The FTSE 100 is going from strength to strength, hitting yet another new record high.
The blue-chip index of UK stocks hit 10,171 in early trading, propelled by a good spread of industries. Endeavour Mining was boosted by ongoing strength in the gold price, with the metal hitting $4,639 per ounce. Gold has become an investor favourite over the past year thanks to a backdrop of uncertainty around geopolitics, inflation and a weakening US dollar.
Distribution group Diploma stood tall after a well-received first quarter trading update, with 14% organic revenue growth. Organic gains are important to the market as it proves Diploma’s growth isn’t entirely dependent on acquisitions.
Diploma has proved savvy at making the right deals to drive value and it has enjoyed considerable share price gains over the years. Showing it can keep growing with what’s already under its belt is paramount to winning over even more investors.
Utility group SSE moved higher after it won big in a record UK offshore wind power auction. It secured a 20-year contract for 1.4 gigawatts of offshore wind power, with the UK government saying the auction was a ‘monumental’ step towards clean power by 2030.
Costa / Coca-Cola
How the mighty have fallen. Once a dominant name on the high street, Costa Coffee has gone off the boil, and its sale process has gone down the drain. Coca-Cola has been trying to sell the business, but it looks like offers have only been lukewarm.
Reports suggest the sale has been scrapped after failing to get the right price. This is not a good look given the speculated sale price was already half what Coca-Cola paid in 2018. The coffee chain hasn’t worked for Coca-Cola, yet the parent company will be reluctant to sell it for beans.
We’re in an era where companies are focusing on what they do best, and for Coca-Cola that means fizzy drinks rather than lattes.
Higher staffing costs and a spike in raw material prices have put pressure on Costa. At the same time, competition has heated up, and consumers have become wary about spending money on casual items like a coffee.
It always felt like Costa was low down the priority list for Coca-Cola, left to go cold like an undrunk cappuccino. It will now have to give the brand more love if it is to stand any chance of getting a more reasonable takeover offer.
BP
The logic behind BP’s about-turn on its green energy push is reaffirmed by impairments in a teaser ahead of quarterly results.
Put the write-downs together with a weak showing for its oil trading arm and the impact from weaker oil prices looks like the final set of quarterly results before Meg O’Neill steps into the hotseat in April will be downbeat.
From O’Neill’s perspective this is no bad thing as it gives her a low base from which to build. However, it does illustrate the scale of the challenge in front of her.
There’s little O’Neill can do about a capricious oil market but investors, including activist Elliott, will hope the new CEO can transform BP into a more streamlined and efficient business and revive its traditional oil and gas operations.
O’Neill will be supported by chair Albert Manifold who led a transformation, albeit in a different sector, at construction materials firm CRH.
At least BP is making progress in trimming its hefty debt pile which is an important step towards putting the company on a more sustainable footing.
Vistry
Affordable housing specialist Vistry was a victim of delays thanks to the timing of last year’s Budget as it saw a hefty fall in completions.
This overshadowed some modest progress on debt reduction and margins and put the company in the market doghouse.
Vistry does not have a huge amount of credit with shareholders after issues around the understatement of costs in its South Division which came to light in 2024.
It needs to show a focus on regeneration and affordable housing can deliver the goods. The expectation for a second half weighting to 2026 performance may inspire a bit of trepidation among investors.
Pearson
A lack of guidance on 2026 performance and the loss of a US student assessment contract in New Jersey which will have an impact on the first half of the year saw Pearson punished in early trading.
In an environment with mounting concern about AI’s ability to disrupt Pearson, its latest statement didn’t offer the reassurance investors were looking for.
Pearson needs to do more when it posts its full-year results next month to convince investors AI can be more of an opportunity than a threat and that it can realise an improvement in underperforming parts of the business.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
