Middle East worries weigh on stocks, Tesla misses expectations and OnTheMarket the latest UK takeover target

“Worries about an escalation of violence in the Middle East weighed on stocks around the world. US markets experienced a troubled session last night and negativity spread across Europe and Asia on Thursday,” says Russ Mould, Investment Director at AJ Bell.

“Unsurprisingly, investors are flocking to supposed safe-haven or defensive assets including insurers and gold which neared a two-month high. Energy stocks were also in vogue as oil prices held firm above $90 per barrel amid fears that Middle Eastern oil supplies could be disrupted by the Israel-Hamas war. A big drawdown on US crude oil inventories has also given support to the oil price this week.”

Tesla

“Tesla failed to deliver the goods with its latest quarterly earnings, putting a downer on the US reporting season which is now in full swing. The company missed expectations on margins, earnings and revenue.

“Tesla cut prices earlier this year to stimulate demand, but it might need to go further if it wants to get more of its vehicles on the road. Intense competition in the electric vehicle industry and a more cautious consumer have made Tesla’s life much harder.

“A few years ago, having a Tesla was considered to be a badge of honour, showing the driver to be a trailblazer in the shift to electric power. Now, electric vehicles are much more commonplace and the choice is growing by the day.

“The imminent launch of Tesla’s Cybertruck – possibly the ugliest vehicle known to man – threatens to be another headache for the group. Elon Musk has warned about challenges with ramping up production and generating positive cash flow from the product.

“Tempering expectations now might help to stop some investors believing the Cybertruck could revolutionise the business on day one of being on sale, yet Musk’s ferocious desire to be the centre of attention means the world will be watching every step of the way, and any slip-ups could be disastrous for the company and certainly its share price.”

OnTheMarket

“OnTheMarket is the latest UK stock to receive a takeover offer, making it feel like a near-daily event as private equity and trade players seek to take advantage of cheap valuations on the UK market.

“Shareholders are being offered a chunky 56% premium to last night’s closing price by CoStar. It’s a classic move – a US business that is already an expert in the same sector is using the acquisition of a London-listed stock to expand into a new segment of the UK market. In CoStar’s case, the deal will give it a foot in the door for the UK residential property sector.

“OnTheMarket was set up as a rival to Rightmove and Zoopla, and while it didn’t necessarily cause those businesses too much stress, it did make slow but steady progress.”

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