Daily market update: Lloyds, Tesla, Rolls-Royce, Clarkson, Whitbread

“The FTSE 100 was firm in early trading,” says AJ Bell Investment Director Russ Mould.

“Ever since President Donald Trump announced his partial U-turn on tariffs on 9 April the index has been on the rise.

“There was plenty of corporate news for the markets to digest on Thursday morning – with the good, bad and ugly all represented.

“Banks, energy stocks and housebuilders were out of favour while miners and other stocks caught up in the tariff-related sell-off made progress. BP and Shell were a drag given their weighting in the index as US oil prices slipped below $60 per barrel. This reflected concerns about an economic slowdown in the wake of a global trade war and speculation producers’ cartel OPEC might lift production again in June.”

Lloyds

“Unlike Barclays, which is a beneficiary of market volatility thanks to the trading part of its investment banking business, the current uncertainty is only bad news for Lloyds.

“The company has increased the amount set aside for bad debts – not based on anything it is seeing yet but as a prudent move to anticipate any impact from the recent turmoil.

“While there is no change to the current annual guidance, the first quarter showing was slightly behind forecasts thanks to the tariff-related adjustments and as the company absorbed the impact of higher costs.

“The loan book offers evidence of decent demand as the mortgage market picks up and overall, the company seems to be in reasonable shape.

“Judgement day on the motor finance scandal, which has helped put a brake on the share price, is expected in July but at least Lloyds did not feel the need to increase its provisions in this area.”

Tesla

“Elon Musk has come to realise he can’t be in more than one place at a time. After investor backlash over his involvement with the US government, he was under pressure to spend less time serving the Trump administration and more time trying to solve Tesla’s problems.

“While it’s since been confirmed that Musk will dial down government involvement, there was speculation that Tesla’s board aren’t taking any chances and want to set the wheels in motion to line up the next CEO for the electric vehicle group.

“If Musk’s association with Trump has caused irreparable damage to Tesla’s brand, it’s understandable why the board would want to replace him. However, he is the entrepreneur who helped make Tesla a major success in the first place and losing him could also lose the company some of its supporters.

“Tesla’s chair Robyn Denholm has played down reports that the board are hunting for a new CEO. However, it’s now going to be a question that’s asked over and over again regarding the long-term plans for Musk in the business. The seed has been planted and playing down speculation will only see it grow back again.

“It seems highly unlikely that Tesla would want to oust Musk. Tesla’s vision has always been much greater than simply offering electric vehicles and Musk is the driving force behind these bold plans. It’s hard to imagine someone else could come in and fill his shoes with the same creativity and drive.”

Rolls-Royce

“Rolls-Royce is one of the most vulnerable UK-listed companies to US tariffs because of its involvement in aircraft parts, a key export to the states.

“Had the tariff tantrum happened five years ago, Rolls-Royce might have struggled to cope given the business was weak and had lost its way. Having been nursed back to full health, it now stands a much better chance of coping with tariff pressures and management has offered such reassurance to the market.

“Given the widespread uncertainties, investors are now taking unchanged guidance to be a massive win. The fact Rolls-Royce is sticking with previous earnings and cash flow expectations has prompted another leg-up for the share price.”

Clarkson

“It’s a terrible time to be a shipping broker as companies around the world rethink how much goods they want or need to send to the US.

“While the tariff landscape continues to change, Trump gave enough hints well ahead of Liberation Day that he would get tough so there was stockpiling ahead of the event and now there’s the likelihood that we’ll see a slowdown in global shipping activity.

“Clarkson says broking rates in its industry are now 7% lower than forecast on 10 March and unfavourable exchange rates make matters worse. It all points to a potential profits miss for the company and the shares have fallen as a result.”

Whitbread

“Premier Inn owner Whitbread has suffered of late as it faces increased costs – largely related to changes in last year’s Budget – and fairly soft demand with revenue per available room under some pressure.

“However, there were encouraging signs for shareholders in the company’s first-quarter update. Notably it is outperforming the wider market and sees forward bookings ahead of the levels seen at this time last year.

“To signal its confidence in the outlook the company has served up another healthy share buyback.

“At the same time the German business is on track to break into profitability this year – meaning it will start to make a financial contribution to the business as well as a strategic one.

“Whitbread cannot control what happens in the wider market but it can control the consistency of its offering and the efficiency with which its sites are run.

“With independent hotels and smaller chains under pressure there is an opportunity for Premier Inn to take market share and the company can look to build on its continuing progress in the German market.”

Persimmon

“Housebuilder Persimmon continued the trend of cautiously positive updates from the sector as demand remains resilient to wider macroeconomic uncertainty for now.

“Concerns that the property market might see a pronounced slump once the period of reduced thresholds for stamp duty came to an end seems to have been unfounded. The ongoing supportive supply and demand dynamics in the UK property market are still intact.

“The tone and content of Persimmon’s statement indicates management is mindful of the risks that the current tariff-related turmoil, while having no direct impact, might affect buyers’ confidence.

“However, so long as mortgage availability and affordability is there and home ownership remains an ultimate goal for so many, the business will likely have confidence in its ability to continue thriving.

“Persimmon is also helped by having lower average selling prices and by having its own in-house materials arm – which helps give it greater control over build costs.”

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