Key events
FTSE 100 inches closes to record high
London’s main share index is inching closer to the record high struck at the end of last month.
The FTSE 100 share index traded as high as 9184 points this morning, just 6 points away from the intraday high of 9190 hit on 31 July.
Insurance group Hiscox are the top riser, up 8.6%, after beating profit forecasts this morning and lifting its dividend despite “the largest wildfire insurance event in history”.
Victoria Scholar, Head of Investment at interactive investor, says:
“The FTSE 100 is trading slightly higher, although earnings reports are stemming an even greater gain for the index. Glencore is down around 3.5% after the miner reported a drop in first half profits and Legal & General is down a similar percentage, disappointing investors despite an earnings beat.”
Chris Beauchamp, chief market analyst at IG, says:
“London’s listing authorities will breathe a sigh of relief over Glencore’s plans to stay on the LSE, mainly since it seems unlikely it can make the S&P 500.
It’s been a gloomy update overall from Glencore, which has suffered from the dire performance of coal prices, though recent improvement there and in cobalt provides hope that they can turn the ship around in the second half.”
Glencore scraps plans to move stock market listing away from London
There’s some good news for the City this morning: mining giant Glencore has decided not to quit the London stock market in favour of New York.
Glencore told shareholders this morning that it has completed its analysis of potential alternative listing options, and concluded that shifting its listing to the US did not make sense.
Glencore explained:
Of the major global equity exchanges, the scale and depth of US capital markets is unrivalled, but having considered the costs and benefits, including in respect of indexation, we do not believe that becoming a US domestic issuer or having a sponsored ADR program [an American depositary receipt] would be value.
Back in February, Glencore said it was considering moving its primary share listing away from London, a journey already taken by major companies such as gambling firm Flutter.
Glencore also reported a 14% drop in adjusted profits in the first half of the year, on an EBITDA basis, as it suffered from weaker coal prices and lower copper production.
Glencore’s chief executive officer, Gary Nagle, says:
“While there is much uncertainty around the impacts of geopolitics and trade in the shorter-term, we remain of the view that, in certain commodities, the scale and pace of required resource development will struggle to meet the demand projections for such materials into the future.
We are well placed to participate in bridging this gap, through the flexibility embedded in both our Marketing and Industrial businesses to respond to global needs.”
Honda Motor quarterly profit halves as tariffs bite
Profits at Japanese automarket Honda have halved in the last quarter, as Donald Trump’s trade war hit their earnings.
Honda, which is Japan’s second-largest carmaker, has reported quarterly operating profit of ¥244.2bn (£1.24bn) for April-June, missing analyst forecasts of ¥311.7bn.
Honda said the 27.5% tariffs on auto imports imposed by the US, pulled down its operating profit for the quarter by about ¥125bn.
But the automaker said the impact from the tariffs on its full-year operating profit was smaller than it had estimated in May. It now expects a ¥450bn yen hit for the year, compared to ¥650bn forecast previously.
But in better news, Honda now believes tariffs will have less impact on its full-year operating profits than previously forecast. It now expects a ¥450bn hit this year, down from ¥650bn forecast previously.
The company raised its full-year operating profit forecast to 700 billion yen from 500 billion yen, and said it expected the yen to trade at a weaker rate than it had previously estimated, Reuters reports.
Last month, the US and Japan agreed a trade deal under which tariffs on Japanese cars would drop to 15%. However, a timeframe for the change to go into effect was not announced; yesterday, Japan’s top tariff negotiator Ryosei Akazawa headed to Washington to try to hammer this out…
Introduction: OpenAI in talks for share sale at $500bn valuation
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The artificial intelligence boom is continuing to excite investors, creating the possibility of huge earnings for the companies and individuals at the heart of the AI race.
Overnight, news has broken that OpenAI, the group behind the ChatGPT chatbot, is in talks about a share sale that would value the company at $500bn.
That would be a serious jump on OpenAI’s previous valuation of $300bn, set in a financing round in March, and underline its status as one of the largest privately held companies in the world.
The talks centre on a potential sale of stock for current and former employees, Bloomberg reports, adding that existing investors including Thrive Capital have approached OpenAI about buying some of these shares. As OpenAI isn’t listed on the stock market, such a secondary stock sale would allow present and ex-staff to cash in.
The mooted share sale comes as companies race to test, and roll out, artificial intelligence systems, which has sent the value of chipmaker Nvidia surging to over $4tn last month.
Shares in Palantir, the software analytics and AI company, jumped almost 8% yesterday after it beat Wall Street estimates and hiked its full-year guidance due to the artificial intelligence boom.
OpenAI is riding this wave too. The Financial Times reports that OpenAI’s annual recurring revenue — a measure of expected revenue from subscriptions commonly used by start-ups — has surged to $12bn, and the company is apparently expecting $20bn or more in ARR by the end of 2025.
Yesterday, OpenAI launched new freely available artificial intelligence models, in a challenge to rivals including Mark Zuckerberg’s Meta and Chinese rival DeepSeek.
The ChatGPT developer has announced two “open weight” large language models, which are free to download and can be customised by developers
Sam Altman, OpenAI’s chief executive, said the company was excited to add to a stack of freely available AI models “based on democratic values … and for wide benefit”, adding:
“We’re excited to make this model, the result of billions of dollars of research, available to the world to get AI into the hands of the most people possible.”
The agenda
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7am German factory orders for June
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8.30am BST: eurozone construction PMI report for July
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9.30am BST: UK construction PMI report for July