The FTSE 100 was today set for another calm start to trading although shares in HSBC and GlaxoSmithKline could see some volatile moves.
Reports this morning said Elliott, the activist investment fund which recently took a big stake in GSK, was not looking to take some of the radical actions markets had speculated.
The Times newspaper reported that Elliott would not be pushing for a forced sale of the company’s core vaccines or pharmaceuticals businesses. Speculation that it might push for such a sale has caused concerns in Westminster due to GSK’s “national champion” status.
Elliott has also said it will not push for a cut in research and development spending, a move analysts at Citi had suggested it might demand.
This leaves Elliott’s options limited, and could lead to GSK’s shares to fall somewhat today. It could even result in investors taking the view that the secretive hedge fund simply saw a stock that had fallen further than it deserved and decided to take a punt on the shares rising.
Elliott does not always shake up every company it invests in, sometimes using its firepower simply to buy into undervalued companies in the hope that sentiment will warm towards them.
At HSBC, the banking giant exited the bulk of its US retail and small business banking operations as the group continues its push to focus on Asia.
The bank has said it will exit 90 of its 148 branches in the US and has struck deals to sell operations to Citizens Bank and Cathay Bank. A further 35 to 40 branches will wind down.
The news will not come as much of a surprise to investors but could be welcomed as evidence that chief executive Noel Quinn is making good on his strategy to sharpen focus on Asian wealth management and rid the company of unnecessary distractions.
Such stories will provide some interest to stock investors on a session that promises to be fairly quiet for followers of the FTSE 100 Index. The FTSE was being called up just 1 point at 7023 by traders on the IG platform.
Asian shares were slightly down this morning in a retreat from the two week highs they had been marking. Sentiment was still being buoyed by the words of Richard Clarida, US Federal Reserve vice chairman, earlier this week that inflation pressures would “prove to be largely transitory”, suggesting no imminent tapering of Fed support for the economy was likely.
Nerves remain, though, that the central bank will have no option but to act if the US economy continues heating up as it is.