FTSE retreats, AstraZeneca upgrades guidance, Shell wins climate appeal, Vodafone weighed down by Germany, BAE sticks with guidance, DCC break-up and Bitcoin nears $90,000

“The FTSE 100 had a weak start as most sectors were in the red apart from energy and healthcare,” says Russ Mould, Investment Director at AJ Bell.

“HSBC was the biggest anchor on the index, joined by Unilever, GSK and RELX. Sentiment seemed patchy across the board as investors continued to spend time digesting the implications of a Trump administration. Despite the initial excitement upon the election result last week, investors are starting to realise that Donald Trump’s ideas could drive up inflation, make life tough for foreign companies selling into the US, and raise geopolitical risks. It creates the kind of uncertainty which markets hate.

“Two FTSE 100 stocks that rarely get much attention had their moment in the sun. ConvaTec and DCC were both in touching distance of 20% stock price gains, a highly unusual movement for the shares. ConvaTec soared after lifting 2024 guidance, helping to claw back half of the share price losses since March. DCC saw its shares rise 17% after saying it would get ready to sell its healthcare arm and potentially do the same for its technology business afterwards.”

Astrazenaca

“After a few setbacks with drug trials and the detention of its head of business in China, it was about time AstraZeneca served up some good news.

“While raised earnings guidance, positive trial data on a neurofibromatosis treatment and a multi-billion-dollar investment in the US should have given the shares a shot in the arm, investors weren’t won over.

“The China issue revolves around allegations about the importation of its cancer drug Imjudo, which hasn’t been approved for sale in the country, medical insurance fraud and personal data breaches. AstraZeneca said it would fully cooperate with the authorities, if requested. The uncertainty around this issue is likely to hang over the shares until the matter is resolved.

“It’s an unwelcome situation for the business, but the pharmaceutical juggernaut will keep on trucking. It has a large portfolio of drugs at different stages of their development and the end goal is to find treatments that will help people and generate the earnings of tomorrow. AstraZeneca has a good track record of success in the laboratory or acquiring biotech firms that bring new treatments to its portfolio.

“Spending big bucks in the US should put AstraZeneca in a good light from the perspective of Donald Trump and his policies to create more jobs in the country. We don’t know the precise details of how tariffs would work under his new administration, and which products they would be applied to, but the idea of a British business spending $3.5 billion to set up new research and development facilities and additional manufacturing capacity is surely music to the ears of the president-elect who wants more done on US soil. It also helps that the US is a prime location for AstraZeneca, accounting for 44% of its total revenue.”

Shell

“Shell’s successful appeal against a court ruling in the Netherlands, overturning a ruling which demanded it must sharply reduce carbon emissions, feels loaded with symbolism.

“When the original ruling was handed down in 2021, the focus was on the ESG agenda and Shell was already committed to the transition even if it wasn’t shy in criticising the court’s decision.

“The impact on oil and gas markets of Russia’s invasion of Ukraine has shifted priorities towards energy security and under CEO Wael Sawan there has been a hardnosed focus on profit today over transition tomorrow.

“The issue hasn’t gone away entirely, given the climate groups which brought the original case are likely to bring their own appeal to the Netherlands’ Supreme Court, which perhaps explains why Shell shares haven’t budged much today.

“Sawan is trying to get Shell to play catch up with US counterparts which have streaked ahead in valuation terms. The company’s long-term strategy of expanding in natural gas is paying off, with gas seen as a bridge between more polluting fossil fuels like coal and oil and renewables.”

Vodafone

“Vodafone may be writing off the current financial year as one of transition but it’s a message shareholders have received a lot in recent years and patience is wearing thin.

“Quarterly performance was marred by a weak showing for its German business, its biggest market, where a previously flagged issue around the government barring housing associations from bundling TV with rent is impacting performance.

“Chief executive Margherita Della Valle’s turnaround plan is close to fruition with the sale of its Italian business expected to follow on from May’s divestment of its Spanish operations early next year and the merger with Three in the UK looking close to clearing regulatory hurdles.

“Once these elements of the turnaround are complete, the market is likely to be less forgiving of poor performance. This places a lot of emphasis on the company fixing its problems in Germany and achieving a level of wider consistency which has escaped the business for years.

“Dialling up growth won’t be easy for Vodafone but it is what’s required after years of the shares drifting lower. Less mature markets in Africa present an opportunity, with the company expanding at a decent clip.”

BAE Systems

“The increasingly uncertain geopolitical backdrop remains a strong driver of profit and revenue for BAE Systems and the company is sticking with the upgraded guidance from August’s first-half results.

“That’s underpinned by a strong flow of orders and it maintains the extraordinary trajectory of the business since Russia’s 2022 invasion of Ukraine, since which its share price has more than doubled.

“The company is experiencing some currency headwinds, although the resurgence in the dollar since Donald Trump’s election success is likely to see these ease a touch in the remaining weeks of 2024.”

DCC

“DCC has realised there is merit in focusing on what you do best rather than having fingers in many pies.

“The healthcare, technology and energy conglomerate has done well over the years, yet its share price hasn’t made a lot of progress. In this situation, it’s inevitable that the board looks at options for the business and a break-up of DCC is now on the cards.

“The focus will now be on the energy arm as this is the group’s biggest profit engine and generates the highest returns.

“Investors and analysts will be busy doing the maths, trying to work out what the individual components of DCC could be worth and seeing if that justifies taking a position in the shares now in hope that the healthcare and technology arms are sold for a lot more than is currently attributed by the market.”

Bitcoin

“Bitcoin has had the time of its life since Donald Trump won the US election. Investors and traders have piled into the cryptocurrency in the belief the president-elect will loosen regulations and build a strategic reserve of bitcoin.

“The price appreciation is being fuelled by FOMO – fear of missing out. The price has gone from $68,317 to $89,728 in a week, the kind of rapid gains most investors can only dream of.

“The more the price goes up, the more publicity bitcoin will get, and the more it will get on the radar of people looking to make money. This can’t go on forever, but it certainly feels like a purple patch for now.”

These articles are for information purposes only and are not a personal recommendation or advice.