Daily market update: Walgreens Boots Alliance, housebuilders, Broadcom

“More uncertainty around tariffs has weighed on global stock markets,” says Russ Mould, Investment Director at AJ Bell.

“Even though Donald Trump has made more goods exempt from tariffs on Canada and Mexico, it’s the constant tinkering that’s upset investors.

“If Trump had stuck to his guns, companies could have planned adjustments accordingly and known the lay of the land. The fact Trump keeps changing his mind confuses matters as companies have no idea what’s going on from one day to the next. That also means investors are unsure how to position their portfolios.

“Wall Street endured a chaotic session yesterday with the Nasdaq down 2.6% and the S&P 500 down 1.8%. The VIX measure of volatility jumped by 13.5%, illustrating how investors are feeling nervous. Futures prices imply a small recovery on Wall Street when trading gets underway on Friday, providing some relief to markets.

“The FTSE 100 fell by 0.5% to 8,636, with only 16 stocks in positive territory. The risers’ list was topped by Melrose as it tried to bounce back from yesterday’s slump. Energy stocks BP and Shell were among the rare bright spots as oil prices perked up.”

Walgreens Boots Alliance

“The worst kept secret in the business world has finally gone public. Walgreens Boots Alliance is being taken over by private equity group Sycamore, bringing an end to a turbulent time on the stock market.

“Shares in Walgreens crashed by approximately 80% in value between 2022 and 2024 as the company’s struggles mounted up. The retail chain has battled with growing competition from online operators and low prescription drug reimbursement rates hurting its pharmacy operations.

“An attempt to sell the Boots UK operations didn’t go to plan as reports suggest Walgreens couldn’t get the desired valuation, so it gave the business a bit more attention in an effort to improve efficiencies, cut costs and put it in a better shape for the future.

“Sycamore is unlikely to keep Boots once the takeover completes. The logical route is to first find a buyer and if that doesn’t work, it might float the business on a stock market.

“The London Stock Exchange might be on a charm offensive in support of an IPO, but Sycamore will care more about making money now rather than later. Therefore, a trade sale or offloading it to another private equity company looks more plausible as a first step.

“Boots is a well-loved brand and could attract a lot of attention if it did list on the UK stock market. However, the retail sector faces considerable headwinds from higher employment costs and a potential dip in consumer confidence. Therefore, it might be better to wait until the outlook improves before pursuing a listing, should Sycamore go down the IPO demerger route.”

Housebuilders

“Housebuilders seem to be breathing a sigh of relief after the latest UK house price figures. The market has stalled but not slumped as the stamp duty holiday approaches its end.

“While the latest Halifax figures were below expectations, they were hardly a disaster. While the tailwind as people rushed to beat the deadline has now played out, the country’s supply and demand dynamics can continue to support property prices.

“A fragile recovery in the housebuilding space needs support from a resilient market as the sector contends with pockets of inflation in build costs.”

Broadcom

“Context can be key when looking at how the market reacts to a set of earnings and that’s certainly the case with US chip designer Broadcom. Its shares have surged in pre-market trading despite significant weakness among US tech stocks in recent days.

“This is testament to how much investors liked the company’s latest statement and, in particular, the better-than-expected revenue and confident outlook on the AI theme. This was in stark contrast to rival Marvell Technology, which reported disappointing earnings on Wednesday, and to how Nvidia’s recent numbers were received.

“Its latest statement suggests Broadcom is taking the battle more strongly to Nvidia, having been left in the latter’s shadow over the last couple of years.

“Broadcom is benefiting from strong demand for the specialist chips co-designed with customers – offering the sort of bespoke solutions which may see increasing demand as the complexity of AI ramps up.

“The company is also diversified across both software and semiconductors. To date, the AI story has largely been about the infrastructure but that could shift over time – with Broadcom pushing into areas like the tech which connects chips within a data centre.”

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