Daily market update: Bond markets, SK Hynix, Unilever, GSK

Bond investors rule the roost on Budget Day as their opinion on the government’s policies and economic outlook has considerable sway.

They will waste no time in letting the world know if Chancellor John Healey hasn’t won people over with plans to keep public finances in check. A dull as dishwater Budget is the best outcome for bond investors as they crave zero drama.

The 10-year gilt yield is the benchmark for bond market sentiment, particularly on Budget Day, and it was calm leading up to the red box event with only a fraction of a gain. It suggests that investors are ready and waiting to dive into the details but aren’t trying to second guess anything before the official announcement.

Admittedly, 5.36% is high relative to the past 20 years, but that is partially down to inflation worries linked to the Iran war rather than simply bond investors being worried about UK public finances and wanting a bigger return for the risk of lending the government money.

UK banking shares got a boost on reports that Chancellor John Healey will scrap plans to reduce the Cash ISA allowance from £20,000 to £12,000. Cash ISAs are an important funding source for banks and building societies, making the apparent U-turn welcome news for the sector.

While there was a moment of calm on UK financial markets ahead of the Budget announcement, Wall Street loaded up the party cannon on Tuesday. There was a rally in a host of AI-related stocks including neocloud group CoreWeave, data storage specialist Western Digital and IT solutions provider Super Micro Computing.

Strong gains in the stocks and a decent session overall for the Nasdaq implies that investors aren’t over the AI craze just yet. These types of stocks have become a litmus test for the mood of the market. They typically fall when investors are worried that the AI story might be running out of steam, and they rise when animal spirits are running high around the technological revolution.

Helping to keep the party alive in Korea was a strong set of results from SK Hynix, arguably the go-to stock in Asia in 2026 for anyone wanting exposure to the AI theme. Record quarterly results for revenue and operating profit suggest demand for its products remains in top gear, and that was backed up by comments from the company which flagged ongoing supply constraints in the industry.

The big unknown is whether this is the start of a new AI stock rally, or just a relief bounce after a period where investors were starting to question how long positive momentum could be sustained.

Unilever

While Unilever lifted its outlook for volume growth, investors were left unimpressed by its third-quarter update, focusing instead on a weak showing from its high-margin wellbeing segment and stalling sales in developed markets.

Like much of its peer group, Unilever is being sustained by growth in emerging markets. Unlike in the developed world where shoppers have the option of looking down the aisle to cheaper unbranded alternatives which are safe and of reasonable quality, consumers in developing countries often don’t have this option.

The performance of the food arm merely underlined why Unilever is so keen to get it out of the door, with management confirming that the deal which will see a spin-off and combination with McCormick is progressing through regulatory hurdles.

It certainly wasn’t all bad news. Unilever’s ability to increase volumes while also raising prices speaks to the appeal of its core brands. This is a vindication of CEO Fernando Fernandez’s strategy of streamlining the business to focus on top performing household and personal care products.

With his revamp of the business now well advanced, Fernandez will need to demonstrate Unilever’s ability to consistently perform against what remains a testing consumer backdrop.

GSK

GSK may have beaten expectations in the third quarter, but this was what most market watchers would call a ‘low quality’ beat as the company also said full-year earnings growth would be at the lower end of its guided range.

The company is facing higher interest costs on the debt associated with its $10.6 billion takeover of Nuvalent which completed in July and this is putting some pressure on profit.

GSK’s flagship vaccines division was left looking sickly thanks to diminished demand for key treatments and restructuring costs ate into profit.

The bright spot was in speciality medicines where revenues rose sharply for both HIV and cancer treatments. Chief executive Luke Miels is under pressure to build up a pipeline of new drugs ahead of a patent cliff with the loss of exclusivity on its blockbuster HIV drug Dolutegravir.

Miels has made progress on this front, reflected in the strong showing for the speciality medicines arm and recent reporting around a big increase in its cancer treatment pipeline, and is continuing to bring down costs throughout the business. However, the latest update is a reminder Miels still has plenty of work to do.