It’s a calmer end to a chaotic week on the markets.
While it looks like a crisis has been averted, investors’ patience has been well and truly tested.
Gold nudged ahead to trade ever closer to $5,000 an ounce as investors were reluctant to let go of their safety blanket, just in case Donald Trump woke up with another controversial idea.
The FTSE 100 advanced 0.2% to 10,168 as investors loaded up on three names that have served them well over the past year – Rolls-Royce, Endeavour Mining and BAE Systems.
There’s a lot for investors to process given the volatile first three days of the trading week, and it’s only natural for people to pause and take stock of events.
TikTok
TikTok has long been a place for people to tell their stories – now it’s become its own story.
Social media fans will be jumping for joy at a breakthrough with attempts to keep TikTok operational in the US. A deal has been struck to separate TikTok’s US operations from its Chinese owner, ByteDance.
Donald Trump has naturally taken credit for ‘saving’ the social media platform, even though banning TikTok in the US was originally his idea.
Joe Biden during his presidency signed a law demanding ByteDance sell the US division or face a ban in the US, amid security concerns.
Trump kept the pressure up when he returned to the White House, albeit flip-flopping between a critical stance and bigging up the platform.
The new US version might feel slightly different while the algorithm is retrained, but users might not worry too much if they’re still getting their fix.
TikTok is such a significant presence in social media and a crucial tool for companies to connect with millions of existing and potential customers. Its shopping channel has become a powerful part of the retail landscape, and the platform is one of the go-to places for companies to communicate marketing messages.
TikTok disappearing from the US would have been unfathomable, hence why it’s not a surprise to see a resolution to the saga.
Babcock
No chief executive wants to see their company’s share price fall, but Babcock’s David Lockwood might just afford himself half a smile at the drop on news he is stepping down later this year.
His nominated successor Harry Holt has a hard act to follow. Someone who bought the shares when Lockwood took the top job in 2020 would have subsequently made more than five times their money. He transformed what was a struggling business into globally relevant defence outfit.
Lockwood has been helped by improved prospects for the defence space since Russia’s invasion of Ukraine in 2022 as well as growth in the nuclear sector – another key area of expertise for Babcock.
The company’s latest update revealed solid trading albeit with the Land arm falling behind. Addressing this, as well as capitalising on opportunities in the better performing parts of the group, may be among the first priorities when Holt takes the reins.
Holt’s credentials look reasonably solid given his service in the army, long stint at Rolls-Royce and current role heading up the nuclear division at Babcock. Though his time at Rolls-Royce preceded its astonishing transformation under current CEO Tufan Erginbilgiç.
Intel
Intel was on the slide after its fourth-quarter update. The excitement about its ability to become a chip manufacturing champion backed by investment from Nvidia and the US government collided with cold hard reality.
Intel’s below-expectations revenue and downbeat outlook reflect its inability to keep up with demand thanks to supply chain and manufacturing issues. While it is positive that demand is there, if customers become nervous about its ability to fulfil orders the chances of it becoming a genuine US alternative to global leader TSMC will be heavily compromised.
Intel is pouring investment into its production lines as it looks to lift capacity and demonstrate it can produce the high-end chips required for AI at scale. A few more quarters like the one just reported and CEO Lip-Bu Tan might find himself under increasing pressure.
There is buzz around Intel’s new Panther Lake laptop chip which the company hopes can help it regain market share from rival AMD. However, the market may be less minded to give Intel the benefit of the doubt until there is solid evidence the chip is gaining traction.
C&C
It’s a tough time to be running Magners-to-Bulmers group C&C, a drinks manufacturer and distribution company struggling to stand on its own two feet. Profit warnings are back on the menu, and it’s given shareholders an almighty headache.
C&C was the subject of an activist investor campaign in 2024 when Engine Capital called for board changes and for C&C to consider putting itself up for sale. The activist called C&C a ‘perennial underperformer’, partially blaming self-inflicted problems. Former Irn-Bru boss Roger White was drafted in to turn the business around, but fortune remains out of reach.
The hospitality sector has been blamed for the latest setback. Drinkers aren’t spending enough in general, and when they are, they’re choosing beer over higher margin wine and spirits.
Such a backdrop is unhelpful, yet C&C is pulling a few levers internally to try and reshape its business. It’s simply a waiting game to see how long a proper turnaround might take.
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...
