Daily market update: BP, Entain, OpenAI, Dunelm, Bellway

“The FTSE 100 was nudged into positive territory by a mix of industrials, financial stocks and retailers,” says AJ Bell Investment Director Russ Mould.

“US president Donald Trump’s move to impose sweeping steel and aluminium tariffs had earlier led to tetchy trading in Asia. The administration is clearly prepared to implement tariffs rather than just using them as a negotiating tactic but, as the delay to tariffs on Canada and Mexico shows, negotiation is possible.

“For them to be an effective tool the administration needs to keep everyone guessing and this creates uncertainty for financial markets.

“Imperial Leather maker PZ Cussons’ latest numbers may not have a clean bill of health but there were enough positive areas to impress the market. A beaten down share price also meant investors were of a mind to give the company the benefit of the doubt.

“PZ Cussons has been beset by challenges relating to its Nigerian business and the devaluation of the country’s naira currency. A stabilised situation and a strong showing in other geographies gave shareholders some hope the worst of its problems are behind it.”

BP

“BP’s latest earnings provided plenty of fodder for activist investor Elliott after reports it had built a stake in the business. The worst annual profit since the pandemic will have done little to reassure other shareholders that the current plan is working.

“Murray Auchincloss said the right things about increasing cash flow and returns and a ‘new direction’ for company ahead of what is turning into a crunch investor day later this month.

“The market has heard a lot from BP about strategy and vision – it wants to see action. This might include abandoning a target to develop 50 gigawatts of renewable energy capacity by 2030.

“It’s not just the renewables and clean energy businesses whose position within BP looks uncertain. The company’s refining business chalked up a pre-tax loss in 2024 as margins collapsed.

“With its back against the wall, BP clearly believes it needs to keep doling out cash to shareholders to keep them on side but its large debt pile and the need to fund any strategic reset means there is a risk it may have to scale back these returns.

“A clear and credible plan is desperately needed if BP is going to remain the master of its own destiny.”

Entain

“Something must have gone seriously wrong for Entain’s chief executive Gavin Isaacs to leave after just 161 days in the job.

“The first thing an investor would study in this situation is the messaging on trading and the share price performance. Trading is in line with expectations and the stock is higher than when Isaacs started, which suggests something else is afoot.

“One could speculate that Isaacs didn’t fit with the culture of Entain or that he didn’t see eye to eye on strategy. It’s worth noting that previous Entain boss Shay Segev only lasted 189 days in the top job in 2020-21, so the gambling group has form when it comes to short-lived leadership.

“Isaacs’ sudden departure has clearly spooked investors given the near-10% slump in the share price. While Entain’s chair Stella David is steadying the ship as interim CEO, the lack of a permanent boss makes the group vulnerable if a rival betting group or private equity outfit came sniffing around for takeover opportunities.

“The business has been trying to find its footing after losing its way and now it’s been knocked off course once again thanks to boardroom issues. Entain really needs to find someone with bold ideas, a keen eye for detail and a grand vision to put the gambling group back on a winning streak.”

OpenAI / Elon Musk

“Not content with his new role helping the US government become more efficient, Elon Musk continues with his quest to build his ‘tomorrow’s world’ empire. Having already got space technology, self-driving cars and neurotechnology under his belt, it’s only natural that Musk wants a giant in the world of AI tools in his portfolio. Given he helped to co-found OpenAI, the company is a natural target for the world’s richest man. There is also an ego element at play – Musk has fallen out with fellow co-founder Sam Altman and buying OpenAI would be the ultimate way to get back at him.

“Musk left OpenAI before it really took off, but he’s almost certainly watched every move over the past few years as the AI movement has soared. Musk appears to disagree with OpenAI’s strategic shift from being a non-profit entity to one with commercial goals. Part of his rationale for wanting to own OpenAI is to return it to an open-source model, implying that the business should go back to its roots and use its technology to benefit humanity. However, OpenAI last year implied that Musk pushed hard for the company to be for-profit when he was still involved.

“Altman has turned down Musk’s offer, but it’s not entirely up to him. OpenAI is owned by a group of investors including Nvidia with the largest stake being held by Microsoft. It’s fair to suggest that Musk won’t be the only party interested in owning the AI group and his consortium-backed offer might simply be the firing gun on what could become a full-blown bidding war for the group.”

Dunelm

“Dunelm is swimming in mud. Profit growth has ground to a halt as the retail backdrop deteriorates and consumers continue to watch every penny. Value-oriented retailers are struggling in this climate as lower-income individuals buckle under the strain of relatively high interest rates and a deteriorating jobs market.

“Dunelm appears to be doing everything it can. Margins are holding up, which implies it is avoiding widespread discounting, and it continues to take market share. It’s the best it can do under the circumstances until the backdrop improves.

“Chief executive Nick Wilkinson’s departure isn’t anything to worry about. He has helped to transform the business into one that now has a strong digital proposition and a solid store estate. If anything, he’ll be sorely missed by investors.

“His replacement – once appointed – will inherit a business with the right foundations to keep growing. Unlike many leadership changes in retail, Dunelm is not a turnaround story that needs someone new to steady the ship.”

Bellway

“Bellway remains a long way from building back margins and volumes towards their recent peak in 2022. Yet the company seems to be keen to seize on any positive signs and notes encouraging levels of customer enquiries and reservations.

“The UK property market currently has the feel of a toddler which has been given too many sweet treats as the looming hike in stamp duty thresholds encourages buyers to conclude transactions before the end of April. Parents know what typically follows a sugar rush and investors are similarly wary of a potential sluggishness post-April, judging by the reaction to Bellway’s update.

“The mortgage market is still unhelpful for Bellway, given rates have gone up with gilt yields despite interest rates coming down, and the business and the wider industry are seeing building cost inflation tick higher again.

“Investors were more impressed by the resilient performance at MJ Gleeson which has average selling prices of less than £200,000. This relatively low price point could prove attractive to a larger cohort of buyers if mortgage costs remain elevated, although the company did see profitability take a hit as it offered buyer incentives in the second half of 2024.”

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