Market snapshot: more Trump volatility and Flutter's results

It's difficult for investors to keep up with everything that's going on in this White House, but it's clear that many are nervous. ii's head of markets shares the latest from Wall Street and London.

5th March 2025 08:28

Richard Hunter from interactive investor

The last vestiges of the “Trump trade” have now evaporated for the moment, with the benchmark S&P500 trading below where it finished on Election Day in November, and with each of the main indices slipping into negative territory for the year.

The tariff trauma has continued as the rhetoric from the White House has been met with the threat of retaliatory measures from the countries affected. Domestically, investors have begun to price in the effects of these tariffs which could have unintended consequences such as weakening the economy as well as boosting inflation at a time the situation was coming under control.

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Market losses were again widespread, extending to companies with significant imports, such as General Motors Co (NYSE:GM) and Ford Motor Co (NYSE:F), which dropped by 4% and 3% respectively, while banks and retailers were under pressure again on economic growth concerns.

Any arrest to the current declines would need to be prompted by some kind of conciliatory measures from the President, and indeed overnight the US Commerce Secretary suggested that an announcement to reduce some of the tariffs on both Canada and Mexico was likely to follow today.

In the meantime, investors are somewhat sidelined, and in the year to date the Dow Jones is now down by 0.1%, the S&P500 by 1.8% and the Nasdaq by 5.3%, the latter flirting with correction territory over the course of the latest tempestuous trading session.

The FTSE 100 index in the UK was drawn into the agitated investor sentiment yesterday, but recovered some of those losses in early trade Wednesday, partly in response perhaps to the comments made overnight in the US.

The improved appetite for risk led to strong gains in mining stocks and the financials, while British Airways owner International Consolidated Airlines Group SA (LSE:IAG) and easyJet (LSE:EZJ) also regained some poise. The commencement of its share buyback programme gave a further lift to insurer Beazley (LSE:BEZ), while a strong trading update from Games Workshop Group (LSE:GAW) was well received and lifted shares to be up by 54% over the last year, resulting in the group’s promotion to the top table in December.

For the FTSE100 as a whole, a gain of 7.8% in the year to date reflects increasing international investor appetite for an index whose strong defensive backbone is grabbing some limelight amid increased volatility elsewhere.

Flutter Entertainment

Flutter Entertainment (LSE:FLTR)’s decision to switch its primary listing to the US last year is already reaping rewards, with the institutional buying bump leaving the share price performance significantly higher than rival Entain (LSE:ENT).

Given the larger pools of liquidity, higher valuations and that around 40% of its revenues were emanating from the US, the Paddy Power and Betfair owner decided that the FanDuel, FOX Bet and PokerStars brands were best suited in their home market.

The result has been a share price which has risen by 21% over the last year, as compared to a gain of 14.5% for the FTSE 100 of which it was previously a member, and in sharp contrast to the 13% fall which Entain has suffered in the same period. With the prospective fortunes to be made Stateside in a huge addressable market, the shares have spiked by 143% over the last five years and prospects remain sound.

In the period covered by these annual results, revenues grew by 19% to $14 billion (£10.9 billion), leading to net income of $162 million, swinging from a loss of $1.21 billion the previous year. Average monthly players grew by 13% to almost 14,000. The strong cash generation also enabled a reduction to net debt, while the previously announced $121 million share buyback is likely to be followed with up to $1 billion this year, which should provide further share price support.

The group has also reported an encouraging start to the new year which has maintained the momentum. This also extends to its regions outside of the US, underpinning the additional boost the group receives from geographical as well as business diversity.

The previous quarter provided a reminder that adverse sporting results can hinder both margin and profit, given a series of NFL results which were the most customer friendly set of outcomes in a season since the launch of online betting 20 years previously. That being said, the results and indeed prospects have swept that particular concern aside. With the group continuing to retain competitive advantage with tools such as its unique Flutter Edge, significant cash generation enables the combination of shareholder returns, selective acquisitions and net debt reduction. As such, the market consensus of the shares as a strong buy looks likely to remain firmly intact.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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