Daily market update: B&M, Just Eat Takeaway, National Grid

“The FTSE 100 made a steady start to the week as German elections largely delivered the result the market was expecting,” says AJ Bell Investment Director Russ Mould.

“There were gains elsewhere in Europe as a business-friendly government under new chancellor Friedrich Merz looks to have a clear path to victory.

“How the market response develops will likely depend on whether his CDU party only needs one other coalition partner to achieve a majority – making for more stable government – or if it will need to rely on support from other parties to get policy changes through.

“European defence stocks made further gains off the back of Merz’s call for Europe to seek independence from the US – with the obvious inference that the continent needs to take more responsibility for its own security.

“Investors will be watching the US market after Friday’s sell-off on tariff fears and wider concerns about the health of the American economy. Futures markets were suggesting Monday would see a recovery, with Nvidia’s earnings on Wednesday promising to have a significant impact on market sentiment.”

B&M

“Time has run out for Alex Russo to get B&M back on track. He was meant to have steered the discount retailer to greater things since becoming CEO in September 2022, yet an approximate 9% share price decline over those two and a half years tells a different story.

“The market has lost faith in the business amid a slowdown in growth over multiple consecutive quarters. Someone had to take the blame and it’s inevitable that the CEO falls on their sword.

“Russo’s exit is framed as retirement, yet the lack of a successor and a mere two-month lead time until departure imply a different story.

“The energy has disappeared from B&M precisely at a time when it should have been thriving. The discount retail sector is highly competitive and B&M needs to do something different to get back on top.

“Consumers continue to feel the strain of higher interest rates and they’re watching every penny. As a value retailer, B&M should have been hoovering up new customers left, right and centre as they trade down from more expensive shops. It should have also enjoyed a purple patch as lower income households rely on the brand for affordable goods. Instead, the wheels seem to have come off the wagon.

“It suggests that Russo was too aggressive with earnings guidance and committed the cardinal sin of over-promising and under-delivering, and/or marketing tactics haven’t been good enough to convince shoppers they need to choose B&M.”

Just Eat Takeaway

“There remains a large appetite for consolidation in the online food delivery sector. It’s all about gaining scale. Just Eat has had its fair share of bites at the cherry, and now the tables have turned and it is being gobbled up.

“Prosus has its fingers in many pies for the online food delivery sector, owning Brazilian platform iFood, and minority stakes in the likes of Delivery Hero, Meituan and Swiggy. Adding Just Eat to its stable would give Prosus a much stronger position in Europe and an opportunity to apply its technological advancements to a business that has found life a lot harder since the pandemic ended.

“Like many industries, the online food delivery got a boost during Covid times, but reality soon hit when the pandemic faded away as demand levels eased back. That led operators like Just Eat to reassess their growth plans, offload underperforming operations and focus on fine-tuning their engine. Prosus is banking on its experience with AI as being the golden ticket to breathe new life into Just Eat.”

National Grid

“National Grid has to spend a lot of money to upgrade its electricity networks on both sides of the Atlantic and slimming down in other areas of the business has always been a component of that strategy.

“The sale of the company’s US onshore renewables business is not a rushed response to the Trump administration’s more sceptical views on green energy, but something which has been in the works for some time, having first been announced in May last year.

“The fact the company has got the deal across the line in the new political environment might be met with some relief. The price tag looks reasonable for a set of assets which made a modest contribution to the group.

“Attention may now turn to the company’s stated plan to sell its Grain LNG terminal in Kent – a proposal which attracted some controversy when it was announced over the potential impact to energy security.”

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