Daily market update: BP, Shell, H&M, Moonpig, Associated British Foods

“UK takeover action has focused on the mid to lower end of the market so far this year and for a brief moment it looked like we might get the first mega cap action. Alas, Shell has thrown cold water over talk it was preparing a bid for BP, meaning the FTSE 100 hasn’t delivered the surge which many thought might happen this morning,” says Russ Mould, Investment Director at AJ Bell.

“Speculation last night around a BP bid effectively set the stage for the UK stock market to rocket today. Instead, Shell has spoiled the party and the blue-chip index is static.

“That won’t stop the market from continuing to speculate about who else might want to buy the FTSE 100 energy giant. It might also encourage investors to dust off the M&A playbook and think about who else could be a takeover target. That might explain why Anglo American’s shares were among the top risers on the FTSE today.

“H&M shares surged after reporting better than expected quarterly profit. The clothing retailer has found life hard going in recent years due to a more cautious consumer, cost pressures and unfavourable foreign exchange rates. Once a standout performer on the high street, it has faced growing competition and performance has been volatile. A lot of bad news has been priced into its shares so today’s rally is down to relief rather than H&M being at the top of its game.”

Moonpig

“Shares in online greetings cards business Moonpig are proving the old maxim about porcine animals not being able to fly as it disappoints on sales.

“Back in October 2024 the company set ambitious medium-term goals on delivering double-digit revenue growth and by doing so, it seems to have set itself up for a fall.

“While the core Moonpig brand is performing solidly, the company’s Dutch operation Greetz is lagging behind, as is its experiences arm. The higher cost associated with experience days makes them a harder sell in a tricky consumer environment and this is also an area where Moonpig faces established competition.

“Growing sales is reliant on new customer acquisition, retention and getting people to make purchases more frequently. There were some positive signs on this front as the company increased the volume of subscribers to its Moonpig Plus service which offers discounts to customers.

“While Moonpig is the clear leader in terms of online greeting cards, most card purchases are still made offline. Its goal is to take a greater share of the overall market.

“Convenience is the main selling point for Moonpig but given cards are sold in most supermarkets, for many people grabbing the card they need while out doing a weekly shop might be a hard habit to break.”

Associated British Foods

“Primark-owner Associated British Foods has always stood out thanks to its conglomerate structure with a mix of diverse businesses including the Primark retail arm but also footprints in areas like tea, sugar and animal feed.

“The list of areas it operates in looks set to get shorter as the company’s Vivergo bioethanol operation is in line to be shuttered. The UK-US trade deal agreed in May threatens to flood the UK market with US ethanol, rendering ABF’s plant in Yorkshire unviable.

“Last-minute negotiations with government aimed at keeping the facilities open seem to have failed.

“The muted share price reaction to the news reflects the fact this is a relatively small part of the business and it was already operating at a loss. However, it may prompt wider questions about the future strategy.

“The Weston family, which controls ABF, has always been protective of its current structure and there is no question the diversification it enjoys was helpful during the pandemic when Primark was unable to operate for long periods. However, the sugar arm, of which Vivergo was a part, has always been volatile and its position in the group may now come under further scrutiny.”

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