Footsie’s winning streak falters, AstraZeneca commits to US and BP’s ongoing challenges
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “The Footsie had been on a winning streak, but it’s struggling to hang onto gains in early trade. Although the blue-chip index has made back a chunk of the losses from the tariff induced turmoil, amid some hopes that tariff pain will be diluted, it’s flatlining as optimism starts to disappear.
There’s a lack of clarity over how the China-US negotiations will unfold. It appears both sides are waiting for the other to take the initiative, with US Treasury Secretary Scott Bessent saying it was up to China to de-escalate the situation. Amid the standoff, worries about the effect on global growth are lingering, and it’s showing up in oil prices, with Brent Crude falling back by around 1% as projections for energy demand are scaled back.
The deep frustration among Canadians, sparked by Trump’s trade policies, has played out in the polls, with Mark Carney scooping a stunning victory. The former governor of the Bank of England and Bank of Canada is a newcomer to politics, but his decisive leadership during the height of the tariff crisis has won him masses of admirers, turning around his party’s fortunes. His track record of leading nations through economic pain, first at the Bank of Canada during the Great Financial Crisis, then at the Bank of England, through the Brexit process, boosted his chances, cementing sentiment that he’s the best candidate for the highly tricky job. He has a reputation for diplomacy and has already worked with Trump before during his first term, through G20 meetings, adding to hopes that could open doors to easier negotiations. But with Trump reiterating his call for Canada to become the 51st state of the US, Carney will have to walk a tightrope, showing strength in the face of threats but flexibility to clinch a deal. In his first speech as newly election Prime Minister, he said Trump ‘will never break us’ and highlighted Canada’s intention to fight. (gap) While US Canadian relations are top of the agenda, domestic issues like the cost of living and housing affordability won’t stay in the background for long. It’s still unclear if Carney will win a majority and could be reliant on minority parties to push his ideas through. The Canadian dollar had dipped back, as the wait continued for the final results, but is climbing upwards amid hopes for a more decisive result.
Overall AstraZeneca has demonstrated it’s a calm port in a storm, despite concerns about the impact on business going forward, if the pharma sector is hit by US tariffs. The company has recommitted to its expansion plans in the US, which includes increasing the company’s research and manufacturing footprint by the end of 2026. For the first quarter, it increased revenue and core earnings and is maintaining guidance and its financial targets for 2025. It’s a slowdown from the fourth quarter, but this had already been flagged. Revenues rose by 10%, helped by sales of cancer treatments, the cornerstone of its portfolio, and its biopharmaceutical division which includes vaccines. Expected fines on suspected unpaid import duties in China are expected to come in slightly higher than expected, but this may help draw a line under the uncertainty.
Pressure is likely to mount on BP’s management to turn the ship around, after the energy company missed forecasts. Derren Nathan, head of equity research at Hargreaves Lansdown has the details.
Derren Nathan said: “Improved performance in BP’s troubled refineries, as well as action on central costs, has helped eke out an improvement in profitability compared to the last quarter. But the difficult backdrop means the bottom line is still a far cry from where it was a year previously. Cashflow is under pressure too and that’s allowed net debt to creep up further. This is a key consideration for activist shareholder Ellliott Investment Management and there could be further calls to cut costs and offload non-core parts of the business. This year’s divestment target has been upped slightly from around $3bn to a range of $3-4bn but that’s not really going to move the dial.
Strong progress is being made on oil & gas exploration and development, with three new start-ups and six discoveries, but it will take time to feed through to results with upstream production still set to fall this year. There are some reasons to be hopeful elsewhere as with refining comparisons helped by last year’s Whiting outage in Indiana and performance in downstream activities such as filling stations and biofuels picking up. But going into the second quarter, weaker oil prices mean management will be under more pressure than ever to meet the expectations of its biggest shareholder.”