Daily market update: Lloyds, Centrica, Anglo American

“The FTSE 100 started Thursday modestly in the red as some big names on the index traded without the rights to their upcoming dividends,” says AJ Bell Investment Director Russ Mould.

“Overnight US shares had an uneventful session, while Asian shares largely fell amid continuing nervousness about the impact of US tariffs.

“Figures from the British Retail Consortium show UK consumer confidence slipped, notably for a fifth month in a row, as people fret about higher energy prices and the impact of Budget changes.

“The release of US unemployment claims data will give some insight into how the jobs market is holding up across the Atlantic – a key consideration in the decision-making of the Federal Reserve.

“Mercedes was stuck in reverse as it warned of a big potential hit from tariffs and announced plans to cut costs. Like much of the industry it is struggling with uncertain demand for electric vehicles.”

Lloyds

“The more positive response to Lloyds’ full-year numbers compared with its immediate peer group is less a reflection of the results themselves and more related to the fact it had lagged behind its rivals heading into this earnings season.

“A significant increase in provisions associated with motor finance mis-selling is unlikely to have caught investors on the hop. However, the fact the government’s attempt to intervene on lenders’ behalf was rejected by the Supreme Court is obviously unhelpful and the increased provision meant profit came in below forecasts.

“This issue remains a lingering uncertainty for the business ahead of the latest hearing in early April but the decision to sanction a sizeable share buyback and deliver a healthy increase in the dividend suggests management are not overly concerned.

“The short- and medium-term outlook for returns is in line with previous commentary from the company and the key net interest margin was a smidge ahead of previous guidance. Lloyds will be hoping for a Goldilocks scenario where rates stay high enough to support margins and the economy remains in decent enough shape that the level of bad debts doesn’t start to escalate from here.”

Centrica

“A bumper 2023 was always going to be a tough act to follow for Centrica and, sure enough, profit and revenue were sharply lower in 2024 as energy markets normalised and a one-off recovery of costs in its British Gas division didn’t, as implied, repeat.

“However, it’s all about expectations for the market and Centrica came in ahead of what had been pencilled in, which, along with retaining its 2025 forecast, was sufficient to get investors energised. The company is still throwing off a decent amount of cash and has a strong balance sheet which has allowed it to serve up further generous returns to shareholders.

“While it has had the odd brush with controversy over the significant profits it enjoyed after the energy price shock which followed Russia’s invasion of Ukraine, Centrica does seem to have fixed the roof while the sun was shining, making the business more resilient and well-resourced than it was before 2022.

“There may be some frustration at the lack of any update on the company’s potential investment in the Sizewell C nuclear plant ahead of the final investment decision in May.”

Anglo American

“Results from Anglo American feel like a sidebar to the rapid transformation the miner is undergoing. Just this week it firmed up plans for the demerger of its platinum operations as well as confirming the sale of its nickel arm.

“The company has already sold off its steelmaking coal business and there was a reminder in these numbers about why the company is keen to get shot off its De Beers diamond business.

“The problem is, the situation is so bleak, as the market for precious stones has come under pressure and lab-grown diamonds have flooded the market, therefore Anglo reckons its hopes of finding a buyer in the near term are slim.

“While a De Beers related write-off pushed Anglo into a loss for 2024, investors were prepared to focus on the rapid progress the company has made since rebuffing a bid from BHP last year.

“A more streamlined outfit, with a focus on key metals like copper and iron ore as well crop nutrients, is finding more favour with the market but it could also make the company vulnerable to further bid interest.”

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