Daily market update: oil price, Ocado, AO, Speedy Hire

“As tensions in the Middle East continue to escalate, oil prices remain in the ascendancy and stocks are enduring volatility,” says AJ Bell Investment Director Russ Mould.

“Concern the US might join Israel’s military effort against Iran, after comments from President Donald Trump on his Truth Social platform, saw US shares fall overnight and briefly pushed Brent crude oil above $77 per barrel before it eased back a touch.

“Iran is a significant exporter of oil in its own right and there will be concern it might try and obstruct the Strait of Hormuz – through which a healthy chunk of the world’s oil and liquefied natural gas passes.

“Any easing of tensions could put crude on the back foot given the underlying fundamentals of uncertain demand due to a cloudy economic outlook and rising supply from producers’ cartel OPEC+.

“If higher oil prices stick it would act as a renewed inflationary pressure and this further complicates the decision making of the US Federal Reserve which is set to announce its latest decision on interest rates tonight.

“The central bank was widely anticipated to sit on its hands at this meeting but events in the Middle East could impact its thinking for the remainder of 2025.

“The FTSE 100 advanced in early trading on Wednesday but it is still some way short of the all-time highs seen earlier this week.

“Online groceries specialist Ocado offered its long-suffering shareholders some positivity as it unveiled an extension of its partnership with its first overseas customer, Spanish supermarket Bon Preu, which includes the construction of a new delivery warehouse.

“Ocado has struggled to sign the volume of deals with overseas grocers to justify the excitement which was once generated by the stock, but this latest announcement provides a morsel of good news.”

AO

“AO has rediscovered its spark, hoovering up a significant number of new customers and growing profits fast. More than 650,000 people bought from the electricals retailer for the first time over the past year, while repeat customers accounted for over 60% of orders. That suggests AO is doing something right with both marketing and service.

“At face value, everything looks good until you dig into the numbers. The mobile arm continues to be problematic and that’s acting as an anchor on the business. The mobile market is in decline and competition is fierce. It’s not bad enough for AO to want to exit completely, yet don’t be surprised to see the company slim down its offer.

“Costs are another headwind for AO and they’re only going to get worse. Furthermore, potential legislative changes could create more problems if retailers are forced to take back a customer’s old electrical product for free when they deliver a new one. Companies like AO typically charge a fee to remove old white goods, so taking away that revenue stream would be negative for earnings.

“The balance of good and bad news explains why the shares haven’t budged despite the impressive headline profit growth.”

Speedy Hire

“Speedy Hire needs one of its excavators to dig it out of a hole. Profits have gone into reverse, net debt has moved upwards, positive free cash flow has evaporated and there is no dividend growth.

“The company has blamed delays in government spending impacting major infrastructure projects. However, there is a big clue as to the potential future direction of trading.

“It has boosted investment in hire fleet which indicates management is upbeat about the short to medium term opportunities. Construction rental companies don’t spend millions of pounds on new kit unless they’re confident that demand will go up.”

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