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“The UK economy being stuck in the mud and the threat of high tariffs on Canada won’t be a shock to markets, but they are hard to ignore,” says Dan Coatsworth, investment analyst at AJ Bell.
“After a strong start to the week, investors ran out of energy on Friday. European indices were in the red and futures prices imply Wall Street will follow the same path when it opens for trading.
“Whether this is investors being reminded of headwinds or simply pausing for breath, it’s clear that uncertainty will prevail well into the summer.
“The corporate reporting season begins in earnest next week with the big US banks. That will shift the focus to profits and outlook statements, giving valuable insight into how the business world is coping with a multitude of pressures. Any corporate optimism is likely to prompt a tickertape parade on the markets as investors look for confirmation that tariff uncertainty hasn’t caused widespread damage to earnings.”
BP
“A big slump in the oil price following Trump’s Liberation Day tariff plan has done no favours to BP. It has flagged up to $1.5 billion of potential asset impairments, despite ramping up production in the second quarter.
“The market doesn’t seem too fussed, instead focusing on good news from its oil trading business and higher refining margins.
“BP is in a new era of focusing more on oil and gas and less on renewables, so it needs to prove to the market that the business is doing the best it can.
“Takeover rumours aren’t going away and each pocket of bad news in its results, no matter how small, will stoke the fires and drive speculation that it remains vulnerable to a bid.”
Warehouse REIT
“There is common theme among investment trusts subject to a bidding war – boards are simply recommending the highest value deal.
“We’ve seen this situation with Assura where the board has flip-flopped between recommending offers from KKR and Primary Health Properties. The same is now happening with Warehouse REIT as it switches allegiance from Tritax to Blackstone following the latter’s increased offer. Whether shareholders share the same view is another thing.
“At one point, several big shareholders in Assura voiced a preference for PHP’s bid as it offered ongoing listed exposure, even though KKR was offering more money at the time.
“Tritax’s bid for Warehouse REIT is a mirror situation – it is offering a mixture of cash and shares, meaning shareholders in the target would retain investment exposure to the underlying assets.
“In contrast, Blackstone would simply put hard cash in the pockets of Warehouse REIT investors and nothing more. Ultimately, shareholders will decide which offer wins.”
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...
