Daily market update: FTSE up, oil above $110, BP, Card Factory, Travis Perkins

A matter of weeks ago oil moving through $110 per barrel would be enough to give markets the willies but they seem to be in wait-and-see mode right now.

Energy prices are reacting to stalled talks between the US and Iran and a blockage of the Strait of Hormuz which has now extended to the best part of two months – with just a few fleeting moments of the key shipping route being open. 

Equity markets remain resilient. The FTSE 100 was higher thanks to its oil and gas heavyweights BP and Shell.

Investors are having to make difficult decisions. If a mediated solution to the crisis emerges then investors do not want to be caught on the wrong side of a relief rally. Equally, if there is a return to fighting then there is a danger of being caught out by a sharp correction.

A busy week for corporate and economic announcements, including several interest rate meetings, may help provide some direction. Close attention will be paid to what central bankers say about any renewed inflationary pressures and the signals they provide on the trajectory of rates in the remainder of 2026.

Barclays

Barclays’ results were fine but not fantastic. Profit was as expected while the CET1 ratio – a key measure of a bank’s financial strength – was a touch below consensus.

As is common with the banking sector, there were a few nasty surprises to remind the market that not everything goes in the industry’s favour.

A £105 million increase in the motor finance provision was a memo that the compensation scheme is still a moving feast. Barclays even warns that the ultimate financial impact of the event could still differ from current estimates.

The bank has also set aside £823 million for bad debts, partially related to a fraudulent customer within its investment bank. This is an increase from a £643 million provision in its first quarter results a year ago and is thought to be linked to the collapse of UK property lender Market Financial Solutions – though this is not confirmed in Barclays’ results.

BP 

The highest quarterly profit in the best part of three years is not a bad way for new BP CEO Meg O’Neill to begin her tenure. Circumstances have helped but, as Napoleon famously attested, there’s no harm in being a lucky general. 

While the spike in energy prices may not have fed through to all parts of the business yet and only affected the final few weeks of the first quarter – the impact on BP’s oil trading operations was immediate and significant. Notably, it has enabled BP to beat analysts’ expectations.

Traders do best in periods of volatility as sharp swings in the price create gaps between buyers and sellers, opportunities for arbitrage, and greater hedging demand from industries like the airline sector.

However, disruption to BP’s own operations in the Middle East may have impacted production given guidance for output to be lower for 2026. 

There may also be some frustration that BP’s hefty borrowing pile has ticked higher on lower operating cash flow and higher costs. BP is more heavily indebted than many of its peers and a big item in O’Neill’s in-tray is achieving the targeted reduction in net debt by the end of this year.

She can’t count on the backdrop remaining helpful indefinitely, and Shell’s acquisition of Canadian shale firm ARC Resources may dial up the pressure for BP to articulate a growth strategy of its own alongside its turnaround plan.

Card Factory

Card Factory's high street woes have led to a slump in profits and there is no cause for celebration with its outlook statement. The seller of cards, balloons and party accessories is braced for new inflationary pressures.

The Middle East crisis is pushing up the cost of transporting costs and energy, and that could feed into higher prices for retailers like Card Factory and dampen demand from consumers if there is a new cost-of-living crisis.

In theory, Card Factory’s value-led proposition should work in its favour if consumers are feeling hard up. However, it is still at the mercy of consumer sentiment, and many people might not feel a card, excluding a birthday one, is an essential purchase. A shift into gifts makes Card Factory even more vulnerable to a drop in discretionary spend if the backdrop gets tougher.

The key reason why the shares moved higher on the results was proof that Card Factory can keep generating solid cash flow even in harder times. A new share buyback, while small in value at £15 million, also sends a positive signal to the market that the business is down but not out.

Travis Perkins / Howden Joinery / Taylor Wimpey

The effects of a stagnant housing market and a lacklustre economy are starting to be felt along the supply chain.

Moving home is often a catalyst to spend money on property upgrade work, with many people choosing the ‘do it for me’ route and hiring tradespeople. A slowdown in the property market means fewer properties are changing hands, thereby dampening demand for building materials.

There is normally a steady flow of demand from homeowners staying put on general repair, maintenance and improvement work, but even that looks vulnerable to a pullback. Travis Perkins is in the thick of it, and its latest update shows a business having to work harder just to stand still. Its Toolstation arm is faring better in the UK, but Benelux operations have fallen in the ditch with a sharp drop in revenue.

The next few months could be crucial for Travis Perkins. A prolonged Middle East conflict keeping oil prices higher for longer could further weigh on consumer and business sentiment, leading to a drop in retail and construction activity. Any increase in interest rates would be bad for the property market, and that would also have a negative knock-on impact for Travis Perkins. There’s not a lot that Travis Perkins can do apart from keep a keen eye on costs and find more efficient ways to run its business so not a penny is wasted.

Against this backdrop, one might have thought that demand for new kitchens would have fallen off a cliff. Interestingly, Howden Joinery's trading update for the past 16 weeks would imply otherwise. The UK operations have quietly got on with the job, while overseas interests have raced ahead.

Spending on a new kitchen is a hefty outlay for homeowners and purchase decisions might have been made six to 12 months ago, followed by a period of rigorous saving. It’s therefore possible that Howden might not see a drop-off in demand because of spending concerns linked to a Middle East-driven inflation shock until well into 2026.

Taylor Wimpey’s update implies a small step back in terms of sales and pricing. It is watching inflation closely as there is a risk that materials to build a home become a lot pricier – which is not good news when Taylor Wimpey’s home selling prices are in retreat. It’s no wonder investors are displeased with the update as it suggests harder times ahead.

WPP 

It’s a case of one step forward two steps back for WPP. While there are signs new boss Cindy Rose might be gaining some traction with her recovery strategy, the geopolitical backdrop and client losses lead to a downbeat first-quarter update. 

One saving grace is the numbers aren’t quite as miserable as analysts were forecasting but this is still a business battling a decline in its fortunes. 

WPP is sticking with its full-year guidance and there have been some notable bits of new business brought in since Rose took charge.  

However, the threat of AI disruption continues to loom over the business, and the market seems unconvinced WPP can be a beneficiary of this technology. The difficult economic backdrop does not make life any easier. 

Built through a series of acquisitions under its founder Martin Sorrell, WPP has many moving parts. Rose is looking to simplify the business and take out costs – which in a lot of ways is a similar playbook to her predecessor Mark Read.

Whether she can enjoy more success than he did remains to be seen but the cards seem stacked against her for now.