Markets Defused aims to present an easy-to-understand and straightforward recap of the week’s most engaging stock market news
BHP takeover approach spurned by Anglo American
Australian mining major BHP Billiton had its takeover advances spurned by Anglo American.
BHP on Thursday launched a £31.1 billion proposal to buy up the assets of is smaller international mining rival in an ‘all-paper’ transaction –offering new BHP shares to Anglo shareholders whilst also proposing to split off Anglo’s platinum business to allay monopoly fears.
The City of London and its analysts were still scrambling to weigh up the bid by the time that Anglo, on Friday morning, confirmed it was rejecting the offer.
‘Opportunistic’ is what the bid-target called the approach, whilst also damning it as ‘complex’ and ‘uncertain’.
Indeed, the initial read in the square mile was that the offer was on the cheap side.
Mining experts pointed to copper as the main attraction for BHP and highlighted that copper prices are currently near two-year highs.
Meta shareholders have an AI problem
Mark Zuckerberg is evidently struggling for a second time to get his fellow Meta shareholders on board with a big vision.
The Facebook and Instagram parent company saw its shares drop over 12% this week, wiping some $200 billion off the Silicon Valley firm’s stock market valuation in the aftermath of Wednesday night’s quarterly financial results.
It comes as Zuckerberg plans to spend between $35 billion and $40 billion per year on its artificial intelligence endeavours. He is also asking shareholders to be patient while waiting for this big investment to pay off.
Meta’s share price reaction says investors aren’t comfortable that this would be a sure bet.
Indeed, some may see it as a fresh folly, following Meta’s recent ‘metaverse’ splurge which saw Zuckerberg pour $46 billion into developing virtual digital worlds with limited tangible return on that investment.
Alphabet revenue profits soar as Sundar Pichai hails the ‘Gemini era’
Google’s parent company saw its share price jump more than 10% higher after it reported a big increase in revenue, rising 15% to $80.54 billion for its first quarter of 2024.
It said that net income for the quarter was $23.66 billion.
The financials impressed the market and were better than Wall Street expected.
Shareholders were meanwhile rewarded with the news of the company’s first-ever dividend, which will be 20 cents per share, and it said it will launch a program to buy back $70 billion worth of the company’s shares.
Key business highlights included higher revenues from search and website advertising, as well as improved ad sales on Youtube which were up 21% to $8.1 billion compared to $6.7 billion in the same period in 2023.
Online storage and services, aka ‘the cloud’ business meanwhile saw revenue improve to $9.6 billion versus last year’s total of $7.5 billion.
AI, of course, featured prominently in the Google owner’s communications with chief executive Sundar Pichai hailing the ‘Gemini era’. This comes as the group continues efforts to put its ChatGPT-challenger ‘Gemini’ in the spotlight.
“Our results in the first quarter reflect strong performance from Search, YouTube and Cloud,” Pichai said in a statement.
“We are well under way with our Gemini era and there’s great momentum across the company.
“Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation.”
Microsoft revealed another big financial boost from AI
Microsoft stock traded positively as it reported strong third-quarter financial results that beat Wall Street predictions.
The company said its strong performance was mainly due to high demand in its cloud computing business, driven by a significant contribution from AI services.
Microsoft’s AI business is “orchestrating a new era of AI transformation”, according to Microsoft chief executive Satya Nadella.
OpenAI’s ChatGPT services use Microsoft’s cloud resources, and, it is proving to be a gamechanger for the Silicon Valley’s 1990s boom that established Windows and Office as industry standard brands.
Microsoft, meanwhile, has its own AI suite of products, that use OpenAI tech, and chief executive Satya Nadella highlighted success with the Microsoft Copilot as a driver of growth.
The company reported $61.9 billion of revenue, and, net income was up 20% from the same period last year to a total of $21.9 billion. Earnings per share (an important metric for investors) was reported at $2.94 per share.
All the key financials came in higher than the market had forecast.
Microsoft shares moved around 5% in ‘after hours’ trading following the results announcement.
“Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry,” Satya Nadella said in a statement.
Stellantis took a dim view of UK’s EV policies
Britain might be short of a hatchback or two in the future – that’s if we’re to take comments from chief executive Carlos Tavares at face value.
The Vauxhall, Peugeot, and Citroen maker’s boss in comments on Thursday threatened it may withdraw vehicles from the UK market if the government doesn’t row back what he called “terrible” proposals to mandate that a significant percentage of car sales would be electric.
New rules would demand 80% of all new car sales must be electric by 2030, and may even reach to 100% by 2035.
“It’s very simple. The ZEV mandate is [forcing] carmakers to have a growing EV sales mix every year,” Tavares is quoted saying in a media briefing on Thursday.
“The problem is the natural demand of the market today in the UK on EVs is half of the mandate.”
Canary Wharf office value plunged
CWG, the Qatar-backed property group that owns 100 acres of Canary Wharf, this week reported around a £900 million drop in its portfolio’s value, as its bank of offices have been hit by a fall in demand – said to be caused by ‘work from home’.
It comes as the private property company refinanced £550 million of loans.
AstraZeneca smashed City forecasts
AstraZeneca beat market expectations as it released its quarterly financials on Thursday, with the numbers showing a significant boost from its top drugs.
Specifically, it revealed a 26% increase in cancer drug sales with that business bringing in $5.12 billion. Overall group revenue totalled $12.68 billion, which was also better than market watchers predicted.
AstraZeneca’s shares rose more than 5%, and reach their highest level since May 2023 – it was the largest single-day gain for the share in more than two years.
Chief executive Pascal Soriot gets much of the credit, according to media reports at least, with the increasingly high profile chief executive said to have revitalized AstraZeneca’s drug pipeline over the last decade, helped by the success of on blockbuster drugs like the lung cancer treatment Tagrisso, the leukemia treatment Calquence, and diabetes treatment Farxiga.
Microsoft-backed Rubrik soared in New York debut
Rubrik Inc, a data management software company part-owned by Microsoft, enjoyed a buoyant New York Stock Exchange debut as its shares surged to a 15% premium following its successful IPO.
Before its float on the NYSE the company raised $752 million in the IPO, with shares priced at $32 each – which was above the predicted range of $28 to $31 per share.
Trading on Thursday sent the stock price to $38.60 in its early trading before the market closed, setting a day-one price of $37.00 for a 15% gain.
Rubrik is led by Bipul Sinha, a co-founder of the business, and it is 8% owned by Microsoft.
Peacock in the spotlight but Comcast stock dropped
Comcast Corp saw its stock struggle following its quarterly financial results, which showed only a slight increase in profits – it made $3.86 billion of net income compared to $3.83 billion this time last year.
Nevertheless, revenues for the quarter actually hit a new record for the period at $30.1 billion, up from $29.8 billion.
Peacock, the media and communications group’s online streaming service, performed well with a 55% increase in paying subscribers which reached a total of around 34 million.
The growth moves the needle in the direction of profitability. Peacock generated more than $1 billion of revenue, which meant its loss for the three month period reduced to around $639 million.
At the same time, however, Comcast’s broadband business was in decline and lost more customers than expected (65,000 versus 48,000). It blamed a weak housing market and fewer home moves across its market for some of the fall, as normally new homes equal new broadband connections.
