Daily market update: Diageo, Palantir Technologies, Vodafone, Crest Nicholson

“There are more twists and turns to the tariff situation than a theme park rollercoaster,” says Russ Mould, Investment Director at AJ Bell.

“One minute we’ve got eleventh-hour deals to temporarily halt tariffs on Mexico and Canada, and the next we’ve got China flexing its muscles and showing it isn’t a pushover.

“China has hit back at tariffs imposed on its goods imported into the US by saying it would retaliate with its own tariffs. It’s like two cats screaming at each other in the street, tails puffed up and fangs on display.

“Donald Trump has shown he is prepared to stand his ground until the other side either agrees to his demands or reaches a compromise.

“There is an indication that Trump will hold talks with Chinese president Xi Jinping later this week. That conversation will hold the key to whether they reach a middle ground or we get a repeat of heightened tensions between the two countries omnipresent during Trump’s first term as US president.

“Markets have shown some nervousness around the prospect of a trade war, yet it doesn’t look like we’re going to have another truly miserable day. Equity indices were only slightly down in Europe, pockets of Asia rallied sharply, while futures prices imply a fairly quiet day on Wall Street. It suggests that investors are digesting the tariff developments one step at a time, and the fact Mexico and Canada tariffs were postponed after last-minute talks helps to create some sense of calm. Whether this is lasting peace or the calm before the storm remains to be seen.

“The FTSE 100 dipped 0.6%, with the UK index dragged down by a miserable market reaction to Vodafone’s trading update, Diageo withdrawing its forward guidance, and a weaker oil price weighing on Shell and BP’s shares.”

Diageo

“Diageo has had precious little good news to toast so far in 2025. First the threat of having to include cancer warnings on its drinks labels emerged and now the company has withdrawn its medium-term guidance.

“It becomes one of the first companies to move beyond vaguely discussing the threat posed by US tariffs to actively talking about the impact and how it will attempt to mitigate it. Diageo imports from Mexico and Canada account for a good chunk of its US sales so it will be relieved to see the imposition of tariffs for these two countries delayed for now.

“If tariffs are eventually imposed then it will be a test of Diageo’s pricing power to pass on these extra costs to consumers. The financial results themselves weren’t outstanding, even though group revenue came in slightly ahead of forecasts. The dividend was held flat, in a sign of the uncertain outlook and big spirits brands like Tanqueray, Gordon’s and Smirnoff sales all under pressure.

“The outlier is Guinness which is having a good moment. This may only fuel speculation, so far dismissed by Diageo, about a spin-off or sale.

“One thing is for sure; CEO Debra Crew remains under pressure to come up with something to revive the group’s fortunes amid the threats posed by shifting drinking habits among younger generations and the impact on alcohol consumption of the adoption of weight-loss drugs.

“Since taking the helm in July 2023, Crew has seen Diageo shares lose 30% of their value to trade close to pandemic lows.”

Palantir Technologies

“Data analytics group Palantir smashed earnings forecasts with its latest quarterly results, with chief revenue officer Ryan Taylor calling 2024 ‘nothing short of incredible’ for the business.

“It’s yet another company to be riding the AI wave, benefiting from multiple industries pressing the button on big investment to improve their technological capabilities. From military and healthcare to transport and mining, Palantir is helping clients across a wide range of sectors to address problems previously deemed too complex to handle.

“Having generated a 341% return for shareholders in 2024, investors are now wondering if Palantir is the new Nvidia as the tech stock with the ingredients to keep delivering supersized gains.

“It has already achieved 10-bagger status based on the share price growing 10-fold over the past two years. We’ve now got another 23% rise for the share price in pre-market trading following the Q4 results. Excitement is clearly bubbling up, but the devil is always in the detail and any investor with FOMO should make sure they’re comfortable with what the company does, where it operates, and recognise that the valuation is richer than Granny’s chocolate cake.”

Vodafone

“Vodafone’s long decline shows no sign of letting up. While there are some reasons for encouragement in the UK market ahead of the now-approved merger with Three, and robust performance in other geographies too, the market has tuned these out and is focused on the growing problems in its German operation.

“This is understandable given it is the company’s single largest market and the impact of regulatory changes affecting television services continues to mount up.

“Vodafone is struggling to remain relevant and asset sales and mergers will only take it so far. The company will hope to win investors over with share buybacks this year but, again, it needs to demonstrate it can achieve sustainable growth. Until then, everything else it does looks like tinkering at the edges.”

Crest Nicholson

“The past year or so is not working out the way Crest Nicholson and other housebuilders would have hoped. As inflation was brought under control and the political situation in the UK stabilised, they would have been expecting an improved outlook, with growing consumer confidence and rate cuts supporting demand for new homes.

“Instead, rates have remained stubbornly high and economic clouds have gathered, all while material and employee costs are moving higher. The implications for margins are obviously unhelpful and, once you add internal failures in the business to the mix, it adds up to some shaky foundations.

“This is the context recently appointed CEO Martyn Clark has been thrust into. The company’s results were so bad that it is at risk of breaching banking covenants. Fire safety remediation measures were also notably higher which helped push the business into a sizeable loss.

“Clark’s first job is to stop the rot and investors will be looking for signs he has stabilised things when Crest next updates on its performance. Only then can he start to build towards a genuine recovery.”

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