Daily market update: FTSE up, Currys, Dr Martens, C&C

Trump’s hot/cold demeanour around the Iran war continues to cause volatility on the markets.

With the US president having yesterday called off a new military attack on Iran, investors are showing relief that tensions haven’t escalated. That’s helped oil prices to ease back slightly and equity markets to move higher in Europe and Asia.

However, futures prices imply a cautious session for Wall Street when it opens for trading later today, and oil prices remain at high enough levels to weigh on the global economy.

Mining stocks were out of favour amid weakness in metal prices including copper. This risk-off mood was also evident with moves elsewhere on the market, including investors showing a preference for utilities, pharmaceuticals and defence contractors. This looks like portfolio readjustment rather than preparation for a sell-off.

Keeping investors’ hopes alive is a steady trickle of positive corporate news, showing that certain businesses haven’t been derailed by an uncertain economic backdrop. Industrial and life science products distributor Diploma is a case in point. It keeps churning out the good news, with aerospace, defence and data centre customers lining up for orders.

Dr Martens found its feet after a wobbly patch for the company. Profit growth is back on the menu and there is a more optimistic tone from management. There is a lot more work to be done as it tries to build scale and deal with an uncertain economic backdrop. Dr Martens’ shoes aren’t a casual purchase, and consumers might prioritise essentials if life gets harder because of inflationary pressures and interest rates potentially going up.

Currys

Against a difficult backdrop, Currys’ latest update has helped electrify its share price as investors react to an upgrade to full-year profit guidance. It’s a testament to the job CEO Alex Baldock has done in recent years and underlines why he will be a loss when he leaves to run retailer Boots.

Baldock’s strategy of helping people navigate an increasingly complex world of consumer technology through the lifecycle of a product – from credit services to repairs and recycling – has paid off. While it offers credit services to customers, Currys is not exposed to risks around rising levels of bad debt because these are underwritten by a third party.

The decision to rebuff a takeover offer from US firm Elliott in 2024 looks wise, with the share price having more than doubled since then.

Currys benefits from being one of the last physical electronics retailers of any scale and when people need some handholding it becomes an obvious destination, underpinning market share gains. The Nordics business which had been a problem child of the group for a period is now a reformed character, and Currys’ mobile phone offering is resonating with cost-conscious consumers in the UK.

C&C Group

There was little to toast in Magners-owner C&C Group’s latest numbers, although a poor run heading into the latest update spared the share price greater damage.

Profit was at least in line with the guidance given in January’s profit warning. Margins were protected by cost cutting and the dividend was trimmed, somewhat undermining assurances that the group is committed to returning €150 million to shareholders by the end of the February 2027 financial year.

A soggy and chilly late spring won’t have done anything to lighten the mood and C&C ducked the question of how it might fare over the crucial summer months. At least trading since the end of February has been in line with expectations.

Chief executive Roger White will need to draw on all the experience he built during a successful tenure at AG Barr if he is to get the business back firing on all cylinders. White’s first big call has been to move away from the previous ‘One C&C’ model and split into two distinct sets of operations – its core brands and its struggling wholesale distribution business. With little help from the wider consumer environment, White has a tough task ahead of him at C&C.

SSP

Having barely repaired the damage from the pandemic, SSP would have been hoping for a bit longer without more major disruption. Today’s first-half results suggest it is holding up reasonably well, but there are hints of potential trouble to come.

Operating food outlets in travel hubs is, in theory, a vibrant place for business because of the captive audience – something which allows for robust pricing.

However, the solid like-for-like sales growth seen by SSP in the first half of the year has slowed more recently as the impact of the Iran conflict begins to filter through. For now, this seems limited to the Middle East region but as costs and disruption builds this could extend further.

Management have signalled some confidence in the outlook by raising the dividend and sticking with its share buyback. One legacy of Covid is the company has a hefty pile of borrowings and leverage was a smidge above the targeted level, which may create some nervousness.

A restructuring of its underperforming European rail estate shows SSP is being proactive, and the group is sticking with full-year guidance assuming no further decline in trading. However, there is an acknowledgement that a deterioration would put this guidance at risk.