Gilt yields rise again, Entain avoids same losing streak as Flutter, Serco CEO leaves after just two years, PageGroup trims guidance, Oxford Nanopore sticks to goals and Sosandar’s festive joy

“Gilt yields continued to creep higher as the market fretted about Rachel Reeves’ spending plans and borrowing requirements,” says Russ Mould, Investment Director at AJ Bell.

“10-year gilt yields rose to 4.891% and 30-year yields hit 5.46%. The higher the yields go, the higher the cost of borrowing for the government and the greater the likelihood that we’ll see spending cuts to public services.

“The number of stocks falling on the FTSE 100 outnumbered the risers two-to-one as investors reassessed their portfolios. Technology, industrials, healthcare and consumer stocks were firmly out of favour, while commodities, utilities and real estate shone. Those movements are what you might expect when investors believe inflationary pressures are going to intensify.”

Entain

“Entain has dodged a bullet in terms of punters cleaning up on NFL bets over the past few months. The market had started to worry Entain would suffer the same fate as Flutter in having a dramatic losing streak with US sporting bets, causing the share price to be weak in recent sessions.

“That’s prompted Entain to come out with a trading update and reiterate previous earnings guidance for its BetMGM US joint venture.

“Rather than deliver the bad news investors had expected, Entain also said its group earnings would be at the top of previous guidance. That took the market by surprise and triggered a surge in the share price.

“Investors will be keen to know how it has managed to achieve this result, but they’ll have to wait as the trading update is short on detail. BetMGM updates on 4 February and Entain reports on 6 March, the latter is expected to contain an update on the group’s strategy under its new chief executive, Gavin Isaacs, who is under pressure to get the business back on top after a troublesome few years.

“Entain might have scored the winning goal in recent months, but its share price has more than halved since 2021 which implies something drastic needs to be done to revive its fortunes and win back the market’s favour. Today’s trading update is a good start, but the market will need more good news rather than a stroke of luck.”

Serco

“Serco’s chief executive Mark Irwin is leaving after only two years in the job. His predecessor Rupert Soames did a brilliant job turning around the company and Irwin kept things ticking over, but to leave after such a short time seems odd.

“The share price is essentially at the same level as when he took the top job and the fact his replacement Anthony Kirby was already part of Serco’s succession planning implies that Irwin might have been too safe a pair of hands.

“It will be interesting to see the scale of Kirby’s ambitions and whether he has bold plans to take Serco to the next level.”

PageGroup

“Given recruitment is an area which can provide a warning signal for the wider economy, the consistent iffy performance of PageGroup and its peers is not exactly encouraging.

“The trimming of profit guidance on soft conditions in Europe reflects an environment where firms are increasingly reluctant to hire because they are feeling unsure about the future. Given the uncertainty, it is hard to see where an improvement might come from in the short term.

“It is notable that Page is talking about funnelling what spare resources it does have into areas of long-term opportunity, recognising that things could be tough for a while and essentially looking for some patience from shareholders.

“PageGroup’s focus on placing candidates in permanent roles, which accounts for around 70% of its business, also means it finds things particularly tough during periods of economic difficulty.”

Oxford Nanopore

“DNA-sequencing specialist Oxford Nanopore showed signs it is finally finding its feet as a public company – a little more than three years on from an IPO which generated significant excitement and then fizzled out.

“It remains some way off profitability and consistent cash flow though and it is on this hard currency which the company will ultimately be judged. While the company is sticking with its medium-term guidance, growth will need to accelerate from here.

“This will require expanding the company’s footprint beyond core areas like life sciences and research tools into sectors like biopharma. The strategic holding in the business held by drug maker Novo Nordisk’s investment arm does lend a portion of credibility to the story.”

Sosandar

“Woman’s fashion brand Sosandar showed signs over Christmas it is resonating with shoppers. Confirmation the company is on course to turn a profit for the current financial year was enough for investors to take it off the rack and bid up the shares.

“Sosandar has been dialling back promotional activity – a brave call in a difficult retail backdrop but one which appears to be paying off as margins tick higher.

“In a competitive market, Sosandar needs more than just a good quarter. It needs to show it can back this up consistently and that it has genuine staying power.”

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