Daily market update: AstraZeneca, HSBC, BP, Associated British Foods, Entain

“Banks, defence and miners did their best to lift the FTSE 100, yet the negative pressures were too great from pharma and energy stocks for the UK index to make any headway,” says AJ Bell Investment Director Russ Mould.

“A significant amount of corporate news flow gave investors food for thought. News flow has generally been good for the first quarter of 2025 – the big unknown is what happens next as the second quarter got off to a terrible start thanks to Donald Trump’s sweeping tariffs.

“Howdens Joinery topped the list of FTSE 100 risers as the kitchen specialist surprised the market with a resilient trading update. There had been fears that consumers were scaling back big-ticket spending and that might result in fewer home improvements, such as a new kitchen.”

AstraZeneca

“AstraZeneca’s core business is doing well, generating robust sales and profit growth. Importantly, the pipeline of new drugs looks promising with recent late-stage drugs trials having yielded success. It is generating significant amounts of cash that enables ongoing reinvestment back into the business.

“On paper, this is exactly what a business like AstraZeneca wants to achieve. Unfortunately, there are still many unknowns that hang over the company like a dark cloud.

“First is China, where there are lingering issues around allegations of illegal drug importation and unlawful collection of personal information. The potential fines won’t hurt its wallet but any evidence of wrongdoing could hurt its reputation.

“Second is the prospect of tariffs in the US. While it already has manufacturing facilities in the country and plans are in motion to expand its footprint in that part of the world, there is still the prospect of tariffs being applicable to active ingredients being imported into America.”

HSBC

“HSBC has joined the list of companies who have climbed the mountain of success and now face the prospect that it’s downhill from here.

“First quarter profit was significantly better than expected, albeit down on year-on-year basis. Investors were pleased with the outcome, helped by news of a new $3 billion share buyback. Such treats tend to get a positive market response, yet they’re often like a sugar rush where the enjoyment quickly dissipates.

“For now, the market seems sanguine about what might be coming around the corner. The prospect of a trade war is bad for businesses and economic growth, and HSBC could see a potential hit to loan demand and credit quality.

“A lot of the challenges are out of HSBC’s control so it will need to keep its fingers crossed that Trump doesn’t come down as hard as previously indicated with tariffs, so that the bank’s customers can navigate the tougher landscape rather than be derailed by it.”

BP

“If BP wanted to win sceptical investors over this wasn’t the set of earnings to do it. Instead, the latest update laid bare the scale of the challenges the business is facing.

“Profit came in lower than expectations. Lower cash flow meant that net debt saw an appreciable rise, and the company has scaled back its buyback programme.

“Chief executive Murray Auchincloss was keen to steer the focus on to operational performance, where the company can point to some recent discoveries and good uptime for its refineries. That is likely to prove a forlorn hope, particularly as commodity prices move against the company.

“Auchincloss and his team seem to be struggling to keep anybody happy after the abandonment of the firm’s energy transition strategy amid pressure from activist shareholder Elliott and the unveiling of a new strategic direction in February.

“Management doesn’t appear to be going far enough and fast enough for the activist’s liking while other institutions have reservations about the shift in direction and how it has been handled. Some investors have just been underwhelmed.

“The departure of Giulia Chierchia – the head of strategy who helped oversee the push into clean energy – suggests that the new hydrocarbons-first approach is here to stay. Another key architect of the green strategy, chair Helge Lund, is already on his way out of the door, although not fast enough in the eyes of some.

“For as long as BP remains in the doldrums it could be vulnerable to a takeover approach and Auchincloss and his team badly need a reversal of fortunes if they are going to do more than just run to stay still.”

Associated British Foods

“Despite the weather creating a favourable backdrop for clothing retailers, Primark-owner Associated British Foods disappointed the market as the performance of its sugar division left a sour aftertaste.

“Associated British Foods’ conglomerate model and the diversification it brings was a boon during the pandemic but it has now tripped the company thanks to lower prices for the sugar business and a difficult time for its bioethanol operation Vivergo.

“While the company is sticking with its full-year guidance for the unit, Primark seems to be underperforming its peer group of late. This is worrying given warm temperatures should have increased footfall to Primark’s stores. This hasn’t escaped the attention of investors and will be causing concern for management too.

“They will be looking at whether they are getting the basics right – putting the right product in the right places at the right times and right price points to get people through the tills. It badly needs to arrest a loss of market share.

“Making life more difficult in terms of getting things on track is the recent departure under a cloud of Primark’s longstanding CEO Paul Marchant. The chain badly needs someone permanent to provide it with direction for the future.”

Entain

“Stella David was the obvious candidate for the CEO role at Entain given that she was already steadying the ship on an interim basis. She’s got plenty of experience with a broad range of consumer-facing companies, which will come in handy as Entain tries to broaden its appeal to betting fans around the world. Experience with corporate governance and navigating regulatory issues is equally as important given both areas are key challenges for Entain.

“Investors might view her as a safe pair of hands, which might not be a bad thing for Entain given it is no stranger to significant fines and regulatory action linked to anti-money laundering failures.

“Whether the plethora of activist investors on the register will be so enamoured remains to be seen. While the likes of activists Eminence Capital and Corvex Management will want Entain to be a good corporate citizen, they will also want to see something happen to drive a re-rating in the share price. The stock has been in the doldrums for years and the company needs to be put on a different path if it is to reclaim its crown in the gambling world.”

Jet2

“Jet2 is a classic example of a business that has made significant strategic progress in recent years, yet whose share price has struggled to fly higher. Even after today’s spike, the shares are still trading at the same level as four years ago.

“Airlines are highly cyclical businesses and Jet2 has come on leaps and bounds in diversifying its income through the provision of packaged holidays. The brand is held in high esteem and the company is in a financially strong position. So far so good, the only problem is that holidaymakers are still leaving it to the last minute to make bookings. That means Jet2 has limited earnings visibility.

“Given the uncertain economic backdrop, Jet2’s trading update could have been a lot worse. At least it remains upbeat and has reiterated full-year guidance, which has to be taken as a win in the current market environment.

“The share buyback should keep investors happy for now, but there are clear risks to future earnings for the group and the market could need regular reassurance that it is still cruising above the clouds.”

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