Daily market update: FTSE 100, Bunzl, Barratt Redrow, WH Smith

“The FTSE 100 was firmly lower early on Wednesday as investors reacted to the latest developments on tariffs and trade,” says AJ Bell Investment Director Russ Mould.

“A warning from AI chips champion Nvidia that it will face a $5.5 billion hit from tightened US controls on exports to China marks a new chapter in the escalating tit-for-tat between Washington and Beijing, along with Chinese restrictions on ordering Boeing jets.

“The deteriorating relationship between the two countries means China’s better-than-expected GDP figures for the first quarter may not attract too much attention given they cover a period before the Trump administration unleashed its trade policy.

“Dutch semiconductor manufacturing equipment specialist ASML also warned of tariffs clouding the outlook for this year and next as talks between EU and US negotiators failed to yield much in the way of tangible progress overnight.

“Lower than expected UK inflation opens the door for the Bank of England to cut interest rates – with the possibility that the country could see a deflationary impact from a flood of cheap Chinese imports looking for a home in the face of US import levies.”

Bunzl

“Bunzl is supposed to be a reliable stock – providing everyday essentials like disposable coffee cups to cafes and food wrap to supermarkets. It’s not supposed to pull the rug from under investors’ feet by delivering a major profit warning and abandoning a current share buyback.

“This helps explain the ferocity of the market reaction as the company’s reputation as a steady performer takes a real battering.

“The culprits behind the softer showing include a tricky environment in North America – the company’s largest business. Execution on shifting from third-party suppliers to its own branded products has not been up to scratch and, along with challenges around rising costs and deflation, have helped squeeze margins.

“It could take some time for Bunzl to reestablish its credentials as a steady performer and it faces a real challenge to get back on track given the volatile backdrop.”

Barratt Redrow

“Today’s update from Barratt Redrow will offer some reassurance to investors concerned about the impact on the housebuilding sector of tariff uncertainty and the recent end to the stamp duty holiday.

“Demand remains resilient for the company’s homes and there are signs of a modest uptick in selling prices. The benefits of the Barratt and Redrow combination are beginning to shine through too, with the company expecting to be able to keep a lid on cost inflation thanks to its increased scale. Notably rivals are already seeing costs tick higher.

“The integration process is nearing completion without having encountered any significant hiccups, no mean feat given the size of the transaction.

“Recent developments have also increased the chances the Bank of England will pull the trigger on rate cuts sooner rather than later and this should help stoke demand as mortgages become more affordable.

“While the uncertain economic backdrop could put some buyers off, the supply and demand dynamics in the UK housing market remain supportive. Barratt Redrow also benefits from a strong balance sheet which gives it strong foundations to withstand any future market uncertainty.”

WH Smith

“If there were any lingering questions about why WH Smith was prepared to let its high street operation go on the cheap they are answered in its latest first-half results with this part of the business seeing significant declines in revenue and profit.

“Shoppers may harbour some nostalgia for the WH Smith brand as a high street presence but shareholders are likely to be bidding.

“The travel business continues to perform strongly although growth has slowed a touch. The travel division benefits from a captive audience which enables it to sell its wares at premium prices in airports and rail stations.

“While acknowledging the geopolitical uncertainty and the implications this might have for global travel, WH Smith strikes a reassuring tone on the outlook and sticks with current full-year guidance.

“An area which the market is likely to watch closely is the performance in North America – the company remains effusive about the opportunities here having expanded significantly across the Atlantic over recent years.

“However, there have been signs of reduced travel to the US under the current administration and if this becomes a trend rather than a blip it could be a significant headwind for the business.”

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