MARKET REPORT: City is subdued as Rolls and Unilever downgrade

There was little New Year cheer on the London stock market yesterday after analysts downgraded heavyweights Rolls-Royce and Unilever.

In a subdued start to the first full trading week of 2025, the FTSE 100 added 0.3 per cent, or 25.68 points, to 8,249.66 and the FTSE 250 rose 0.1 per cent, or 21, 25 points, to 20,612.65.

Rolls-Royce, whose shares rose more than six-fold between the start of 2023 and the end of 2024, fell 2.6 per cent, or 15p, to 570p after Citigroup downgraded its rating on the engineering giant to ” neutral” from “buy”.

The bank said the strong recovery in the share price in recent years means it is now fairly valued rather than a bargain.

“Rolls-Royce has been a runaway success for investors in recent years as its turnaround story gained traction,” said Russ Mould, chief investment officer at AJ Bell.

“The turnaround opportunity seems like a thing of the past, and investors increasingly want to hear about the next phase of the company’s growth, not simply what it’s doing to get back on track, as that appears to have already happened.” “.

Citigroup also cut its price target for Marks & Spencer to 400p from 420p and for JD Sports to 150p from 180p.

Shares in M&S, which will publish its Christmas trading update on Thursday, fell 2 per cent, or 7.7 pence, to 382.8 pence, but JD gained 4 per cent, or 3.78 pence, to 97.94 pennies.

Also in analysts’ sights was consumer goods giant Unilever after RBC downgraded its shares with a warning that it does not have the “means” to increase sales enough to meet its targets.

Shares in the group, whose brands include Hellmann’s, Marmite, Domestos and Dove, fell 2.5 per cent, or 113 pence, to 4,448 pence, and rival Reckitt Benckiser, the home of Dettol, Nurofen and Durex, lost 1 .2 per cent, or 60 pence, to 4,809 pence. .

Airline shares were in decline, with British Airways owner IAG – like Rolls-Royce, one of last year’s biggest performers – down 0.8 per cent, or 2.3 pence. , to 296.6 pence, while Easyjet fell 1 per cent, or 5.2 pence, to 535.2 pence and Wizz Air fell 0.9 per cent, or 12 pence, up to 1378 pence.

Overall, it marked a shaky start to a week in which a number of well-known names will update investors on Christmas trading, starting today with Next, whose shares added 0.3 per cent, or 32p, to 9,554p yesterday .

Tesco (up 0.2 per cent, or 0.7 pence, to 373 pence), Sainsbury’s (up 0.3 per cent, or 0.8 pence, to 277.2 pence), B&M (up 1. 3 per cent, or 4.6p, up to 364.5p) and Greggs (up 0.1 per cent, or 4 pence, at 2800 pence) will do the same later in the week alongside EM.

Investors will also hear from oil giant Shell tomorrow (up 0.4 per cent, or 11p, to 2,577.5p).

As well as the high-profile downgrades, there were more positive reports from the City, with analysts at Exane BNP Paribas upgrading Currys, sending the shares up 0.3 per cent, or 0.3p , up to 93.9p.

Among housebuilders, Redburn analysts upgraded their ratings for Persimmon (up 1.9 per cent, or 22p, to 1,161.5p) and Barratt Redrow (up 1.5p, or 6.3p, down to 426.8p), but cut their recommendation on Berkeley (down 0.4p). per cent, or 14p, to 3838p).