Business Update, June 9: Market Movements and Corporate News

The S&P 500 opened with a slight gain of 4.35 points, or 0.07 percent, standing at 6,004.63. The Dow Jones industrial average saw an increase of 23.3 points, or 0.05 percent, reaching 42,786.19 at the opening bell but later dipped, while the Nasdaq Composite rose by 43.2 points, or 0.22 percent, to 19,573.138.

Market sentiment remained positive, fueled by anticipation that the recent trade discussions between the US and China in London would yield favorable outcomes following previous tensions.

IonQ, a US quantum computing firm, announced its acquisition of Oxford Ionics, a British competitor, for $1.08 billion. This acquisition aims to enhance IonQ’s research capabilities in quantum technology, an increasingly attractive area for investors.

Oxford Ionics focuses on innovative techniques for managing qubits, the essential components of quantum computers. These advanced computing systems outperform traditional computers in speed and efficiency, enabling the handling of extensive data and complex calculations.

Founded in 2019 by physicists from Oxford University, Chris Ballance and Tom Harty, Oxford Ionics, alongside its 80 employees, will transition to IonQ following the completion of the deal.

In early afternoon trading, London’s benchmark index faced slight declines. Investor caution about the outcomes of US-China trade discussions led to a 0.24 percent drop in the FTSE 100, which fell 21 points to 8,816.61. WPP, the advertising group, saw a dip in shares due to the announcement of its CEO’s departure, while gold mining stocks declined despite an increase in bullion prices.

On a brighter note, the FTSE 250, focused more on the UK market, rose by 0.46 percent, buoyed by a 71 percent increase in Spectris shares after indications that the company may accept a conditional offer from private equity firm Advent.

Wall Street anticipated a slow start as index futures suggested an opening about 7 points higher for the S&P 500, or 0.1 percent, with the Nasdaq 100 expected to increase by 12 points, or 0.06 percent.

In legal news, a former police officer linked to the £237 million London Capital & Finance investment scandal is facing bankruptcy proceedings after being found liable for substantial damages. Paul Careless, aged 49, was one of five individuals deemed involved in the fraudulent activities related to LCF, which fell into administration in 2019, leaving thousands of investors with considerable losses.

Administrators for LCF are now seeking to initiate bankruptcy proceedings against Careless to recover funds for creditors, as noted in a court filing.

Shares in Spectris experienced a significant rise of 68 percent to £34.40 at midday, following news that its board is considering Advent’s conditional proposal, which includes a cash offer of £37.63 per share, along with a proposed interim dividend of 28 pence per share. Spectris acknowledged that this development came after previous offers from Advent regarding an all-cash proposal.

Meanwhile, Warner Bros. Discovery revealed plans to split into two publicly traded entities without tax liabilities. The Streaming & Studios division will encompass Warner Bros. Television and HBO, while Global Networks will cover CNN and TNT Sports in the US, among others.

David Zaslav, the current president and CEO of Warner Bros. Discovery, will lead the Streaming & Studios division, while Gunnar Wiedenfels will head Global Networks. Wiedenfels emphasized that this separation aims to enhance each company’s potential and allow for more focused investment opportunities, ultimately driving shareholder value.

The FTSE 100 reported a minor decline of 14.13 points, or 0.16 percent, at midday, settling at 8,823.44, while the FTSE 250 recorded a slight increase of 7.21 points, or 0.03 percent, at 21,162.17.

Crude oil prices rose by 0.3 percent to $66.68 per barrel. The British pound increased by 0.26 percent to $1.36 as the dollar weakened following a boost from a more favorable US jobs report.

Market observers are anticipating a government spending review set to be released on Wednesday, which will outline departmental budgets up until 2029, amid rising concerns regarding the UK’s sovereign debt levels.

The pound also appreciated against the euro by 0.12 percent, reaching €1.19.

During London Tech Week, Markus Villig, CEO of ride-hailing service Bolt, commented on the ongoing trend of European tech firms eyeing the US for IPOs, citing a persistent lack of liquidity and investment within Europe. He remarked, “Most European companies raise 80 percent of their funding from the US, even though we are based in Europe.”” Villig remains hopeful that London could still serve as a site for Bolt’s potential IPO.

In a significant announcement, Sir Keir Starmer declared that the government plans to invest an additional £1 billion to boost the UK’s computing power significantly.

Opening London Tech Week, Starmer stressed the government’s commitment to being an optimal partner for tech entrepreneurs worldwide. Earlier this year, the government revealed its strategy for artificial intelligence, committing to develop a long-term plan for AI infrastructure needs within six months. Tech firms await further details in Rachel Reeves’s spending review, which may address the establishment of AI growth zones to accelerate planning approvals and promote clean energy for data centers.

Jensen Huang, CEO of Nvidia, characterized Britain’s AI sector as “the envy of the world” but pointed out its notable deficiency in AI infrastructure. Speaking during London Tech Week, Huang emphasized the need for the capability to build AI supercomputers in the UK, which would attract more start-ups to the region.

Chinese Vice-Premier He Lifeng emphasized to UK Chancellor Rachel Reeves the importance of maintaining sustained economic relations between China and Britain during trade discussions in London.

These discussions coincide with ongoing tensions surrounding compensation claims for more than £1 billion from UK ministers by Jingye, the Chinese owner of British Steel.

In corporate developments, L’Oréal has acquired a majority stake in the British skincare brand Medik8, enhancing its presence in the burgeoning dermatological skincare sector. The stake was sold by UK private equity firm Inflexion, though financial details remain undisclosed.

Trade negotiations today between the US and China aim to reactivate a preliminary trade agreement reached last month but was jeopardized when President Trump accused China of breaching terms and threatened to implement substantial tariffs on Chinese imports.

China’s considerable control over rare earth minerals remains essential for various high-tech industries, with US officials stressing the need for these critical supplies to continue flowing smoothly.

Recent data suggests a slowdown in China’s export growth, reaching a three-month low due to tariffs imposed by the US, alongside domestic protests regarding Trump’s immigration policies.

The UK has reaffirmed its position as Europe’s top destination for foreign direct investment (FDI) in financial services, despite a reported 32 percent decline in activity. EY’s latest Attractiveness Survey revealed the UK secured 73 projects in 2024, while Germany and France followed with 32 and 30 projects, respectively.

As total FDI projects in financial services across Europe dropped from 329 in 2023 to 293 in 2024, marking an 11 percent decrease, WPP shares fell following the announcement of CEO Mark Read’s upcoming resignation at the year’s end.

The chipmaker Alphawave, which is not listed on the FTSE 100, saw a 20 percent rise in shares after its agreement with Qualcomm for a takeover. The FTSE 100 opened with a modest increase of 10 points, or 0.1 percent, at 8,849.42, while the FTSE 250 remained unchanged at 21,157.77.

The pound traded at $1.3566 against the dollar and €1.1876 against the euro, with the ten-year gilt yield slightly falling to 4.62 percent.

A weaker dollar contributed to a rise in gold prices to $3,323.78 per ounce, reflecting a 0.4 percent increase.

Revolution Beauty indicated that billionaire entrepreneur Mike Ashley’s Frasers Group is among various entities exploring potential acquisition opportunities, given the company’s recent decision to seek a sale.

Having put itself up for sale last month, Revolution Beauty noted that Boohoo, now rebranded as Debenhams and holding a 27 percent stake according to FactSet, also has significant interests in the firm.

Investors are advised that there are no guarantees that Frasers’ interest will lead to a definitive offer.

The London-listed firm Alphawave has endorsed a £1.8 billion takeover proposal from US chipmaker Qualcomm, which includes an attractive share price exceeding 90 percent of its last closing price before Qualcomm’s interest was revealed.

Meanwhile, Arm Holdings, the notable Cambridge-based chip designer listed in the US, showed interest in acquiring Alphawave.

Mark Read’s announcement of his departure as WPP’s chief executive at the end of the year marks a pivotal change within the firm. In a stock exchange statement, WPP confirmed that the search for a successor is actively underway.

Read, who has been with the company for seven years, expressed confidence that he is passing on a solid foundation for ongoing corporate success.

His resignation follows the recent appointment of Philip Jansen as the chairman of WPP at the start of the year, with the company experiencing a drop in share prices since his appointment.

Overall, the prevailing optimism regarding US-China trade discussions positively influenced market sentiments, as evidenced by notable increases across Asian stock markets, while European markets anticipated a more muted response.

Scott Bessent, the US Treasury Secretary, along with other top aides from the Trump administration, are expected to engage in talks with their Chinese counterparts in London to address ongoing trade tensions.

Reports from China indicated a recent slowdown in export growth, further complicating the landscape amid protests in Los Angeles regarding immigration policies.

Lastly, the government’s projections have indicated that just over half of the promised new homes will be built by 2029, leading to concerns about exacerbating the ongoing housing crisis in the UK.

Additionally, the pharmaceutical sector rejected government proposals to reform NHS drug pricing, claiming it fell short of addressing their concerns, while Nvidia announced new partnerships aimed at advancing AI capabilities in the UK amidst fears of falling behind in technological development.

Upcoming economic data is anticipated to show a moderation in wage growth alongside an increase in unemployment during the spring, while a projected economic contraction is also on the horizon.