Markets appear to be more optimistic about a Middle East peace deal, with stocks edging higher across Asia and Europe.
Despite the advance in equities, there was still a slight sense of nervousness as there remains considerable uncertainty over a successful outcome from peace negotiations.
Investors seem happy to dip their toe in the water again, but they’re not diving in headfirst and loading up on stocks. Healthcare stocks were the day’s comfort zone on the UK market, with AstraZeneca leading the charge.
Barratt Redrow
The conflict in Iran and the implications it has for inflation and interest rates have shaken the foundations of the housebuilding sector, so there will be a modicum of relief after Barratt Redrow’s third-quarter update.
The company is sticking with guidance, albeit for a financial year which ends in a matter of weeks. Demand is holding up for now, with sales rates ticking higher and the order book in reasonable shape, but the company’s decision to materially scale back land purchases feels instructive as it reacts to limited forward visibility.
There is a sober acknowledgement that inflationary pressures are likely to be felt more acutely through the course of 2026.
While it may owe much to the timing of remediation payments, investors will be pleased to see a higher-than-expected cash buffer expected at Barratt by the year end.
A strong balance sheet could help the company navigate what could be a tricky period. What was expected to be a relatively smooth road ahead, with easing rates and inflation helping Barratt and the rest of the industry to rebuild profitability, now looks littered with potholes.
ASML
While it feels like interest in tech stocks has waned over the past six months, there are still pockets of the market exciting investors including semiconductor equipment maker ASML.
For all the worries about potential over-investment by big tech in AI, there are still plenty of companies on the receiving end of that spending and they’re making hay while the sun shines. This includes ASML which has lifted its full-year sales forecast amid strong demand for its kit.
Customers are lining up to buy its equipment, which is a ringing endorsement of its skills as ASML’s products are not a casual purchase. The equipment is incredibly expensive, so customers need to be truly committed about their growth plans before signing on the dotted line with ASML.
The elephant in the room is the prospect of US restrictions on selling or servicing certain equipment to Chinese customers. A draft US bill has proposed tighter restrictions on ASML and peers, which clouds the outlook for the Dutch group as it would reduce an opportunity to make even more money.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
