The FTSE 100 posted minor gains on Wednesday, which would have come as a welcome relief for UK equity investors, given the backdrop of geopolitical risks and rising UK inflation.

Concerns about possible escalation in the Ukraine-Russia war were reignited yesterday after Russia hinted at the use of nuclear weapons in response to missile attacks deep in Russian territory.

However, the spike in risk aversion didn’t last long, and the FTSE 100 was trading comfortably above 8,100 in early trade Tuesday. That said, the choppy nature of trade this week dictated that these gains may not last long, and the FTSE 100 slipped into negative territory as the session progressed.

“After yesterday’s wobble on heightened tensions between Russia and the West, the FTSE 100 was steady in early trading on Wednesday,” said AJ Bell investment director Russ Mould.

“For now, investors seem to have largely shrugged off concerns about the Ukraine war. Moscow said yesterday the Ukrainians had fired US-made long-range missiles into Russian territory after President Joe Biden gave them the green light to do so. However, investors will be watching closely for signs of further escalation.”

All eyes will be on the US and Nvidia earnings later this evening. Although the AI trade has slowed, it is still very important for broader sentiment and an upbeat report from Nvidia has the potential to power global equities higher.

Movers

Sage Group shares soared 18% higher after reporting an 11% jump in revenue and 21% increase in EBITDA. Share buybacks again played a bit part of the gains as investors dived into the latest UK share announcing a very respectable programme.

“Sage’s software produces payslips among other things and perhaps that’s exactly what they’re delivering to shareholders this morning. This update is ticking a lot of boxes – profits up by 21%, margins up and growing, dividend hiked and big share buyback programme announced. What’s not to like to investors?,” said Adam Vettese, market analyst at investment platform eToro.

Beleaguered housebuilder Vistry was bottom of the leaderboard again as shares sank another 6% on news of management shakeup. The builder has made major cost miscalculations, leading to an obliteration of the share price, and shareholders will be demanding action. The change shows Vistry is trying to address the problem but investors seem unimpressed.

Weakness in Vistry weighed on the rest of the housebuilding sector, with Persimmon and Barratt Redrow fell more than 2%.

GenIP shares jumped on Wednesday after the Generative AI analytics firm announced surging orders and pointed to encouraging negotiations with potential new clients.

After listing on London’s AIM in October, GenIP has announced a series of corporate updates that provide insights into the pace of sales and orders for its Generative A analytics services.

Today’s announcement revealed orders for their technological discovery commercialisation assessments have more than doubled since the last update in October.

GenIP works closely with research institutions such as universities and corporations to help bring new technologies to market by providing comprehensive reports on commercial opportunities and potential valuations using their proprietary GenAI models. The level of orders announced today suggests these organisations see real value in GenIP’s offering and have acted by ramping up activity.

The company also announced its first client in Saudi Arabia, demonstrating the global reach GenIP has established.

Perhaps the biggest takeaway from today’s update was the announcement of GenIP’s largest order since the launch of their Generative AI services. A leading Fortune 100 technology company client has placed an order for 30 assessments, bringing the total number of GenAI assessment orders to 195. GenIP previously announced orders for 80 assessments in October.

“We are delighted to have received GenIP’s largest single order since our GenAI enhanced services launched,” said Melissa Cruz, CEO of GenIP

“The calibre of our clients and the orders for multiple volume reports demonstrates the utility of our technology transfer services for research institutions seeking to improve commercialisation of their new discoveries. Additionally, we are highly encouraged by our interactions with leading innovators at recent industry events in Singapore and Brazil and are confident these will translate to additional orders for GenIP’s services.”

Looking ahead, GenIP are engaged in negotiations with over 50 new potential clients and ‘looks forward to announcing significant commercial milestones in the near term’.

GenIP shares were 10% higher at the time of writing.

British Land shows signs of stabilisation after a period of uncertainty as the company transitions its portfolio to better-performing assets.

Property operators have suffered during the pandemic, and uncertainties around working and shopping trends have rocked rental value across vast swathes of commercial properties.

British Land reacted by shaking up its portfolio, and the Real Estate Investment Trust’s realignment is gathering pace. British Land has disposed of non-core assets and reinvested in retail parks to capture the out-of-town shopping experience, a mainstay for consumers as high streets crumble away.

Retail parks now account for 32% of the portfolio, up from 15% in 2021. The company also mentioned robust demand in the City and sees a supply/demand imbalance in the coming periods.

The portfolio’s realignment has culminated in 3% rental growth over the recent half-year period and guidance for 3%- 5% rental growth over the full year.

“British Land is laying solid foundations for recovery, proving that even in challenging markets, a giant landlord can still think on its feet. Rent growth is driving revenues forward while stabilising interest rates are helping to steady property values. The focus on retail parks and London campuses continues to deliver, tapping into areas of strong, sustainable demand,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“Retail parks are the clear standout. British Land’s recent £441m acquisition of seven new parks was a bold move, cementing its position as a leader in this space. These assets, prized for their affordability and flexibility, are benefiting from a wave of retailer expansion, and British Land’s confidence here looks well-placed.”

The FTSE 100 dipped on Tuesday as tensions in Eastern Europe ratcheted up amid threats of a nuclear response by Russia after Ukraine fired missiles at targets in Russia for the first time.

The Ukraine-Russia conflict is a primary uncertainty following the reelection of Donald Trump. However, it’s the outgoing President Biden who sparked the most recent wave of anxiety after giving Ukraine permission to fire long-range missiles into Russia, which it did without delay. 

Russia quickly responded with threats of a nuclear war should attacks supported by foreign-made weapons continue.

The latest escalation follows reports of North Korean troops joining Russian forces to replenish the 10,000s of casualties suffered by the aggressors. Trump has a job on his hands to end the war in 24 hours when he takes control in 2025. 

Uncertainty about Donald Trump’s actions when he enters the White House and worries about interest rates have been unsettling equity investors. The introduction of threats of nuclear missile strikes accelerated the selling of European and US equities, sending major indices sharply lower.

The FTSE 100 reversed early gains in a violent sell-off as news broke about Ukraine striking targets deep inside Russia, leaving London’s leading index trading down 0.36% at the time of writing.

Imperial Brands

Imperial Brands was the top riser after the tobacco company announced final results that showed robust sales across all categories.

“Imperial Brands’ shares have been soaring in 2024, climbing by more than a third, and today brought more good news for shareholders. The tobacco giant reported a 4.6% increase in operating profit for the year, alongside a promise of further shareholder returns through buybacks and dividends,” said Mark Crouch, Market Analyst at eToro.

“Despite a cloud of regulatory uncertainty gathering over the tobacco industry, tobacco stocks continue to attract a long line of investors, even as global demand for traditional tobacco products declines. Imperial Brands’ pivot into vaping products has been a key growth driver as it ramps up investments to diversify its portfolio, positioning itself for potential regulatory headwinds down the road.”

Imperial Brands were 2.7% higher at the time of writing.

At the other end of the leaderboard, Diploma shares sank 7% after missing analyst estimates.

“Industrial-to-healthcare distributor Diploma was the top faller on the FTSE 100 after a rare profit and revenue miss with its full-year results,” said Russ Mould, investment director at AJ Bell.

“The company has built a reputation of being a ‘Steady Eddie’ operator and while the latest figures still show earnings progression, it’s not quite to the level forecast by analysts.”

Imperial Brands shares jumped on Tuesday, hitting five-year highs after the tobacco and vaping company announced its final results, revealing strong growth in its new generation products segment.

Cigarette smoking rates are rightly falling across the developed world, which poses a big problem for the major listed manufacturers. However, Imperial Brands has done well to pivot into vaping and other nicotine replacement products that now account for around 8% of revenue and may provide the company a future.

“Imperial Brands’ full-year results showed that cigarettes are continuing to fall out of fashion, with tobacco volumes declining by 4%. But this is a dynamic the group is navigating well, managing to drive revenue and profits in the right direction through a combination of strong pricing and impressive growth in Next Generation Products (NGP) such as vapes and heated tobacco, where sales were up 26.4%,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“Imperial is by no means the leader in this space, but it is a challenger, and at 8% of the total pie, it’s starting to become more meaningful. But for now, it’s still a loss-making activity.”

Although some may be optimistic about the new products, Imperial Brands’ real attraction is its high shareholder capital returns.

“Our operational delivery coupled with consistently strong cash flow generation has supported enhanced shareholder returns with increases to both our ordinary dividend and share buyback,” said Imperial Brands’ CEO Stefan Bomhard.

“We are on track to deliver five-year capital returns of c. £10bn, representing 67% of our market capitalisation in January 2021 when we launched our strategy.”

The company will return £1.25bn to shareholders through share buybacks in FY25. This is arguably the biggest draw into Imperial Brands.

Imperial Brands’ operating profit was almost flat, but EPS jumped 19% due to buybacks reducing available shares. This trend is set to benefit Imperial Brands shareholders in the years to come.