Berkeley Group shares dipped slightly on Friday after the housebuilding firm said trading had been stable in the first four months of the year.

Berkeley shares were down 0.4% at the time of writing, although the drop was more a result of a drop in the wider market than major disappointment with Berkeley’s update.

After Barratts released a dismal update earlier in the week, a reaffirmation of full-year £525 million pre-tax profit guidance by Berkeley will be music to the ears of investors.

“There wasn’t any news to shake foundations as Berkeley released a short trading update ahead of its Annual General Meeting later today. Business has been stable over the first four months of the year,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“And given that 90% of the planned sales this year are already locked in, management reiterated its full-year pre-tax profit guidance of £525mn, which would mark a decline of around 5% on the prior year. Performance is expected to be weighted to the first half, which should help fund the £229mn of shareholder returns the group has planned in the period.”

Like many in the construction industry, Berkeley said they welcomed the proposed changes to the planning system and Labour’s plans to build 1.5 million homes.

The FTSE 100 was relatively steady on Thursday as investors braced for tomorrow’s Non-Farm Payrolls and potential heightened volatility in equity markets.

Without sounding like a broken record, as we’ve mentioned this a couple of times already this week, tomorrow’s Non-Farm Payrolls hold the keys to the direction of stock markets in the coming weeks as investors react to the leading economic indictor for the world’s largest economy.

Thursday’s trade was relatively benign compared to the start of the week, as investors are likely to have completed all of their positioning ahead of tomorrow’s release.

Ahead of tomorrow’s data, a softer job openings report created a sombre mood in the US overnight. This translated into a range-bound FTSE 100, which was down 10 points at the time of writing on Thursday.

“The US Labor report failed to quell fears about the direction of the world’s largest economy. Job openings fell more than expected to 7.67mn, although hires rose 0.2% month on month to 273,000,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“All eyes now turn to Friday’s pivotal non-farm payrolls count which is expected to show an increase of 161,000 and a small fall in the unemployment rate to 4.2%. Markets are still pricing in a 0.25% rate cut this month, but only just, with the odds of a 0.5% cut now shortening further.”

Nathan continued to explain the star of the AI rally, Nvidia, had a poor session overnight amid concerns about an antitrust investigation. This is important because if Nvidia falls, its very likely broad global equity indices will also fall, such is the fixation with the company currently.

“The recent flagbearer for US markets NVIDIA took a further fall as rumours emerged that it had been subpoenaed by the Justice Department in an antitrust investigation,” Nathan said.

“The chipmaker at the forefront of the AI boom has however since denied these claims. Rival Advanced Micro Devices saw its shares close up 3% on the day.”

Vistry

Vistry was the FTSE 100’s top gainer, up 4%, after releasing surprisingly good results for the first half of the year.

“Vistry looks to be bucking the trend of a housing market slowdown,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Its transformation into a Partnerships giant, which specialises in providing affordable housing, has helped it outperform the more traditional housebuilders of late. This strategy of delivering high volumes of affordable housing is well aligned with the new government’s ambitions to address the country’s housing shortage. New home completions landed at just under 8,000 in the first half, giving Vistry the confidence to reiterate its full-year guidance of over 18,000 new homes.”

AB Foods

Primark-owner AB Foods struggled on Thursday, as the retailer reported soft sales growth over the summer due to the weather.

“Primark has had a good run but it is not immune to the vagaries of the British weather and owner Associated British Food’s year-end trading update reveals the retail chain has been hit by the soggy summer,” said Russ Mould, investment director at AJ Bell.

“Blaming poor performance on the weather may not be the greatest look but it is understandable that it will have had an impact on Primark given its reliance on footfall to generate sales in the absence of an online offering, beyond click and collect.

“The operation is at least benefiting from lower costs in some areas which are helping to increase margins, although in certain areas like wages and investment in technology, outlays have gone up.”

AB Foods shares were down 5% at the time of writing.

After announcing a listing on US supermarket giant Target’s website last week, Tekcapital portfolio company Innovative Eyewear is now setting its sights on the lucrative Middle Eastern market for the next stage of its global expansion.

Innovative Eyewear, a leading developer and retailer of ChatGPT-enabled smart eyewear, has announced its expansion into the region market through an exclusive distribution agreement with Ecom Gulf FZCO.

The agreement encompasses the Gulf Cooperation Council (GCC) countries, including the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman.

This strategic move aims to introduce Innovative Eyewear’s smart glasses to a region experiencing rapid growth in demand for technology products and wearables. Innovative Eyewear’s revenue has grown substantially over the past year, and the launch of Eddie Bauer and Nautica-branded smart eyewear has been a precursor for a global expansion drive.

According to research compiled by Tekcapital and Innovative Eyewear, market projections for the GCC region are present a significant growth opportunity.

Statista data forecasts that the traditional eyewear market is expected to generate revenue of US$1.8 billion in 2024, with a compound annual growth rate of 3% between 2024 and 2029. By 2029, the market volume is anticipated to reach approximately 170 million frames.

The companies note an increasing demand for luxury eyewear brands in the GCC, with consumers demonstrating a willingness to pay premium prices for high-quality, stylish frames.

To launch this partnership, Ecom Gulf FZCO will participate in the Dubai AI & Web3 Festival, scheduled for 11-12 September 2024 at Madinat Jumeirah, Dubai. This event provides a significant platform for showcasing Innovative Eyewear’s cutting-edge ChatGPT smart eyewear. The festival, which focuses on enabling digital economies, brings together global leaders in artificial intelligence and Web3 technologies.

“I am excited to announce our partnership with Innovative Eyewear, Inc. as the exclusive distributor of their pioneering smart glasses in the Middle East,” said Hisham Elhusseini, CEO of Ecom Gulf FZCO.

“This collaboration marks a key milestone in our commitment to driving the future of smart living through GenAI technology, and we look forward to introducing these innovative products to our customers across the region.”

Following the approach by Rupert Murdoch’s REA for Rightmove, analysts at AJ Bell have highlighted four FTSE 100 companies could that also be potential takeover targets. 

London’s equity market is being picked apart by overseas buyers who see underlying value in UK-listed companies that London’s public markets are unable or unwilling to offer.

AJ Bell analysts have shortlisted companies with similar attributes to Rightmove that may attract the interest of potential bidders. The characteristics observed in these companies include share price underperformance and a spell of bad news that has weighed on sentiment.

The potential FTSE 100 takeover targets highlighted by AJ Bell are:

• Burberry
• Entain
• Diageo
• Whitbread

In his own words, Dan Coatsworth, investment analyst at AJ Bell, explains the reasoning behind each company being classified as a potential takeover target:

Burberry

“Burberry’s shares have fallen by 70% in value over the past 12 months. The stock is trading at a 14-year low, making Burberry vulnerable to a takeover approach.

“Any potential bidders would have to see through near-term problems and be confident in the company’s ability to get back on track.

“The decision to take Burberry more upmarket and then heavily discount products to shift unsold stock was a bad move. While shoppers love a bargain, discounting can tarnish a luxury brand as it is perceived to be less desirable.

“Making matters worse was a lacklustre economic rebound from China post-pandemic, given the country has historically been a rich source of earnings. A new management team has been appointed to steady the ship.

“What makes Burberry appealing to a potential buyer is the enduring appeal of its products. There is instant brand association with its chequered patterns. While styles go in and out of fashion, Burberry’s products have stood the test of time and a potential buyer will be focused on the long-term prize.”

Entain

“The Ladbrokes owner has previously been subject to takeover interest from MGM and DraftKings, but neither suitor managed to place a winning bid. Since then, Entain’s share price has lagged many of its peers and left it a sitting duck for a third party to swoop on the business. Buying Entain would be an easy way for a rival company to greatly increase scale, something that really matters in the gambling sector.

“The stock is down 45% over the past 12 months, partially dragged down by a bribery investigation and losing share in the lucrative US market. The company has also faced accusations that it overpaid for acquisitions.

“A new CEO joins this week, which raises the prospect of a sweeping review of the business and potentially some strategic changes. The pressure is already on, given activist investors on the shareholder register.

“One might ask why any potential bidders haven’t already shown their cards this year given the share price weakness. It might be that they want to see a repair job at Entain before swooping in.

“While that might result in a bidder paying a higher price than now, certain suitors might view this strategy as sensible, given it arguably means an offer is only made once risks have been lowered.”

Diageo

“Shares in Diageo are down 23% over the past 12 months thanks to disappointment around performance in Latin America and questions over the company’s leadership qualities. In July, it reported an operating profit decline in four out of its five operating regions, two of them in substantial double-digit territory.

“Management seems to have taken its eyes off the ball when it comes to monitoring inventory levels and working out ways to keep consumers spending.

“The most recent results didn’t include a new share buyback programme, which troubled investors. That’s not a surprise given the balance sheet is close to getting out of the company’s comfort zone. Diageo targets 2.5 to 3 times net debt to adjusted earnings and the leverage ratio is now sitting at the top end.

“While the current news flow is fairly gloomy, Diageo could be a takeover candidate for a bidder looking to own a portfolio of well-known drinks brands and wanting to pick up an industry giant at a big discount to where it has historically traded. The key sticking point is the fact such a takeover deal would require a significant cash outlay, even if the bidder got a bargain price.

“Diageo is currently worth £55 billion. Apply a potential 30% bid premium and a suitor would need to stump up a very large amount of money. One route might involve breaking up Diageo, with a beer company taking on Guinness and another company taking on the spirits brands.”

Whitbread

“It’s not been the best time for the Premier Inn owner, with its share price down 17% over the past 12 months. The market has been worried about a lack of organic growth in its UK operations and that we won’t see a major improvement any time soon. German operations are performing better but they only account for small part of the group.

“While some investors will be disappointed at the company’s situation, there is the potential for Whitbread to be on the radar of private equity or an overseas-based operator looking to get ahead in the UK through buying one of the country’s best-known hoteliers.

“The shares are trading on a low rating of 12.2 times consensus earnings for the year to February 2026. That bargain-basement rating, together with weak market sentiment towards the stock, could be enough to draw out a bid. Premier Inn is front of mind for consumers looking for affordable accommodation and scores well with tourists seeking decent, reliable hotels when visiting the UK.”

The FTSE 100 tracked the US lower on Wednesday after poor US manufacturing data revived growth concerns ahead of Friday’s Non-farm payrolls.

Some investors are clearly petrified that a soft jobs report on Friday could see a rerun of the volatility in early August and want no part in it.

Slowing new manufacturing orders and rising inventories in the US yesterday spooked markets overnight and spurred investors to book profits in US technology shares, sending the S&P 500 down 2%.

“A near-10% one-day decline in Nvidia’s shares and a 3.3% drop in the Nasdaq index illustrate the fragility of the market. It goes to show that everything was not back to normal after markets quickly rebounded from their summer wobble, even thought it might have looked fine on the surface,” said Russ Mould, investment director at AJ Bell.

“Investors panicked over the summer about a potential US recession, causing markets to go through a rocky period which was compounded by the unwinding of the Yen carry trade where certain investors had borrowed in the low-interest Japanese currency to invest in higher-yielding assets elsewhere, including US tech shares.”

Such was the weight of concern: the FTSE 100 opened sharply lower and was trading down 0.5% at 8,252 at the time of writing after recovering from the worst levels.

With the US Non-Farm Payrolls just two days away, markets will be laser-focused on any global economic data that could be a precursor for the heightened volatility.

“Hirings, in the non-farm payrolls report, are expected to come in around 162,000 jobs for August, but if they are significantly lower than expected, it will do little to calm fears that a recession could be looming,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Up to one percentage point of cuts from the Fed by the end of the year are currently being priced in by financial markets, and if further weak data comes through, a big bazooka cut of 50 basis points looks more likely.”

The selling of FTSE 100 shares on Wednesday was broad with 85% of the index in the red at the time of writing.

The selling was also fairly indiscriminate, with Airtel Africa sitting at the bottom of the leaderboard, followed closely by Convatec and Burberry.

With a 1% gain, Rolls Royce was the top gainer.