Daily market update: FTSE 100, WPP, IHG, Airbnb, Serco, Deliveroo

“The FTSE 100 is struggling to make meaningful progress this week, running to stand still as investors weigh the latest economic, geopolitical and corporate developments,” says AJ Bell Head of Financial Analysis Danni Hewson.

“Not helping today was several heavyweight names trading without the rights to their dividend. This held the index back despite gains on Wall Street and across Asia. Investors are largely greeting widespread tariffs taking effect with a shrug.

“The exception again was India, with the Trump administration ordering a big increase in tariffs to punish the country for buying and selling Russian oil.

“Apple shares were in demand as it pledged significant investment in the US at a White House event on Wednesday.”

WPP

“It’s a measure of just how beaten down WPP’s share price is that today’s results only provoked a modest sell-off in the shares.

“Make no mistake this was a really weak set of numbers – the last under departing CEO Mark Read.

“Rebasing the dividend takes an unpopular decision out of the hands of incoming CEO Cindy Rose. She will have plenty on her plate when she starts at the beginning of next month with a strategic review of the business.

“At one time WPP was considered a bellwether for the wider economy – given the breadth and depth of its operations and the link between advertising spend and clients’ confidence in their future prospects. However, it is now so consumed by its own problems this wider relevance has diminished.

“Growing advertising at Facebook and Google have cut out the ad agency middleman over the last decade with AI tools also disrupting this market. Even so WPP has fared worse than the likes of European rival Publicis which snatched the key Coca-Cola account from under its nose in March.

“Shareholders will hope former Microsoft executive Rose can draw on her tech sector experience to help WPP recover and thrive in a new advertising landscape.”

InterContinental Hotels

“While InterContinental Hotels Group's (IHG) revenue per available room growth slowed materially in the second quarter, investors overlooked this to focus on a big increase in first-half profit. The reported number was an eye-catching beat of expectations.

“The Holiday Inn owner’s model – whereby it owns a relatively modest proportion of its hotels and focuses instead on franchising and managing premises.

“As well as generating premium margins, the asset light model also enables it to grow quickly with limited capital investment and to focus on building preferred brands based on guests’ needs, and on strong delivery systems, such as its branded hotel websites and call centres.

“The company saw record hotel openings in the period and it was notable to see the CEO talk about shorter-term economic uncertainties ‘subsiding’ as it stuck with full-year guidance.

“However, there will still be some concern at the second-quarter slowdown – largely thanks to a weaker showing in the Americas – with investors likely to be watching future releases closely to see if this was a one-off or part of a broader trend.”

Airbnb

“While revenue for Airbnb’s second quarter came in a smidge ahead of what was expected, investors were not prepared to book in with the shares. The company’s warning of ‘tough’ months ahead leading to check outs aplenty in after-hours trading.

“The company sees tariffs having an impact on margins in the third quarter, with the initial tariffs shock in April leading to a big drop in bookings.

“One saving grace for the company is that most bookings in the US are domestic, with inbound travel only accounting for a modest proportion of the total.”  

Serco

“Outsourcer Serco is getting a real boost from the trend towards increased military spending and this saw investors react with optimism to the company’s first-half results.

“Earnings came in ahead of the guidance given less than a couple of months ago with the defence sector now the biggest contributor to the group.

“However, the impact of the loss of a contract to provide immigration detention services in Australia and higher operating costs in the UK as the group absorbs higher employer national insurance contributions means full-year guidance is unchanged despite the first-half beat.

“Serco cannot rely on defence alone and pressures on government spending in the developed world are a risk the market will be watchful of going forward.”

Deliveroo/DoorDash

“It is a bitter irony for shareholders in Deliveroo that, having endured a bumpy ride since joining the market four-and-a-bit years ago, it is showing signs of finding a smoother path just as it is about to head for the exit.

“With its takeover by US peer DoorDash looking set to complete later this year, Deliveroo is showing decent order growth but also, perhaps more significantly, in underlying earnings, margins and cash flow. These are areas which have proved sticking points for the market with Deliveroo in the past.

“Its prospective new owner DoorDash posted its own impressive earnings overnight and delivered encouraging guidance which suggests the online delivery market is in decent health in general despite the uncertain economic backcloth.”