FTSE stands tall despite Shell disappointment, Flutter warning pulls down Entain, Johnson Matthey steps up fight against activist, Hornby gives Mike Ashley some festive joy and Samsung misses expectations

“The FTSE 100 held firm despite headwinds from Shell’s disappointing update and a sell-off in the utilities sector. Financials came to the rescue, with investors bidding up banks and shares in London Stock Exchange,” says Russ Mould, Investment Director at AJ Bell.

“A 0.1% rise in the UK index should be taken as a win coming straight after a miserable session on Wall Street. The Nasdaq gave up 1.9% while the S&P 500 fell 1.1%. Importantly, the Vix measure of volatility in the US jumped by 11% which implies that investors are biting their nails at the start of the new year.”

Shell

“Shell’s leading position in liquefied natural gas is a key attribute which makes it stand out from its peers so news of reduced LNG production and volume guidance in the final three months of 2024 is disappointing for the market.

“The company’s usual teaser ahead of its quarterly results will have done little to whet appetites for the main event, with its trading business also in the mire and the timing of payments for emission certificates and an airline fuel duty payment in Germany hitting cash flow and working capital.

“These aren’t the kind of messages CEO Wael Sawan wants to be delivering to the market at a time when he is desperately trying to close the valuation gap with Shell’s US peers.

“The commodity price backdrop wasn’t helpful for Shell in the last quarter of 2024 but oil prices have been gaining ground in the early weeks of 2025 amid declining OPEC production and continuing signs the US economy remains robust.”

Flutter / Entain

“Customers have cleaned up from bets on US sporting events, causing Flutter to issue a warning about a hit to earnings and triggering a sell-off in its shares. London-listed rival Entain also fell in sympathy as investors fretted that it too might upset with its next round of earnings.

“America was meant to be the land of opportunity for Flutter but it hasn’t quite worked out that way since moving its primary listing to New York last year. Downgrading US revenue and earnings estimates is a disappointment for the company and it will no doubt focus management’s minds on finding new ways to get back on top.

“There is a phrase in the gambling sector that says, ‘The house always wins’ and while this wasn’t true for Flutter in recent months, the company will be hoping it reverts to form as soon as possible.”

Johnson Matthey

“When an activist investor and its target are publishing correspondence publicly, you know relationships are particularly strained between the two parties. Such is the case with Johnson Matthey and shareholder Standard Investments.

“Having published its second open letter within a month to Johnson Matthey, Standard Investments yesterday warned it was going to seek support from other shareholders to drive change in the chemicals business.

“Johnson Matthey has now made its most recent private letter to the activist public, but it doesn’t add much apart from reiterating progress in reviving the company, and that it is happy to meet the activist in person to discuss governance matters.

“The clock is ticking before Standard Investments turns angry and makes tougher demands on the business. Johnson Matthey’s chief executive Liam Condon will be squirming in his seat as he already has enough on his plate without having to deal with activists. Time is running out to show tangible evidence of progress, otherwise his days with the company could be numbered.

“Standard Investments may only have an 11% effective stake in Johnson Matthey but it is noisy. Johnson Matthey’s board needs to either make a more convincing argument for the activist to back down or bow to its demands and enforce change. Judging by the ongoing share price weakness, the market appears to have little faith in the current strategy so might welcome the activist rallying the troops and getting the big shareholders on its side.”

Hornby

“Mike Ashley gets frustrated when things are derailed so he’ll be pleased that Hornby’s turnaround efforts are finally chugging along.

“Frasers owns 9.25% of the toy train company, which has reported a decent end to 2024. Progress looks encouraging with an increase in first-time customers, higher margins and lower net debt.

“Hornby is not going to be fixed overnight but it is encouraging to see the business is finally on the right track.”

Samsung

“After a terrible 2024, it seems the market is prepared to give Samsung the benefit of the doubt. Yes, its fourth-quarter numbers were short of expectations but a 25% share price fall over the last 12 months means there’s a lot of disappointment in the price already.

“Investors are looking through to the potential for a recovery in chip demand. Samsung’s faltering efforts to stay relevant in the AI push were given some credibility by positive comments from Nvidia CEO Jensen Huang at an industry event in Las Vegas.

“AI matters for Samsung because demand for traditional chips used in personal computers and smartphones is under pressure. Samsung has been put in the shade by compatriot company SK Hynix on this front and is also facing competitive pressures around its mobile business. The launch of a new flagship phone later this month could be key for the company.”

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