

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