FTSE 100 breaks another record, BP’s first-quarter earnings short of forecasts and Nintendo hints at new hardware launch date

“Whoever followed the advice to sell in May and go away will be kicking themselves if they disposed of UK shares from their portfolio. A new set of batteries has been fitted to the FTSE 100 and this bunny keeps on hopping,” says Russ Mould, Investment Director at AJ Bell.

“The blue-chip index has hit another new record high and the sun is shining – exactly what’s need to put investors in a chipper mood.

“Rising another 1.1% as post-Bank Holiday trading gets underway, the FTSE 100 is now up 2% so far in May and 7.4% year-to-date. That’s quite a performance given we’re not even at the halfway point in the year. Add in returns from dividends on top and it’s easy to see why more investors might finally have rekindled their interest in the UK stock market.

“Tuesday’s market rally was broad-based with only four stocks in the FTSE 100 in negative territory, namely Phoenix, Smith & Nephew, Haleon and AstraZeneca.

“Housebuilders were among the stocks in demand after British house prices returned to growth, albeit only by a fraction. Halifax data gave hope that the property market was getting up on its feet after a soggy patch, enticing investors to look at names such as Persimmon and Barratt.”

BP

“The inherent volatility of oil and gas prices means it is inevitable that BP’s profits will wax and wane but the big disappointment for investors will be that they came in below forecasts – with an unplanned outage at a US refinery something of an own goal.

“BP, like its integrated energy rivals, is a business with lots of moving parts and that can make it difficult for analysts to get to the right number. With all that said, it still represents a relatively inauspicious start for Murray Auchincloss since his interim role was made permanent in January. Though this is more the equivalent of a caretaker boss at a football club getting the job full time and then losing one-nil in a closely fought game than anything more disastrous than that.

“Auchincloss is largely singing off the same hymn sheet as his counterpart at Shell, Wael Sawan, when it comes to an energy transition strategy. Essentially, the company will make green investments as long as they pay.

“His use of the word ‘pragmatic’ will be seen as a euphemism in some quarters for putting profit before the planet. Backsliding on a commitment to net zero is not without risk given the pressure that could come from politicians, some investors, regulators and the public.

“However, to an even greater extent than Shell’s Sawan, Auchincloss is eyeing a big valuation disparity between his charge and rivals across the Atlantic and will clearly feel a big part of his remit is closing that gap.

“To that end, the company is targeting efficiencies and savings through initiatives like the use of technology and improvements to its supply chain. Maintaining the pace on share buybacks demonstrates a commitment to returning cash to shareholders.”

Nintendo

“There was excitement in the gaming world after Nintendo finally gave some details about the launch of its next console.

“Nintendo’s Switch was a megahit for the Japanese group and it’s been a cash cow for years. Technology has come a long way since the original one was launched in 2017 and there are high expectations for Nintendo to uphold its reputation and deliver another must-have product whenever the sequel is released.

“The market has long awaited news from Nintendo about how it might revolutionise the Switch given it was first launched seven years ago. Traditionally, hardware suppliers refresh their consoles on a semi-regular basis to keep gamers engaged and to further drive sales. Therefore, it feels like Nintendo has been sweating its assets much longer than one would normally see in the gaming sector when it came to the Switch.

“We’ve now got the answer. Nintendo is to announce the successor to the Switch during its current financial year, which ends in March 2025.

“While this announcement is still somewhat vague, it does put a marker down about its plans and means that the decline in sales of the legacy Switch could accelerate if gamers who don’t own the console decide to wait for the new machine rather than buy the original one.”

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