By Patrick Munnelly, Market Strategist, Tickmill
The FTSE has started the week in the green, up 0.23% at the close.
UK Equities unusually cheap
According to Morgan Stanley, UK equities are currently considered unusually cheap compared to historical trends. The U.S. bank is optimistic about a potential turnaround in the fortunes of UK stocks and believes that the pessimism surrounding the country’s economic outlook may be exaggerated. Morgan Stanley views UK stocks and bonds as the cheapest global asset classes available, indicating that there could be opportunities for investors. The bank suggests that better macroeconomic data could act as a catalyst for a positive change, particularly benefiting smaller and domestically focused stocks. However, it cautions that concerns regarding the delayed impact of higher interest rates mean it may still be too early to make broad investment decisions.
The bank advises that if there are improvements in the UK’s macroeconomic conditions in the coming months, it would logically lead to a rotation of investments into domestically focused stocks.
The recent deal involving Thames Water has had a positive impact on the UK water utility stocks, leading to a rise in share prices for companies such as Severn Trent [LON:SVT] +1.6%. Thames Water, the largest utility company in the UK, announced that investors agreed to inject £750 million into the company. This cash injection helped alleviate worries about the possibility of nationalisation and addressed concerns about the company’s heavy debt burden. Thames Water made it clear that it did not require a government rescue, aiming to put an end to speculation regarding its future. The injection of funds into Thames Water has not only resolved the leak of confidence in the company but has also lifted sentiment around other listed utilities in the market.
FTSE 100 biggest movers
However, the top gainer on a percentage basis today was Flutter Entertainment [LON:FLTR] +3.2% following the announcement that Portia Walker is set to act as Chief Strategy Officer for their Turkish lottery joint venture.
On the negative side of the ledger Ocado [LON:OCDO] sat at the bottom of the table with losses of 1.8%. During the annual general meeting, Stuart Machin, CEO of Marks & Spencer [LON:MKS], expressed his frustration with Ocado Retail, a joint venture between M&S and Ocado. Machin highlighted the absence of M&S in advertisements or emails by Ocado, despite M&S owning a 50% stake in the online grocery venture. Machin also shared his dissatisfaction with the limited availability of M&S products on the Ocado platform. He stated that only a quarter of M&S products listed on Ocado were actually available for purchase, as reported by The Times. Archie Norman, the chairman of M&S, echoed these sentiments and expressed his unhappiness with the performance of Ocado Retail.
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