Daily market update: Meta, Tesla, Sainsbury’s, Barclays

The FTSE 100 fell as the mood across global markets darkened on Thursday.

However, it outperformed Asian and European counterparts thanks to a decent showing from its contingent of energy stocks and traditionally defensive names.

Concerns about the sustainability of AI spending hurt Asian markets and rising oil prices stoked concerns about the threat posed by inflation.

In London, miners were under pressure as metal prices eased on fears about the global economy and names with exposure to the technology sector also struggled.

Meta

Meta’s latest earnings were enough for most investors to keep the faith in its strategy of spending heavily to get ahead in the AI race.

Revenue came in ahead of expectations and the company could point to widespread adoption of its Muse AI personal assistant.

In order to convince the market on the merits of pushing so heavily into artificial intelligence, companies need to demonstrate the technology is seeing widespread adoption by businesses and individuals.

That Meta was able to demonstrate this, at least to some extent, was crucial given the increase in full-year spending guidance to eye-watering levels and the fact Meta reported its first quarter of negative free cash flow in a decade.

Meta has also done some background work to make sure CEO Mark Zuckerberg remains in California even after a wealth tax is introduced in the state and unveiled a new class of share to allow it to raise funds for AI investment without diluting Zuckerberg’s control.

This could be a bone of contention with shareholders, as could the company’s continuing legal issues around consumer protection, privacy and online safety. The costs associated with litigation markedly depressed the company’s net income for the period.

Tesla

These latest earnings from Tesla were very much announced in the shadow of discussions about a merger with its larger counterpart in the Elon Musk empire SpaceX.

While the group did report better-than-expected numbers, the market seemed to be underwhelmed.

For now, Tesla remains primarily a manufacturer of electric vehicles and on this front the business looks underpowered. The company pinned the blame on lower average sales prices in the face of fierce competition from Chinese rivals in particular, and a lack of battery supplies to keep up with orders.

Profit and cash flow plunged as the company piled investment into Optimus humanoid robots, AI and robotaxis.

The risk is Tesla now enters a period of limbo while investors await news on a potential combination with SpaceX, which even if shareholders are supportive, might face significant regulatory hurdles.

Sainsbury’s

Sainsbury’s decision to focus on the grocery market is certainly vindicated by its latest results as other areas of the business were a millstone around its neck.

In fairness, the company is set to cast off a struggling Argos business, with a sale to Swift Partners expected to complete early next year, but general merchandise and clothing sales outside of Argos also slumped. These fall in a more discretionary category than the weekly shop so it’s not a surprise to see some pressure here given how tight household finances are right now.

And while the company was able to move the lower end of guidance for the full year higher, there were signs of stuttering momentum in the second quarter as like-for-like sales slowed from the first three months of the financial year.

Sainsbury’s is having to work hard to maintain its profitability and the contrast with Tesco, where margins are improving, will do nothing to dampen speculation about Sainsbury’s pursuing a merger in the sector.

The clear edge Tesco has on Sainsbury’s is one of scale. With news emerging of Sainsbury’s looking to combine with Morrisons before talks fell apart earlier this year, there may be pressure for it to revive its M&A (mergers and acquisitions) ambitions.

Barclays

Barclays is reaching for the AI lever, expecting to cut a decent chunk of its workforce as it expands the use of artificial intelligence across its operations.

The announcement comes as the company failed to match expectations with its third-quarter performance – with the unveiling of a healthy share buyback failing to entirely ease investors’ disappointment.

Barclays is an outlier compared with UK counterparts Lloyds and NatWest thanks to its meaningful investment banking presence.

The performance here was a real mixed bag as its equities trading division performed robustly but it suffered on the fixed income side.

Across the wider group costs went up and Barclays shareholders are also having to contend with two major clouds over the business. The first being a widely expected increase in tax on the sector in next week’s Autumn Budget and the other being a reported probe into possible misrepresentation of risks in its private credit portfolio.

The former will at least be resolved in the near term, but the latter looks set to weigh on the shares for longer as the Bank of England’s Prudential Regulation Authority pursues its investigation.

Rentokil

Signs Rentokil is starting to root out some of the bugs which have infested its North American business helped drive a major relief rally in the shares.

After a major profit warning and the abandonment of profit margin targets for its business across the Atlantic earlier this year, investors welcomed signs of stabilisation in this business and news of a sizeable share buyback.

The buyback is a show of confidence on the part of management. Despite today’s upwards move, the shares are still down 20% so far in 2026 and investors will be looking for management to build on this improvement rather than resting on their laurels.