London pre-open: Stocks seen flat; HL rejects 985p a share takeover offer

London stocks were set for a steady open on Thursday after Prime Minister Rishi Sunak called a general election for 4 July and following well-received results from US tech giant Nvidia.

The FTSE 100 was called to open flat.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Nvidia announced another round of better-than-expected results and forecasts yesterday after the bell. This is perhaps why we see the US futures back in the green this morning.

"Nvidia’s Q1 sales hit $26bn (again $2bn more than the company’s own forecast of $24bn) and the company said that they expect to make $28bn during the current quarter. If we rely on the forecast-beat pattern, Nvidia sales could hit the $30bn mark by the end of this quarter.

"And that’s not all. Nvidia is expanding business beyond chips. It has a new software platform, called NIM, that offers an ‘AI ecosystem’ - THE AI ecosystem - a ‘set of easy-to-use microservices for accelerating the deployment of foundation models on any cloud or data’. And because it’s a software licensing model, it’s 100% profitable and opens the door to a better profitability as companies from all sectors rush into AI. And last but not least, Nvidia will opt for a 10-to-1 split of its stock to boost demand as the price of one share is now flirting with the $1000 level.

"Nvidia jumped 6% in the afterhours trading - but note that the kneejerk reaction has been softer than one would expect. The stock price will certainly reach $1000 per share, but whether it can maintain that level is uncertain. Seemingly, investors got used to blowout results, and even a comfortable beat is not enough to spark joy. That’s worrying for the future earnings announcements for Nvidia, but it’s promising for the extension of the rally toward other names."

On home shores, meanwhile, investors were mulling the prospect of a general election in six weeks.

Danske Bank said: "While the consensus was for an autumn election, we do not expect the timing to be a game changer. At present, the Labour Party is set to win by a majority according to both polls and prediction markets, and this is well-priced in by markets.

"Overall, we expect the market impact of the UK general election on 4 July to be fairly muted with both parties firmly campaigning on the notion of delivering economic stability and the likelihood of another event akin to the ‘mini’-budget event being unlikely."

In corporate news, Hargreaves Lansdown confirmed it had rejected a 985p per share takeover offer from a consortium comprising CVC, Nordic Capital and Platinum Ivy, which is a wholly-owned subsidiary of Abu Dhabi Investment Authority.

It said: "The board confirms that it unanimously rejected the proposal on the basis it substantially undervalues Hargreaves Lansdown and its future prospects.

"The board is focused on executing its strategy and looks forward to updating the market at the full year results on 9th August 2024. In the meantime, shareholders are advised to take no action."

Elsewhere, National Grid reported a 4% increase in underlying operating profit to £4.8bn, driven by growth in UK electricity transmission and higher rates in the US, despite an 8% decrease in statutory operating profit due to non-cash exceptional charges.

The company announced a £7bn equity raise through a rights issue and declared a final dividend of 39.12p, bringing the full-year dividend to 58.52p, up 5.55%.

Looking ahead, National Grid projected cumulative capital investment of around £60bn billion and expected underlying earnings per share growth of 6% to 8% annually from 2025 to 2029.

Aviva reported strong growth in the first quarter, with general insurance premiums up 16% to £2.7bn and significant increases in UK and Canadian markets.

The company maintained a robust capital position with an estimated Solvency II shareholder cover ratio of 206% and progressed a £300m share buyback.

Strategic acquisitions, including Optiom in Canada and AIG's UK protection business, and the sale of its Singapore joint venture, enhanced Aviva's market capabilities and simplified its geographic footprint, positioning it to meet its 2026 financial targets.