Must read: OpenAI, oil, Ashtead

GLOBAL MARKETS

European markets have opened mixed to lower with the CAC 40 in France bucking the negativity, trading in the green. The FTSE 100 is under pressure, dragged down by Ashtead Group (LSE:AHT) after the equipment rental company downgraded its earnings outlook. Meanwhile,  Diploma (LSE:DPLM) is at the top of the index after reporting strong annual results. 

In Asia, the Nikkei pulled back after briefly topping a 33-year high, and the People’s Bank of China kept its lending rates unchanged in November as expected. 

• Learn more: SIPP Portfolio Ideas | How SIPPs Work | Transfer a SIPP

In a rollercoaster few days for OpenAI, fired former boss and co-founder Sam Altman has been hired by Microsoft Corp (NASDAQ:MSFT)’s new AI team. Meanwhile, the former boss of Twitch Emmett Shear has taken over the CEO role at the ChatGPT maker. Despite the changes, Microsoft’s CEO Satya Nadella said the tech giant ‘remains committed’ to its partnership with OpenAI. It is understood that scientists on OpenAI’s board were concerned about the company’s pace of expansion, spearheaded by Altman and former President and co-founder Greg Brockman who is also moving to Microsoft. 

Oil is trading higher extending Friday’s 4% surge following weakness earlier last week which pushed prices to four-month lows. Gains have been spurred by reports that OPEC+ is considering extending supply cuts further into next year.  

All eyes in the UK are on the Autumn Statement this Wednesday. The Chancellor will be looking to strike a balance between keeping fiscal policy constrained to balance the books and tame inflation, versus its last-ditch attempt to drum up support from voters ahead of a looming General Election.

ASHTEAD 

Ashtead has downgraded its full-year outlook. It expects annual profit to come in around 2-3% below market expectations and lowered its US rental revenue growth forecast from 13-16% to 11-13%. The weakness has been driven by lower emergency response activity with fewer natural disasters in the US as well as the strikes in Hollywood which has negatively impacted its film and TV business in Canada. The US accounts for the majority of Ashtead’s group revenues. 

It is also faced with a full-year depreciation charge of over $2 billion and a net interest cost of over $500 million on the back of rising interest rates, weighing on its earnings guidance. However, the business has benefitted from US legislative acts from President Joe Biden as well as ‘an increasing number of mega projects.’ 

Investors have reacted badly to today’s update, with traders selling the stock heavily. Shares have suffered a double-digit percentage drop, sliding as much as 15% at one stage this morning. Today’s price action has wiped out its year-to-date gain, with shares now down over 4% since the start of January. Analysts at Peel Hunt slashed Ashtead’s price target from 6,000p to 5,000p in light of the update.