Daily market update: FTSE 100, Tesla, HSBC, Rosebank

“The UK stock market was a rare bright spot among a lacklustre session for European equities on Friday,” says Russ Mould, Investment Director at AJ Bell.

“The FTSE 100 advanced 0.2% to 8,829, with two thirds of the index’s members in positive territory. Utilities and healthcare led the charge as investors focused on dividend-paying defensive-style stocks.

“Germany’s Dax index retreated 0.3% as weakness in consumer cyclicals, industrials and financials weighed on the market.

“The economic agenda is dominated by US jobs data later today, where the market is looking for 130,000 new jobs in May versus 177,000 in April. Worries about the economic outlook and impact of tariffs explains why the market anticipates a slowdown in nonfarm payrolls. However, the unemployment rate is expected to remain steady at 4.2%.”

Tesla

“Tesla’s shares enjoyed a boost last year when Elon Musk became best buddies with Donald Trump after he won the US presidential election. Investors thought Musk – and therefore Tesla by default – would get special treatment.

“When it became clear that Musk was spending too much time on White House duties and leaving Tesla to veer off course, investors demanded he ditch politics and get back behind the wheel of the electric vehicle group.

“Tesla’s shares got a bump when Musk subsequently said he would step back from governmental work.

“At that point, some investors might have thought everything had returned to normal – but like a good Hollywood blockbuster, there’s a twist to the story.

“Musk has taken to social media to slag off Trump in a move that suggests he feels betrayed by his new best friend, perhaps indicating he was pushed out of the White House.

“The relationship has quickly soured and Trump now seems to be on a mission to make Musk’s life difficult.

“Tesla shareholders are stuck in the middle of the battle zone as whatever happens to Musk will act as a proxy for the car company’s share price. Trump has signalled he could terminate US government contracts with Musk’s companies, causing Tesla’s share price to crash 14% in a day.

“Musk’s outspokenness is becoming a liability for Tesla shareholders. He recently pledged to stay on as CEO for at least another five years, but if he cannot be restrained from stoking fires on the public stage, Tesla’s board might have to think long and hard about his future with the business.”

HSBC

“The changing of the guard is gathering pace at HSBC as a date is put on Mark Tucker’s departure as chair. He’ll step down at the end of September, with non-exec director Brendan Nelson filling in until a permanent successor is found.

“Tucker’s exit will coincide with Georges Elhedery’s first-year anniversary as CEO. The new boss has laid the foundations to have a more streamlined and efficient business, focused on key regional markets for growth.

“The new chair will be responsible for making sure Elhedery and the rest of the board are focused on this strategic goal, while also upholding high levels of corporate governance. HSBC is a big beast in the world of banking and being chair of this business is a prestigious role.”

Rosebank

“The effective Melrose 2.0 has found its first target for a ‘buy, improve, sell’ strategy. Rosebank was launched by former Melrose directors with the aim of replicating previous success in finding businesses that were battered, bruised or had simply lost their way, and sprucing them up before flipping at a premium.

“Shares in the cash shell rocketed on the stock market debut last summer as investors speculated about what Rosebank might achieve. Reality now hits hard that it will need to raise a significant amount of money to make acquisitions, and then it could take years to do each one up.

“Rosebank is certainly not buying electrical components business ECI on the cheap. It is paying nine times adjusted earnings which is fine for a company that is running smoothly, but twice as much as you might find with acquisitions of a broken business. Rosebank hopes to improve ECI’s margins, improve working capital and reduce leverage so servicing debt doesn’t consume so much of its cash flow. This sounds like fine-tuning the engine rather than chucking in a new one.”

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