Daily market update: DeepSeek, Chemring, Aston Martin Lagonda

“The FTSE 100 made a strong start to trading on Wednesday, lifted by gains for banks and mining stocks,” says AJ Bell Investment Director Russ Mould.

“This followed a rebound for Asian markets, as a rally in the Chinese tech sector resumed and copper prices moved higher as commodity traders weighed the potential impact of tariffs floated by the Trump administration.

“The biggest drop in US consumer confidence in four years put US stocks on the back foot on Tuesday and oil prices were also lower amid worries about the health of the world’s largest economy.

“The big news awaiting the markets later today is the quarterly earnings report from Nvidia. Such is its weighting and its importance to the all-pervasive AI theme, the results could have a significant impact on market sentiment.”

DeepSeek

“DeepSeek came out of nowhere earlier this year and shook markets as it offered a cheaper method of facilitating AI. It went from being an unknown brand to a household name in a flash. It’s no surprise the Chinese company now wants to make hay while the sun shines.

“Reports suggest it is bringing forward the launch of its next-generation AI model, capitalising on global interest in its capabilities. DeepSeek has a cost advantage over its rivals and that’s likely to win it plenty of custom. This could gather momentum if the new model, dubbed R2, is even better and still available at a fraction of rival offerings.

“The launch of R2 is likely to garner worldwide attention, even though DeepSeek is apparently under pressure to keep a low-profile amid concerns about its privacy practices.

“If R2 is a roaring success, it will put further pressure on big tech firms that have already spent significant sums developing their own AI models, for fear that they didn’t need to have splashed so much cash.”

Chemring

“Chemring has kept quiet on widespread speculation that US private equity firm Bain wants to take it over. However, Chemring’s AGM update has all the hallmarks of trying to convince shareholders they shouldn’t let someone come along and buy the business for peanuts.

“AGM updates are normally stale statements, with a few lines saying everything is fine and no new information will be released. Chemring’s AGM update is on another level. It lays out the company’s strategy, current trading, outlook and financial strength, and it includes a new share buyback programme, an act which always goes down well with investors.

“Chemring’s message comes across loud and clear – the business is doing incredibly well; the opportunities are tremendous and investors should be rewarded for their patience over time. The board has essentially sent a clear signal to Bain – Chemring is not for sale until there is a knockout price.”

Aston Martin Lagonda

“Aston Martin’s latest numbers won’t get investors rolling down the windows and blasting out celebratory music.

“However, news of positive cash flow in the second half might give the company enough juice in the tank while new CEO Adrian Hallmark looks to deliver on his recovery plan. The hero for Aston Martin of late has been the newly launched plug-in hybrid vehicle, Valhalla.

“The company has faced a series of speed bumps since joining the market in 2018 – making a mockery of comparisons with Ferrari at the time of its listing.

“This has left it in the last-chance saloon with long suffering shareholders. Hallmark’s suggestion that a period of new product launches is over and the company can now focus on delivery needs to be borne out by the performance in 2025.

“US tariffs are a potential threat in the months ahead and the company needs to stoke demand for its more profitable high-end models.

“Aston Martin is engaged in a round of cost cutting, but it will need more than ‘efficiencies’ if it is to get its share price motoring again.”

Metro Bank

“Metro Bank has put another tick in the box for its plans to become a more business-focused lender.

“It has struck a deal to sell a portfolio of personal loans, giving a boost to its CET1 ratio and aligning the company more towards higher yielding commercial, corporate, SME lending and specialist mortgages.

“Having returned to profitability last October, the personal loans sale is another step forward for the bank as it tries to get back on top after a patchy period.”

Stellantis

“Stellantis was stuck in reverse gear once again. Since the abrupt departure of Carlos Tavares last year, the company has lacked a permanent hand on the wheel and it badly needs to fill this position so it can start driving the business in the right direction.

“Stellantis needs to stick to the timetable of appointing someone before the end of the first half while still making sure it secures the right person for the job.

“The latest numbers are ugly, with margins at the bottom of the guidance given when warning on profit last year, and earnings were almost entirely wiped out in the second half of the year.

“The market will be aware that any new boss will want to kick the tyres on the business before committing themselves to any meaningful targets and they may well look to take the kitchen sink to guidance to give themselves a manageable bar to clear.

“That could mean the promised return to profitable growth and positive cash generation in 2025 proves overly optimistic.

“Stellantis, like the rest of the industry, is facing a difficult transition with the pace of electric vehicle adoption uncertain. Whoever comes in will have to steer a course through difficult market conditions.”

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