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WPP Invests in AI to boost margins

CONSUMER CYCLICALS

Rates +4 on the Spain Inflation miss; -0.2% M/M (vs -0.6% cons and 0.0% prior) our rates analyst saw electricity as the largest contributor to the skew higher - Spain had a 11% weight in '23 Eurozone HICP. Equities flat on the open, ~€IG index unch.

Biggest gain in equity eqv's coming from WPP (+6%) the advertising house, after its capital markets day this morning which included a FY24 guidance & investment plans. Its focusing on AI; "annual cash investment of around £250m in proprietary technology to support our AI and data strategy" while targeting cost savings to help improve FY24 margins; "target c.£175m gross savings from efficiency opportunities across both back office and commercial delivery which will be used to invest in growth and support delivery of our medium-term margin target". Only colour we see on BS strategy is "disciplined approach to capital allocation with continued organic investment, a progressive dividend policy and a disciplined approach to M&A supported by a strong balance sheet and an investment grade credit rating."

Its cash curve (Baa2/BBB; stable) is streaming unch to-10bps tighter this morning. It reports FY23 results on the 22nd of Feb.

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