Daily market update: GSK, Novo Nordisk, automotive sector, luxury firms, SSE

“A sense of calm returned to markets after the tariff-related tantrum. Wall Street recorded decent gains last night while Europe held firm this morning,” says Russ Mould, Investment Director at AJ Bell.

“The elephant in the room remains China as Donald Trump has not backed down from a trade spat. Retaliation is underway and that’s led to the cancellation of a meeting between the two country leaders.

“The decision by the US Postal Service to stop accepting parcels from mainland China and Hong Kong shows the severity of the matter. That’s disastrous for big Chinese e-commerce platforms that send goods to the US including Shein and PDD-owned Temu.

“PDD has already seen a share price wobble around tariff fears but bounced back yesterday. Western retailers might secretly welcome the move as it temporarily removes the type of competition that has undercut them on price.”

GSK / Novo Nordisk

“The pharmaceutical sector got a shot in the arm after well-received results from GSK and Novo Nordisk.

“GSK has upgraded its medium-term sales guidance and reported a decent showing from its speciality medicines arm. Guidance for higher dividends in 2025 and the launch of a new £2 billion share buyback programme are the icing on the cake. That’s the biggest buyback for GSK since 2013 which is significant and suggests the business feels it is in strong financial shape.

“It’s hard to ignore the lacklustre performance from its vaccines arm. Sales weren’t great in 2024 and they are guided to stay in the sick bed for 2025 with a further decline in turnover. GSK needs to find a way to get back on top with vaccines, otherwise investors are going to lose faith in the business.

“Novo Nordisk smashed it out of the park with its results, once again driven by weight-loss drugs. Sustaining momentum could be more challenging, with the company having guided for lower sales growth in 2025.

“There is growing pressure on Novo Nordisk to improve the efficacy of its weight loss drugs as investors and users are yearning for a reduction in side effects and a more powerful treatment. Crack the formula and Novo Nordisk will be on a stronger path to greatness. There has been progress, but the market has high expectations and they haven’t been met yet.”

Automotive sector

“Whatever you say about the automotive sector right now, it is not boring. After the week started with European carmakers staring down the barrel of tariffs from the Trump administration, there is now the news that Nissan’s merger with Honda is falling apart.

“Honda executing a three-point turn to propose Nissan becomes a fully owned subsidiary rather than bringing both names together under a jointly owned holding company means already fractious talks on the tie-up may have run out of road.

“Nissan’s negotiating position hasn’t been helped by its weak financial performance which has seen its market value plummet.

“Elsewhere, Toyota is in an acceleration phase after upgrading its full-year profit forecast and announcing plans to expand in China.

“While the West struggles with the transition to electric vehicles, China is pulling ahead in terms of adoption and Toyota has a bold plan to capture share in this market with plans to build a Lexus factory in Shanghai.

“Domestic electric vehicle makers have managed to undercut their global counterparts in China but Toyota clearly feels it can compete and, unlike some rivals, it has a strong balance sheet to underwrite its expansion strategy.

“The company has been well placed thanks to its focus on hybrid vehicles which are proving popular with motorists in the West beset with range anxiety about EVs, however there are signs this hybrid boom is starting to ease.”

Luxury firms

“After yesterday’s downbeat update from Estée Lauder which warned of tariff impacts, slow demand in Asia and significant job cuts, there is a more positive update from Danish jewellery firm Pandora.

“This reflects the uneven nature of the luxury sector with certain companies doing well while others are in the doldrums.

“For now, the US appears to be a strong market for luxury goods. Pandora’s above guidance organic growth was supported by robust sales across the Atlantic. The modest market reaction to the company’s optimistic tone likely reflects a previous strong run for the share price.

“Sales were flat in Europe and Pandora will be wary of being boxed in if the current strength in US spending begins to tail off.”

SSE

“The multi-year nature of SSE’s renewable energy strategy means judging it on an individual trading statement is hard.

“There is little to power up the shares in the latest update but nor is there anything to cause a big outage for the company.

“Having aligned itself with the UK’s clean energy policy, SSE should be well positioned for as long as that remains in place.

“While it is a positive that favourable weather and increased capacity helped to boost renewable energy generation in the current financial year, it is also a reminder that SSE is at the mercy of increasingly unpredictable meteorological conditions in the UK.

“The company managed to respond quickly to the impact of Storm Eowyn but it is likely to have more of these types of event to contend with in the future.

“While SSE waits for the benefits of its long-term investment plan to come through, it will need to balance capital expenditure plans with rewarding shareholders for their patience with a steady stream of dividends and buybacks. This puts an onus on financial discipline and ensuring the costs on individual projects do not overrun.”

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