MARKET REPORT: Scottish Mortgage rallies after a miserable six months as troubled US tech sector finally turns a corner
After a torrid six months, Scottish Mortgage Investment Trust has finally made a strong gain.
The FTSE 100 listed tech backer, flagship of the Baillie Gifford fund empire, is avidly followed by retail investors in the UK who want easy access to the US tech scene.
Scottish has holdings in American giants Tesla, Nvidia, Amazon and Netflix but has witnessed dramatic changes with star fund manager James Anderson leaving last year after 40 years.
Gains: Scottish Mortgage Investment Trust is avidly followed by retail investors in the UK who want easy access to the US tech scene
As well as the internal upheaval, US tech stocks sold off sharply in 2022 as inflation worries gripped the market.
But they are now back in fashion, despite several profit guidance misses, as well as thousands of job cuts and plans to dial back growth spending.
Investors have ignored the fundamentals and are instead buoyed by the fact that inflation has started to cool on both sides of the Atlantic with hopes that aggressive rate hikes by the Bank of England and US Federal Reserve may start to cool.
Amazon, Netflix and Tesla have all risen this year and analysts believe there are further gains to come.
The company also has a holding in San Francisco-based Stripe which has been tipped as a hot IPO this year.
Neil Wilson, analyst at Markets, said: ‘Is now the time to get back into Scottish? Investors seem to think so.’ Scottish was one of the top risers with shares up 4 per cent, or 298p, at 768.8p.
The gains came amid a big day for the FTSE 100 as it passed 8,000 for the first time in its history.
The blue-chip benchmark hit an intraday record of 8,003.65, before falling back to close up 0.55 per cent, or 43.98 points, at 7997.83. The FTSE 250 was up 0.77 per cent, or 154.36 points, to 20,172,59.
There was plenty of action further down the market as the drama over North Sea oil developer Capricorn Energy ended.
Stock Watch – Jubilee Metals
Jubilee Metals tumbled 18.3 per cent, or 2.1p, to 9.35p after power and water disruptions in Zambia affected the African-focused miner’s output.
Its copper production in Zambia fell 10 per cent to 1,149 tons in the six months to December, far below the targeted 3,000.
There were also power outages in South Africa, but its newly expanded facility in the country helped it produce more than 634,000 tons of chrome concentrate – exceeding the 600,000 it expected to produce.
It has pulled the plug on the proposals to merge with Israeli gas group NewMed Energy, which had been opposed by activist investor Palliser Capital and some of the company’s biggest shareholders.
The collapse of the deal represents Capricorn’s second pulled merger after the proposed £1.2billion tie-up with rival Tullow Oil was ditched in September. Shares fell 1 per cent, or 2.4p, to 246.6p.
Meanwhile Dunelm brushed aside a slump in profits to reward shareholders with a special dividend.
Profit plunged nearly 17 per cent to £117.4million in the six months to December due to the timing of its winter sale as sales also rose 5 per cent to £835million during the period.
Dunelm rewarded shareholders with a special dividend of £81million – or 40p a share. Shares inched up 0.9 per cent, or 11p, to 1180p.
Drinks bottler Coca-Cola HBC climbed 1.8 per cent, or 37p, to 2075p after City brokers Jefferies, Citi and Deutsche Bank raised its target price.
Meanwhile energy software firm Getech is on the hunt for a new chief executive as Jonathan Copus steps down at the end of this month after nearly seven years. It rose 9.4 per cent, or 1.38p, to 16p.
North Sea producer Longboat Energy has said that it will lead an operation to extract gas off the coast of Sarawak in Malaysia. Shares inched up 0.8 per cent, or 0.13p, to 15.38p.
And over at Sondrel, the semiconductor chip designer and supplier traded lower after two orders from customers in the automotive sector are expected to be completed later than hoped.
The setback came even though revenue jumped 116 per cent to £17.5million for the year to December.
Sondrel has also secured a record intake of design orders worth £25.6million.
The shares, which floated at 55p in October last year, fell 7.4 per cent, or 4.5p, to 56p.
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