FTSE 100 lifted by higher oil prices and strong results, Tesla impresses, Ashley makes bid to lead Boohoo, Unilever sales shine and Barclays profit beats expectations

“Higher oil prices and some good corporate results helped UK stocks to strong gains on Thursday morning,” says AJ Bell Investment Director Russ Mould.

“Oil was higher amid continuing tensions in the Middle East with observers wary of an impact on supply. This lifted heavyweight energy stocks BP and Shell and their significant weighting in the FTSE 100 meant the index slightly outperformed other European indices.

“PMI data from the US manufacturing and services sectors will offer some insight into how the American economy is doing less than two weeks out from a tight presidential election.

Tesla

“Tesla bounced back from the underwhelming launch of its Robotaxi with a strong set of third-quarter earnings. A reminder that, for all its recent challenges, it is one of the few operators to genuinely make the manufacture of electric vehicles pay.

“These numbers represent a return to form after an underpowered second quarter when profitability dropped sharply amid mounting competition from cheaper models produced in China.

“There is clearly still decent appetite for electric vehicles, even if it is not coming through as rapidly as some hoped, thanks to the higher ticket prices than traditional vehicles and so-called ‘range anxiety’.

“Significantly, Tesla announced its beleaguered Cybertruck had achieved a positive gross margin for the first time. The next key test for Tesla is to hit its targeted year-on-year increase in vehicle deliveries for 2024 which will require a pretty sizable acceleration in the remainder of the year.

“It will be interesting to see if founder Elon Musk’s avowed support for Donald Trump ahead of the election has any impact on demand for Teslas among those with different political leanings.”

Boohoo

“After a period out of the spotlight it looks like Mike Ashley could be returning to the frontline of retail as Frasers uses its stake in Boohoo to call for a vote on him being appointed as its new CEO.

“Ashley has left the day-to-day running of Frasers to his son-in-law Michael Murray since 2022 but today’s news suggest he is itching to get back to the coalface and, if his bid to lead Boohoo is successful, it’s unlikely to be a quiet tenure.

“Boohoo is vulnerable amid the news CEO John Lyttle is set to step down and the ongoing strategic review which could see the business broken up. Given the mess Boohoo has got itself into it could take all of Ashley’s nous and experience to turn things around.”

Unilever

“It’s an easy headline to suggest that since Unilever dialled down its commitments to going green and increasing diversity its fortunes have turned but, coincidence or not, things are definitely improving for the consumer goods giant.

“A little over a year into the job and CEO Hein Schumacher has made genuine progress with the business. This is reflected in today’s slightly better-than-expected third-quarter sales.

“This performance has been built on improved product innovation but also slowing down price increases. This helps explain why the company expects margin progression to slow overall in the second half of the year.

“Unilever faces a tricky balancing act between protecting its profitability and not alienating shoppers. This is a particular risk in developed markets where customers have the option of trading down to generic alternatives but less of an issue in emerging economies where these kinds of options are not readily available.

“Schumacher’s shake-up of the business continues to progress with the sale of the ice cream division on track to complete by the end of next year.”

Barclays

“Barclays’ big beat has got investors excited, with the shares adding to the significant gains already made in 2024 in early trading.

“In previous quarters the company’s investment banking operation was doing a lot of the heavy lifting but in the three-month period just gone its consumer and corporate banking arms have come to the party too.

“Critically, the company is guiding the market higher on the key net interest income metric – with the company benefiting from its management of interest rate risk. Barclays, like the rest of the industry, has also been helped by the slower-than-expected trajectory of rate cuts to date.”

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