Daily market update: Markets, oil, M&S, Boohoo

Market nervousness around the situation in the Middle East continues to ratchet up as the Iran conflict enters a fifth week.

Comments from President Trump about seizing Iranian oil and the country’s Kharg Island export hub, a build-up of US troops and the involvement of Tehran-backed Houthis in the war all create the impression of a conflict that is escalating rather than drawing to a close.

With shipping routes beyond the Strait of Hormuz now seen at some risk of disruption too, Brent crude oil prices remain firmly in alarm bell territory at more than $115 per barrel and are on course for a record monthly gain. Other commodities including fertilisers and aluminium are also being caught up in the turmoil.

In this context it was no surprise to see Asian markets under pressure on Monday, with many countries in the region particularly exposed to the current crisis given they source much of their energy from the Middle East.

Government bond yields actually eased from their recent highs as a narrative of rapidly rising interest rates competes with one of slowing economic growth.

The FTSE 100 was a rare riser boosted by its heavy exposure to the resources and energy sectors. 

Marks & Spencer

UK corporate forays in the US have been more akin to 90s bands’ largely desultory efforts than the successful British invasion of groups like The Beatles and The Rolling Stones in the 60s.

However, nearly a quarter of a century after selling the Brooks Brothers clothing chain, which it dumped at a significant loss after what qualified as a genuine retail disaster story, M&S is dipping its toe back in the US clothing market by agreeing to sell its products with Nordstrom.

This is a much more cautious approach than it previously pursued but could nonetheless be significant if it can tap even a portion of what is an extremely large market. It follows the successful if modest launch of M&S Food items with US retail partners back in 2022 and shows the brand is not sitting still as it looks for different paths to growth.  

Boohoo

The retail backdrop may be unhelpful and a battle with its largest shareholder Frasers ongoing but Boohoo, trading under the Debenhams banner, does seem to be getting some traction with its turnaround efforts.

Ae on the year to February is comfortably ahead of expectations but, perhaps more significantly, guidance for the current year has been upgraded. 

It suggests chief executive Dan Finley is making real progress with a business that was in a mess after a difficult period coming out of the pandemic. Shareholders will hope these efforts aren’t knocked off course by external events.

Motor finance scandal

The day of destiny for companies like Lloyds and Close Brothers caught up in the motor finance mis-selling scandal is finally here, as details of the regulator’s redress scheme are announced.

It looks like industry lobbying and legal efforts have been successful in at least limiting the damage, with average payouts of £700 expected. Though investors will be watching closely to see if companies are forced to set aside any extra cash after today to help fund compensation.

News of an omnibus claim being pursued by borrowers from Lloyds, who are waiving their rights to the FCA’s compensation scheme, and the threat of more to come against other lenders suggests this issue, like a nagging rattle in the dashboard, might not be done and dusted even after today.