The FTSE 100 fell on Friday as the world was hit by widespread technology outages that disrupted trade on the LSE, grounded planes and prevented some bankers from logging into their systems.

Many investors were experiencing difficulties placing trades with orders being rejected and some brokers issuing notices warning of disruption to their service.

The London Stock Exchange’s RNS system was out of action on Friday with corporates unable to login to publish regulatory news. FTSE price feeds were also disrupted in the early minutes of trade, but this was quickly rectified.

“The world grinding to a halt because of a global IT meltdown shows the dark side to technology and that relying on computers doesn’t always make life easier,” said Dan Coatsworth, investment analyst at AJ Bell.

“Countless industries, from airlines and trains to banks and media, face disruption to earnings if they cannot do their job. Workers cannot get from A to B and that will have a knock-on effect for industries across the board if staff aren’t there to perform important functions or systems are offline.

“The severity of the problem boils down to how long it lasts. A few hours’ disruption is unhelpful but not a catastrophe. Prolonged disruption is another matter, potentially causing damage to companies and economies.”

The FTSE 100 was down 0.4% to 8,171 at the time of writing and was recovering from the worse levels of the session as the initial panic subsided.

Notwithstanding the hysteria surrounding the breakdown in technology systems, the European equity space was set for a softer session after another drop in US tech shares overnight that hit futures.

With companies facing difficulties issuing news, the macroeconomic environment was in the driving seat on Friday when it came to FTSE 100 stocks.

Mounting concerns about the health of the Chinese economy was reflected in another weaker session for the miners as Glencore, Anglo American, and Rio Tinto trading negatively.

Burberry continued its dismal run with a 3% decline. Shares in the luxury brand are now worth less than a third of its 2023 high.

Beazley was the FTSE 100’s top faller presumably on concerns about the fallout of the technology sector disruption and potential claims. Beazley shares were down 7% at the time of writing.

Netflix released second-quarter earnings on Thursday and highlighted another period of growth for the streaming company with revenue hitting a quarterly record and EPS beating estimates.

The standout metric was the number of new subscribers added. The company added 8.2m subscribers during the period compared to estimates of just 5m.

Revenue rose to $9.6bn during the period, beating estimates of $9.5bn and a small increase on the prior quarter’s $9.4bn in revenue.

Netflix’s growth has been consistent and steady, but it is slowing. Shares were flat in the premarket as investors reacted to softer revenue projections in the coming quarters.

Once known for a blowout revenue increases, Netflix is becoming more of a utility company than a racy technology stock.

“Netflix is once again showing why it’s king of the streamers. Second quarter results were impressive, and subscriber growth shot the lights out once more. The ad-supported product is proving more popular than many could have hoped. It allows Netflix to penetrate new markets geographically and taps into users who are priced out of the fully paid service,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“But this is a new challenge for Netflix; you can’t simply chuck a load of non-tailored adverts into your product to keep users happy, even if that’s what they signed up for. Squeezing every possible dollar from the new ad-watching user base is proving a challenge, and with users growing so fast, it’s struggling to fill all the ad slots it has at its disposal. Now, that’s a pretty good problem to have, and Netflix has so much user data that it’s better placed than any of its peers to provide relevant, tailored, ads to its subscribers. But markets will want to see Netflix take full advantage of this new revenue stream, and fast.”

SEGRO is offloading Italian warehouse assets to focus on other developments and investment opportunities.

A portfolio of four logistics warehouses in Italy has been sold for €327 million in cash, according to an announcement made today. The disposal was carried out by the SEGRO European Logistics Partnership (SELP) joint venture, with SEGRO acting as the venture adviser.

The transaction involves two warehouses in Milan and two in Rome, totaling 338,745 square meters of floor space. All four facilities were originally developed by Vailog SEGRO and are currently fully leased to three different customers in the online and traditional retail sectors.

The portfolio generates an annual passing rent of €19 million and boasts an average weighted unexpired lease term (WAULT) of 10.5 years, indicating its strong potential for long-term returns for the purchaser.

“We developed and delivered these modern, highly sustainable warehouses for some of our largest customers in Italy to support their expansion plans,” said Luca Sorbara, Co-Head of Italy at SEGRO.

“This disposal has enabled us to divest some assets with long-leases and limited asset management potential, allowing us to recycle capital into other attractive development and investment opportunities.”

The FTSE 100 defied a US tech selloff to push higher on Thursday as the relatively boring nature of London’s leading index provided a haven for investors seeking shelter from volatility in US mega caps.

“A catastrophic day for US tech shares hasn’t caused widespread contagion on the markets,” explained Dan Coatsworth, investment analyst at AJ Bell. 

“While the Nasdaq had a miserable day on Wednesday, only Japan’s Nikkei 225 caught a cold in response. Its semiconductor industry might be affected if the US government gets heavier with measures to stop China getting its hands on foreign chip technology.”

The FTSE 100 was trading 0.7% higher at 8,247 at the time of writing in a broad rally that saw most sector gain.

London’s flagship index is comprised largely of stocks with defensive attributes and lacks the racier technology shares that have driven substantial gains in US indices. Of course, investors focused on UK stocks will have missed out on the sharp gains enjoyed in US stocks over the past two years but will certainly be relieved to be shielded from overnight declines in tech names such as Nvidia, Meta, and Advanced Micro Devices.

The catalyst for the selling was Donald Trump’s approach to relations with China and Taiwan and what it could mean for the sector should he win another term as president in November.

“Semiconductor shares have been some of the strongest in the market so far this year. At one point, Nvidia, the leading AI chip producer, became the world’s most valuable company,” said Steve Clayton, head of equity funds, Hargreaves Lansdown.

“Last night, however, investors took a very different view, leading to sharp declines in the prices of major chip producers, from Nvidia to AMD and beyond. An interview with Donald Trump, for Bloomberg Businessweek saw the former President casting doubt on US willingness to defend Taiwan, should he be elected in November.

“With much of the world’s most advanced chip manufacturing capabilities located within Taiwan, sixty-eight miles offshore China.  That was not a message the market wanted to hear. Nor did it want to hear the Biden administration talking about tougher trade restrictions against China.”

Thankfully, London is largely immune to such concerns, leaving UK-centric stocks free to push higher after positive UK economic data. UK banks ticked higher and JD Sports had another good session with another 2% gain.

Asset managers and brokers had a strong with Schroders adding 5% and Hargreaves Lansdown gaining 1.5%. AJ Bell was a key driver for the sector after announcing robust customer additions in the last quarter.

Frasers Group was the standout performer as the retailer shares jumped 8% after announcing a 13% increase in profits amid a strategic push to revamp the brands it stocks.

Sports Direct was becoming a jumble sale of dead and dying brands, and the model was starting to infect House of Fraser stores. Today’s results signal progress in shedding this image, and investors will be pleased to see that it is translating to higher profitability.

“The so-called elevation strategy is moving along nicely, with more stores upgraded in the period,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“This improves the overall customer shopping experience by displaying products in a more flattering and digitally integrated environment, which is also helping to strengthen relationships with major global brands. These stronger partnerships should help unlock further growth opportunities and increase the brand’s ability to pull consumers into its stores. Increased automation at its warehouses, which significantly reduced inventory levels, should help improve profitability moving forward too.”

SSE said performance was in line with expectations in the three months to June 30th as renewable energy output jumped during the period.

After abnormal weather patterns last year dented renewable energy generation, output jumped 60% in the last quarter as normal conditions resumed.

SSE saw markedly better generation in both onshore and offshore wind, as well as milder improvements in pumped storage and hydro.

Renewables total output rose from 1,625 GWH in the three months to 30th June 2023 to 2,596 GWH in the same period this year.

Although SSE is making commendable steps forward in renewable energy generation, the company still generates most of its power from gas powered facilities which totalled 3,338 GWH output in the last quarter.

This, however, may not be the case for much longer. SSE provided an update on a raft of renewable energy projects due to come online in the near future. The company has recently generated the first power from onshore wind in the Shetlands and is due to launch a new farm in Ireland in early 2025. These are two among many projects to ramp up renewable energy power generation.

Given the company’s trajectory, it’s only a matter of time before the vast majority of SSE’s output is renewable. 

“The UK’s determination to move away from fossil fuels has moved into overdrive following Labour’s election win, and SSE is moving in tandem with the new government to embrace the transition. In its latest trading update, SSE confirmed performance in line with expectations, with renewables output for the quarter up 60% year-on-year,” said Mark Crouch, analyst at investment platform eToro.

“SSE has already made significant investment to improve their electric power infrastructure and is committing a further £20.5bn to its investment programme, including what will be the world’s largest wind farm, Dogger Bank, off the coast of England, capable of powering six million homes.

“Projects like this though have come at the expense of shareholder dividends, dividends that in the past have been synonymous with utility stocks. And the glaring risk is that renewable energy methods are unreliable, thus profits will likely be volatile. 

“However, the company believes that with the business continually expanding its high-quality asset base, shareholders stand to reap the rewards over the long term.”

With its management expectations that 2024 will be a year of significant momentum in terms of both EBITDA margins and cash generation, it will be very interesting to see how this global integrated medical diagnostics business has fared in the first half of this year.

Based in Cardiff, with sites in five other countries, EKF Diagnostics Holdings (LON:EKF), will be issuing a H1 Trading Update within days.

Will it be good enough to get some excitement back into its share price?

The Business

Specialising in the development, production, and distribution of innovative medical technologies and patient-centric solutions EKF is a leading global diagnostics and biotechnology company.

Its solutions help to empower healthcare and medical providers to make informed clinical decisions through point-of-care testing and life sciences applications.

The company’s product portfolio includes small blood analysers and associated consumables used in testing patients for conditions including diabetes and anaemia.

EKF sells through a network of some 200 distributors covering every country around the world; while its German and American offices also sell directly into hospital laboratories, GP surgeries, universities and sports organisations.

The group has sold over 90,000 analysers all around the world since 2008. 

This installed based forms the cornerstone of the EKF Point of Care business, requiring more than 60m tests to be manufactured every year to service existing demand.

New Launch And Contract Wins

Possibly the start of good news to come is this morning’s announcement of the launch of its new and enhanced Biosen C-Line, an industry leading benchtop glucose and lactate analyser within its Point of Care range, in response to customer demands for greater connectivity options and improved usability. 

It also announced that it has secured new contract wins from two tenders: Hong Kong Red Cross (three years) and Thai Red Cross (two years) worth approximately £600k in total.

The Equity

There are some 455m shares in issue, with Harwood Capital being the biggest holder (29.09%), followed by Liontrust (11.99%), Gresham House Asset Management (8.87%) and others accounting for over 70% professional holders.

Analyst Views

Dr Julie Simmonds and Dr Mike Mitchell at Panmure Liberum rate the shares as a Buy, looking for 37p as their aim.

They estimate current year, to end December, sales of £54.2m (£52.6m) with adjusted pre-tax profits of £8.2m (£6.5m).

For 2025 they see £57.9m and £10.1m, then in 2026 £63.8m and £12.7m respectively.

Singer Capital Markets also have the shares as a Buy with 36p as their Price Objective.

Its analysts have very similar sales and profits projections, while looking for the group’s shares to be re-rated in due course on the back of higher numbers.

My View

Capitalised at almost £139m this group has the historic basis of growth driven by expanding sales of its consumables, especially as it develops more specific products into the ‘point of care’ marketplace.

Until much better estimates prevail, I would not be in a rush to chase this stock, now 31p, but instead, perhaps, wait to to buy on any dips.

Frasers Group’s profitability improved materially in the full-year ended 28th April as the fashion retailing group repositioned its product strategy to focus on better thought of brands.

The group has been associated with tired brands at the end of their life, which Frasers Group sold at a discount through outlets including Sports Direct.

The discounting even started to creep into House of Fraser, damaging perceptions of that brand and risked the entire group being perceived as a B&M for dead fashion brands.

The company set about rectifying this with its ‘Elevation Strategy’ focused on attracting a wider audience with high-profile brands – and it’s working.

The successful execution of the Elevation Strategy has strengthened brand partnerships, including the onboarding of new brands such as The North Face, On, and Columbia.

This helped drive a strong year with Adjusted Profit Before Tax (APBT) reaching £544.8 million, a 13.1% increase and at the upper end of the guidance range. Adjusted Earnings Per Share (EPS) saw a significant rise of 33.6% to 95.8p. The firm anticipates continued strong growth, projecting APBT for the fiscal year 2025 to be between £575 million and £625 million.

Sports Direct delivered year-on-year growth in both revenue and gross profit as the company strengthened relationships with third-party brands and worked on Sports Direct’s market positioning.

Demonstrating a clear growth strategy, Sports Direct are increasing presence in the Nordic countries, establishing a joint venture in Southeast Asia, and the ongoing acquisition of a leading sports retailer in the Netherlands.

“This has been a break-out year for building Frasers’ future growth. As well as delivering a strong trading performance, particularly from Sports Direct, we made significant progress with our Elevation Strategy,” said Michael Murray, Chief Executive of Frasers Group.

“We expanded our retail ecosystem, establishing valuable partnerships with new brands. Our brand relationships have never been stronger, giving us invaluable support as we continue the international expansion of our business. We invested in group-wide operational efficiencies in warehouse automation and digital infrastructure, which we expect to yield a tangible impact as early as FY25. And we generated new growth opportunities with the rollout of Frasers Plus, including recently signing our first third party partner in THG.

“I’m really proud of what we have achieved at Frasers this year and would like to thank all colleagues for their continued hard work and our brand partners for their support. Together, we are building a resilient, profitable growth retail ecosystem that delivers exceptional value for our partners, consumers and shareholders. We have built a lot of momentum this year and are entering the new financial year with many exciting growth opportunities ahead of us, which we will continue to invest in for the long-term benefit of the Group.”  

A strategic partnership with THG plc has been agreed upon, which will integrate Frasers Plus into THG’s Ingenuity platform, marking the first external partnership for Frasers Plus.

The launch of Frasers Plus, the FCA-regulated credit scheme, has shown encouraging early performance as the group gets in on the finance game. Frasers have set ambitious long-term goals for Frasers Plus, including over £1 billion in sales, £600 million in balances with a yield exceeding 15%, and more than 2 million active customers.

Avacta Group has announced its decision to settle the upcoming July quarterly amortisation payment for its unsecured convertible bonds in cash. The payment, totalling £3.13 million, comprises £2.55 million in principal and £580,000 in interest.

The company, known for developing innovative cancer treatments and diagnostics, said it carefully deliberates each payment as it arises. The board considers various factors, including the firm’s cash runway, potential shareholder dilution, and overall business outlook before making a decision.

Investors will be pleased that this particular payment has been settled in cash and avoids any dilution for investors.

Following this cash settlement, the outstanding principal on Avacta’s convertible bonds will decrease by £2.55 million to £33.15 million.

Avacta raised around £30m by way of a placing in Q1 2024 to develop the AVA6000 pre|CISION molecule targeting improvements in patient outcomes during chemotherapy.