Daily market update: Alphabet, Hilton Food, Canal+, Watches of Switzerland

“It’s another uneven day for financial markets as the worry list gets even longer,” says Russ Mould, Investment Director at AJ Bell.

“Having been troubled by a jump in long-dated government bond yields yesterday, equities got off to a wobbly start again as investors woke up to leaders of China, Russia and North Korea coming together in public for the first time.

“China showed off its weaponry at a big parade, raising concerns about how the three countries might work together in the future and what that could mean for the West.

“Some might say it was merely a public display of power, sending a message to the US that the East cannot be pushed around. Others might say it could lay the groundwork for something more serious down the line.

“It was telling that defence stocks moved higher, including gains from BAE Systems and Rheinmetall as investors potentially took the view that a more serious threat from the East could further increase demand for Western defence capabilities. Gold also edged up as investors hedged their bets and sought some elements of protection in an uncertain world.

“The FTSE 100 acted like a yo-yo in early trading. Having enjoyed a small bump at the market open amid further weakness in the pound, the UK currency began to stage a recovery and that created a headwind for the blue-chip equity index. It then quickly bounced back as investors loaded up on healthcare stocks, with AstraZeneca leading the charge.

“The 30-year gilt yield continued its ascent, briefly touching 5.756% before pulling back a touch. Bond investors are worried about the state of public finances and uncertainty over how the government will fill the black hole. Chancellor Rachel Reeves is under pressure to produce new solutions at the forthcoming Budget, and we could see further volatility on the bond market ahead of this event.

“The rise in the gilt yield sends a clear message – that investors believe the UK is now a riskier proposition and they want a higher return for lending money to the government.”

Alphabet

“Alphabet’s shares jumped nearly 7% in pre-market trading as investors celebrated the news that it has avoided a forced break-up.

“The US Department of Justice had argued that Alphabet’s Google should sell its Chrome browser business and potentially its Android operating system amid competition concerns. A US federal judge has now ruled that it doesn’t have to sell Chrome or Android, but it must share data with competitors.

“That’s a big win for Alphabet and suggests that other big tech firms facing similar market dominance-related legal or regulatory threats might also secure a more favourable outcome than originally feared.

“Some firms including Alphabet would argue that their success is simply down to offering a superior product, not because they’ve done anything illegal to dominate a specific market. Alphabet’s court ruling could now set a precedent for future cases.”

Hilton Food

“Hilton Food Group slumped 15% after a fishy trading update. Individuals are finding that fillets of fish and seafood are costing a lot more when they do their weekly shop, and that’s causing people to rethink their meal plans.

“Hilton Food has reported weaker demand for white fish and has incurred regulatory-linked shipping issues for smoked salmon. That’s prompted certain analysts to downgrade earnings forecasts and caused the share price to slip up.”

Canal+

“Canal+ entering exclusive talks to take a minority stake in French cinema chain UGC is perhaps its biggest strategic move since joining the London stock market late last year.

“The deal, which could be a precursor to taking full control of the business in 2028, would represent something of a departure for the company and may lead to some nervousness among investors.

“Cinemas have had a tough time during and after the pandemic, and there have been several examples of participants in this space struggling in recent years.

“UGC is not just a cinema operator, it is also a film studio, and it is the library of content it holds which may be the biggest draw for Canal+.

“Attracting eyeballs to its streaming platforms means having a broad spread of different shows and films that can appeal to as wide an audience as possible.”

Watches of Switzerland

“Given its name it wouldn’t have taken an arch detective to peg Watches of Switzerland as a potential victim of the shock US decision to place onerous levies on Swiss imports.

“There is relief at the latest update from the luxury timepiece seller which says it expects no impact from tariffs in the first half of its financial year.

“While the trading update is light on detail, the lack of any major alarms and the fact the company is sticking with existing guidance is enough for investors to give it a warm welcome.

“The issue has not completely gone away, however. Part of the reason there is no tariff impact on its North American business, which continues to tick along, is that brand partners stocked up ahead of import levies taking effect.

“What happens to demand when tariffs start to feed into higher selling prices is the key test. Watches of Switzerland will hope the strength of the brands it stocks means any impact is limited.

“Elsewhere, shareholders will be pleased to see a strong showing for its e-commerce arm, given the investments the group has made in this area.”

Ashtead

“Thanks to its recent struggles, investors could be forgiven for forgetting what a big loss Ashtead will be to the UK stock market when it moves its primary listing to the US – likely by March next year.

“Ashtead has one of the best total returns track profiles of any stock on the FTSE 100, having consistently increased its dividend and the first-quarter update represented something of a return to form for the business.

“The company reiterated full-year guidance off the back of a solid first quarter and, significantly, nudged its free cash flow guidance higher.

“The significant slowdown seen in the final quarter of its last financial year, which the company reported in June, seems to have been arrested for now. Crucially, there seem to be some signs that non-residential construction activity, including on so-called ‘mega projects’ is picking up.

“Current guidance for revenue growth covers a wide range of outcomes from zero to 4% and investors will be expecting this range to narrow as Ashtead moves through the year so they can determine whether it will be a damp squib or a period of meaningful progress.”