Daily market update: oil, Mobico, Saga, Bunzl, Google

“Investors are reacting with relief to apparent news of a US-brokered ceasefire between Iran and Israel,” says AJ Bell Investment Director Russ Mould.

“Oil prices slumped on the news as fears the strategically important shipping lanes through the Strait of Hormuz might be obstructed, affecting global supplies of crude, failed to materialise.

“Tehran’s response seems to have been limited to pre-warned missile strikes on a US base in Qatar with President Donald Trump describing the response as ‘very weak’ and thanking the Iranians for the advance notice.

“The markets will be watching closely to see if the cessation in hostilities is maintained and for Iran’s next move – amid noises from that side that no such ceasefire has been agreed.

“Defensive stocks, oil producers and precious metals miners were all under pressure in early trading. Gold slipped back as its safe-haven attributes were less in demand. This rather clipped the wings of the FTSE 100 given its relatively heavy weightings in these areas and saw the index underperform its European counterparts.

“On the flipside, travel stocks moved higher, both on the implications for fuel costs but also as the potential hit to foreign travel appetite that might have resulted from any further escalation of Middle East tensions seems to have been swerved.

“Attention may switch from geopolitical concerns to the outlook for interest rates as the individuals heading up the US Federal Reserve and Bank of England are set to speak before politicians in their respective countries, with observers alive to any hints about the future trajectory of rates.

“After a disastrous announcement in April which put the share price on the skids, public transport operator Mobico steadied itself as it narrowed profit guidance, confirmed progress on the sale of its US school bus business and announced the appointment of a new finance chief.

“Over-50s specialist Saga announced it remains on track to hit its profit guidance as it continues its recovery plan built around partnering up with third parties – with a new deal with NatWest the latest such agreement.

“While it has a strong brand and a potential runway for growth due to the UK’s ageing population, Saga has struggled to deliver a consistent performance since joining the stock market. Investors will hope the new approach proves more successful.”

Bunzl

“After a shock profit warning in April amid North American weakness, investors are relieved that life hasn’t got any worse for Bunzl.

“The distributor is normally devoid of any drama, simply getting on with the task of delivering essential goods that companies need to do business, but not products they sell to their end customer.

“Rubber gloves, takeaway coffee cups, cling film; the products Bunzl supplies are the sort of things people take for granted. Its fortunes are closely tied to the global economy – if the world is ticking over then Bunzl will be busy but if there is economic weakness it will find life harder.

“Uncertain macroeconomic conditions mean that investors retain a sense of caution towards Bunzl. The shares are only up because there is no further bad news following the recent profit warning, rather than the market becoming more optimistic.”

Google

“The rise of AI and ChatGPT already presented a competitive challenge to Google as people find new ways to search for information. The headwinds have now intensified after the UK Competition and Markets Authority (CMA) warned that Google might have to change its search services to allow for greater competition.

“Google has enjoyed a dominant position in search for decades, soaking up billions of dollars in advertising revenue. Competition authorities have been watching the company closely and a clamp down on its near monopoly has been on the cards for ages.

“The CMA believes the cost to businesses for search-related advertising could be much lower if there was greater competition. Google is co-operating with the investigation and is likely to put up a good fight as changes to the system could cause a big hit to its earnings.”

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