Daily market update: new CEO for Apple, British Land, Associated British Food

European markets trod water in early trading as investors waited for the next update on US-Iran peace talks.

Oil prices remained below $100 a barrel which suggests cautious optimism that the Middle East conflict won’t intensify. However, the longer oil remains in the 90s range (currently $95), the higher the chance of an inflationary shock and a wobble to global economic activity.

The FTSE 100 was flat as strength in utilities and real estate was offset by weakness in healthcare. Associated British Foods was the biggest loser on the blue-chip index as investors were greeted with falling profits and an uncertain outlook. That overshadowed news that the mooted demerger of Primark is now official.

The 10-year gilt yield soared to 5.1% amid growing uncertainty over the future of Keir Starmer’s position as prime minister. Such a movement is the bond market’s way of saying the UK is now a riskier proposition and investors want greater compensation. Investors will now be asking what policies might look like under a different prime minister and how that feeds into the economic outlook.

British Land

The UK-listed commercial property sector has been in the doldrums ever since interest rates shot up rapidly in 2022 and 2023.

A higher cost of borrowing depressed investor sentiment towards commercial real estate, adding to existing post-pandemic woes caused by the rise of hybrid working.

The landscape is now evolving with more people returning to the office, and demand picking up from tech firms.

British Land is well placed to benefit, and that is evident from its bullish update. Upgraded earnings guidance implies strong momentum in the business. This is the type of news that’s needed to finally breathe some life back into its share price.

Apple

Dan Coatsworth, Head of Markets at AJ Bell, comments:

The market reaction to Tim Cook stepping down as CEO could have been a lot worse. 

He’s been responsible for considerable value generation since leading Apple, and investors might have balked at the prospect of Cook no longer running the show. 

However, the share price has barely moved in pre-market trading on the news. That suggests investors are comfortable with the transition, and they’re reserving judgment on the new guy for now.

It might also be the fact that Cook is not leaving Apple – he’s becoming the new chair, which means his knowledge and expertise is still embedded into the company at the top level.

Cook is typified as a supply chain person, not a product one. He’s increasingly come under criticism for Apple lacking innovation and simply launching new iterations of existing products.

While that is a fair criticism, Cook still deserves massive credit for helping to drive Apple’s services business into an underappreciated gem. This has locked people into Apple’s ecosystem and provided an important stream of recurring revenue. Cook has also kept Apple’s core products relevant and given consumers and businesses enough reasons to keep buying the latest versions.

Head of hardware John Ternus now steps up to the CEO role. He is a product expert and has worked under both Cook and Steve Jobs – meaning he lives and breathes the true Apple ethos. His background will raise hopes that Apple can regain its mojo and come up with new products that are trailblazers and disrupt the market, just like the old days.