Dowlais agrees takeover terms with AAM, United Utilities accepts Final Determination
London open
The FTSE 100 is expected to open 10 points lower on Wednesday, having closed up 0.35% on Tuesday at 8,533.87.
Stocks to watch
British manufacturing firm Dowlais said it agreed terms on a cash and share takeover by American Axle & Manufacturing. AAM is offering 0.0863 new AAM shares plus 542p a share in cash and a further 2.8 pence in the form of a final cash dividend to be paid on completion.
United Utilities said on Wednesday that it has accepted Ofwat’s Final Determination for the five-year period to March 2030, committing to a £13bn investment in water and wastewater infrastructure, including a £2.4bn programme to reduce storm overflow spills by 60% this decade. The FTSE 100 company said it remained financially stable with gearing at 60% and £2.6bn in liquidity, while reaffirming its dividend growth policy in line with CPIH inflation. In its third quarter, it confirmed strong operational performance, maintained its 2025 financial guidance, and reported progress on the £2.5bn to £2.9bn Haweswater Aqueduct Resilience Programme.
Newspaper round-up
Rachel Reeves is unveiling plans to create “Europe’s Silicon Valley” between Oxford and Cambridge as she stakes the government’s success on kickstarting economic growth and putting more pounds in people’s pockets. The chancellor will announce a blueprint to improve infrastructure across the region that will add up to £78bn to the UK economy within a decade, according to industry experts, and put it at the forefront of science and technological advances. – Guardian
Starbucks reassured Wall Street with a smaller-than-expected drop in comparable sales, an early sign that its efforts to revive sluggish demand could be bearing fruit. The world’s largest coffee chain, which earlier this month announced that people using its cafes across North America need to buy something, is in the midst of a turnaround bid to win back customers. – Guardian
JP Morgan is in talks to lease space at Credit Suisse’s former UK headquarters in Canary Wharf after it demanded staff return to the office five days a week. The investment bank is understood to be discussing a deal with UBS to rent 150,000 sq ft of space at One Cabot Square office complex. Although the space amounts to less than a third of the 540,000 sq ft building, it is understood that the bank could expand its presence there further to lease as much as half of it. – Telegraph
China is building a gigantic laser-ignited fusion power laboratory that is 50pc larger than its US counterpart as the two superpowers spar for energy supremacy. The part-built research centre near the city of Mianyang, in the Sichuan province, has been observed in satellite imagery, with experts warning it could be used to advance both power generation and nuclear weapons. – Telegraph
The proposed Sizewell C nuclear plant will start generating electricity in 2035 if it gets the go-ahead by the summer, its developers claimed, despite repeated delays plaguing its sister station. The first reactor from the Suffolk nuclear plant will enter commercial operation in 2035 and the second in 2036, according to a presentation published by Sizewell that described a final investment decision by this summer as “essential”. EDF has previously given vaguer guidance of Sizewell starting up in the “mid 2030s”. – The Times
US close
US markets put in decent gains on Tuesday but only managed to claw back some of the prior day's tech-sector sell-off, with eyes starting to turn towards blue chip earnings and the Federal Reserve's first policy meeting on the year.
The S&P 500 rebounded 0.9% to finish at 6,067.70 after a 1.5% slump on Monday while the Nasdaq put in a 2% gain to 19,733.59 after dropping 3.1%.
Tech stocks were hit on Monday by the news that Chinese startup DeepSeek had launched a free AI assistant it claims uses lower-cost chips and less data.
DeepSeek's open-source AI model was reportedly comparable with those of OpenAI, Google and Meta despite the company spending just $6m on its base model, compared with the hundreds of millions (if not billions) of dollars that the US firms have shelled out.
The Dow, which was immune to Monday's tech-focused selling pressure, rose for the second day, gaining 0.3% to 44,850.35 as it closes in on its record closing high of 45,014.04 reached in early December.
The market spotlight on Wednesday will be on the US central bank's policy announcement, with the Fed expected to keep interest rates on hold.