Selling pressure in the United States slipped into the European session on Tuesday as cyclical names dragged on the FTSE 100.

The UK doesn’t have the weighting towards the technology sector in the way the US does, so traders looking at declines in US indices overnight picked out the closest thing to it in stocks sensitive to investors’ sentiment.

London’s leading index was down by 0.2% at the time of writing with stocks such as Rolls Royce, Burberry, Melrose, and a splattering of banks, leading the declines.

Rolls Royce was the top faller, with a 4% drop after Airbus said it was experiencing supply chain issues and cut its profit forecast. Airbus is a major Rolls Royce customer, suggesting Rolls Royce itself may be encountering difficulties.

Although the FTSE 100 was in the red on Tuesday, the selling was contained by a tick-up in US futures, implying the dip in the US will be short lived.

“Last night’s sell-off in certain US tech stocks doesn’t appear to have had any lasting damage given how futures prices are pointing towards an ‘up’ day for Wall Street on Tuesday,” said Russ Mould, investment director at AJ Bell.

The nature of the US selloff should be of little concern for UK investors. The declines were limited to a select few tech stocks, including Nvidia, who have made astronomical gains amid the AI gold rush.

“Admittedly, a near-7% decline in Nvidia might have sounded the alarm bells that we’re seeing a shift in the market. It’s important to remember that stocks don’t always travel in a straight line and there is a herd mentality with big-name companies on the market,” Mould said.

The AI boom has driven global equities higher over the past 18 months, and any hints it could be overheating will undoubtedly be met with risk aversion.

Landsec, the London-listed Real Estate Investment Trust, has strengthened its position in the UK retail market by acquiring an additional 17.5% stake in Bluewater shopping centre. The £120 million purchase from GIC increases Landsec’s ownership of Bluewater to 66.25%.

The transaction is expected to boost Landsec’s net rental income by £10.3 million annually, based on the performance of its existing investment in Bluewater over the year to March 2024.

Landsec shares were 0.16% higher at the time of writing.

Bruce Findlay, Managing Director of Retail at Landsec, highlighted the significance of the deal: “This transaction demonstrates our ability to create value through prime investments in scarce, major retail destinations with attractive return profiles. Bluewater is a key part of our strategy to further build relationships with leading brands.”

Bluewater spans over 240 acres and housing more than 300 stores, restaurants, and entertainment venues. This mix of retail and experiences means the centre has managed the shift in consumer trends better than a typcial high street. Bluewater attracts over 27 million visitors annually.

Chapel Down, the leading English winemaker, has announced a strategic review of its funding options to support ambitious growth plans.

The company’s Board aims to secure capital for investments in new vineyards, a state-of-the-art winery, and the development of its brand home in Tenterden.

Although the company is on track to deliver double-digit sales growth in 2024, Chapel Down has outlined the requirement for external funds to support its plans.

The strategic review will explore a range of funding options, including investments from existing and new shareholders, a potential sale of the company, and ‘other relevant transactions’.

Chapel Down shares were down 1% at the time of writing.

“Fancy owning an English wine maker? Now’s your chance as Chapel Down has effectively put itself up for sale,” said Russ Mould, investment director at AJ Bell.

“Coming so soon after moving from the Aquis stock exchange to AIM, one might think something negative is afoot. Yet it makes sense to have raised the company’s profile by switching exchanges ahead of putting the ‘for sale’ flag up.

“Chapel Down has made a name for itself over the years but the business appears to have a hit the ceiling in terms of scale. To grow even more, it really needs a big slug of cash to invest in the business and that might be better coming from a new, bigger owner, rather than going cap in hand to shareholders on an ad hoc basis.

“Plenty of big drinks companies would be in the market for a niche player like Chapel Down as it could add something new for them to get their teeth into, and also as a way of cross-selling products.”

After last Thursday’s profit warning by YouGov (LON:YOU), the international online research data and analytics technology group, its shares almost halved from the 838p they reached during the previous day’s trading, to close at just 440p.

As if that was not bad enough, they fell again yesterday to as low as 412p at one stage, before closing at 439p.

Almost puzzling many investors who would have thought that the UK General Election, creating a veritable plethora of daily poll announcements, would be creating massive upside for the group.

Now the question is whether its shares, which were at 1,230p each in early February this year, still look overpriced, and do they have further to fall?

The Business

The £511m capitalised company, which was founded in 2000 by Stephen Shakespeare and former Chancellor of the Exchequer Nadim Zahawi, declares that its mission is to offer unparalleled insight into what the world thinks.

Considering that its shares were trading at over 1,600p a couple of years ago – the reaction would be that perhaps investors have better insight than the company’s management.

The group claims that its innovative solutions help the world’s most recognised brands, media owners and agencies to plan, activate and track their marketing activities better.

The company claims that its purpose is to give the world a voice through its global community by collecting, measuring and analysing their opinions and behaviours and reporting the findings accurately and free from bias.

It boasts of having one of the world’s largest research networks, with operations in the UK (with 2 offices), the Americas (8), Europe (15), the Middle East and India (4) and the Asia Pacific (8).

The core of its platform is an ever-growing source of connected consumer data that has developed daily over the last couple of decades or so of operation.

The group, which refers to it as living data, is drawn upon the detailed understanding of its 27m registered panel members to deliver accurate, actionable consumer insights.

The group has over 4,300 clients worldwide and claims to be the most quoted market research source worldwide.

Last Thursday’s Trading Update

The company reported that following the half-year results, it has seen lower sales bookings than anticipated, and as a result it now expects reported revenues for the year to end July will be some £324m-£327m and that it now expects full-year adjusted operating profit to be £41m-£44m.

Analyst View

Analyst Jessica Pok at Peel Hunt considers that the group is continuing to address its issues, but that the statement was very disappointing.

She stated that she was expecting a downgrade but that it was larger than she expected.

“YouGov has been impacted by slower client spend and intensified competition for data products.

Despite these challenges in the short term, the company is addressing the issues, and is focusing on investment in data product upgrades and artificial intelligence, sales organisation enhancement, and cost base reduction.”

The analyst retained her Buy on the group’s shares, while keeping her Price Objective of 1,500p on the equity.

The average of the consensus of six analysts that follow the group suggests that the shares could well Outperform, with Peel Hunt’s 1,500p being the highest price expectation, while the lowest is now 370p – with the average being 922p.

My View

On the face of it, I would have thought that this group’s shares are still overpriced and could so easily fall further, ahead of the end of July when we should get the Year End Trading Statement.

They are currently trading at around 441p.

Former Conservative Party Treasurer and major donor Michael Spencer is building up his open position in the shares of the Alaska North Slope oil and gas group Pantheon Resources (LON:PANR).

Michael Spencer

Billionaire Spencer, 69, aka Baron Spencer of Alresford, is better known for his ICAP business, a world-leading intermediary in the wholesale financial, energy and commodities markets.

Spencer is Chairman, director and majority shareholder in IPGL, a private holding company making investments on behalf of Spencer and other family trusts.

Pantheon Resources

Pantheon is an independent oil and gas company with a 100% working interest in a portfolio of high-impact oil projects focused on the Alaskan North Slope spanning some 193,000 acres, all on state (not federal) land.

The company is expecting that an additional 60,000 acres will be formally awarded this summer.

The Alaska North Slope is a prolific oil province now regarded as a ‘Super Basin’ which is experiencing an exploration and development revival.

Pantheon and its wholly-owned subsidiary, Great Bear Petroleum, has been operating in Alaska for over a decade where it has invested over $350m in building and appraising its portfolio, which includes several major discoveries.

In Alaska, Pantheon has discovered two major fields, Kodiak and Ahpun, which the company estimates contain contingent recoverable resources in excess of 2bn barrels of marketable liquids. 

Market View

Analysts Charlie Sharp and Phil Hallam at Canaccord Genuity currently have a Buy rating on Pantheon’s shares with a Price Objective of 90p.

Spencer and his IPGL company have increased their total position in Pantheon’s shares from 7.01% to 8.11%.

In the last year the oil and gas group’s shares have been as High as 45.50p and as Low as 10.10p – they are currently trading at 25.00p, valuing the whole company at £240m.

The FTSE 100 rose on Monday amid a broad rally in European stocks as traders looked past French elections to value in Euro-area stocks after a sharp sell-off since the surprise snap elections were announced.

The FTSE 100 was 0.5% higher at the time of writing, with Prudential leading the charge higher. A wave of buying in European stocks saw the French CAC gaining 0.9% and German DAX adding 0.6%

France’s flagship CAC 40 gave up around 10% after President Macron announced shock elections – a move that saw London crowned Europe’s largest stock market once more.

The macro agenda was fairly light on Monday, so individual names had a chance to drive price action as investors waited for economic data points later in the week.

There was a sustained bid in retailers that spilled over from last week with JD Sports, Frasers Group and Burberry among the top gainers. Frasers Group was helped higher by a new strategic partnership with THG involving the adoption of THG’s Ingenuity platform and acquisition of luxury websites.

JD Sports added 3.3%, while Frasers Group gained 2.9%.

Prudential shares

Prudential was the FTSE 100’s top gainer after announcing a capital management plan that was headlined by the return of $2bn capital to shareholders before 2026 by way of share buybacks.

“I am pleased with the progress we continue to make in executing our strategy, as we drive towards generating growth in both value and cash returns for shareholders over the long term,” said Prudential CEO Anil Wadhwani.

“The significant growth opportunity ahead of us has not changed and we remain focused on realising that opportunity.”

Prudential shares were over 5% at the time of writing.

Interest rates

Although there was a lull in interest rate-sensitive events on Monday, expect commentary and positioning to pick up as the week progresses as traders look to PCE inflation data and hints of when the Fed may first cut rates.

“The big economic news comes at the end of this week with a reading of US core PCE inflation – the Federal Reserve’s preferred measure of prices. Investors will be looking for signs the inflationary pressure which has led to a ratcheting back of expectations on interest rate cuts are starting to ease,” said AJ Bell investment director Russ Mould.