Daily market update: Trump, Unilever, McCormick, Lloyds

The FTSE 100 consolidated Monday’s gains to stand firmly above the 10,000 mark as investors continue to weigh competing narratives over the Iran conflict.

Wall Street saw selling yesterday and Asian shares were weaker on Tuesday but European markets responded positively to suggestions President Trump is mulling an exit from the war.

Reportedly this might even happen without the Strait of Hormuz being reopened. The hope would be that an arrangement could be made for shipping through this key route to resume once hostilities are concluded. 

However, much remains uncertain and until there is clarity on a route towards bringing the fighting and disruption to an end, markets are likely to remain nervy.

In the UK market, Pets at Home shares had some renewed pep as the company welcomed the findings of a CMA probe into the veterinary sector and, after a difficult period, revealed reassuringly solid results.

Unilever

The market could be about to make its own version of Marie Rose sauce as a combination between Unilever’s food business, which encompasses Hellman’s mayonnaise, and McCormick, owner of French’s Ketchup, moves closer to fruition.

The presence of activist investor Nelson Peltz on the shareholder register since 2022 has led to consistent pressure on Unilever’s management to streamline the business.

Having shed its ice cream division last year, this demerger of its food business is the first big strategic move under CEO Fernando Fernandez since he took the top job a year ago.

While Unilever’s food operations generate strong margins, growth has lagged behind its personal care and beauty brands. Competition from unbranded alternatives hasn’t helped and, in a GLP-1 world, people’s literal appetite for less healthy packaged food is being suppressed.

Having slimmed down, Unilever will want to show it is fighting fit for the future and it will get its next opportunity to do so with next month’s first-quarter update.

Lloyds

While Lloyds is still assessing the impact of the FCA announcement on the motor finance mis-selling redress scheme, which did not come out exactly as expected, the market reaction suggests this will be a mild shunt for the business rather than anything more serious.

The average payout under the scheme is higher than had previously been guided but Lloyds has already made significant provisions and its scale means it should be well positioned to absorb any incremental extra costs.

Shares in Close Brothers, Lloyds’ much smaller counterpart, have also risen in relief. Investors are clearly hoping both businesses, which have been the ones most prominently associated with the scandal, and the other lenders affected can now draw a line under it and move on.

However, there remains a risk that legal action from some complainants could drag the issue out which is the outcome Close Brothers and Lloyds will want to avoid at all costs.

AG Barr

There was some real fizz behind Irn Bru maker AG Barr's latest results. Revenue growth was solid but what really impressed was the improved profitability, with margins expanding significantly.

This was supported by an exit from the less profitable water segment with Barr using acquisitions to expand its footprint in energy and wellness drinks.

Management signalled real confidence in the outlook, despite the uncertain consumer backdrop, with a double-digit increase in the dividend. 

A favourite drink is the kind of affordable treat which people can continue to justify even when their capacity to spend on bigger ticket items is constrained.