Daily market update: Micron, Topps Tiles, Land Securities

A renewed uplift in oil prices and bond yields put European stocks under pressure.

While there are signs that an increased flow of oil is getting through the Strait of Hormuz, Brent crude hovered around $100 per barrel on the continuing war of words between the US and Iran.

Despite US inflation data which came in softer than anticipated yesterday, government bonds continued to sell off, revealing significant twitchiness among investors. The yield on US 10-year Treasuries hit its highest level since the launch of American Idol in 2002.

The 30-year gilt passed above 6% for the first time since January 1998, sending alarm bells ringing. Prime Minister Andy Burnham and Chancellor John Healey already have enough on their plate without a rapid increase in government borrowing costs since they took office. Gilt yields moving at such a pace presents a major challenge for their spending and borrowing plans.

Asian stocks with links to AI still managed strong gains as they reacted to a blockbuster set of earnings from US memory chip outfit Micron. US futures pointed to a higher open on Wall Street later, largely thanks to this artificial intelligence-related boost.

In London there was a significant sell-off with banks and consumer-facing names among those to lose ground.

Micron

Memory chip play Micron helped reignite some confidence in the AI chip trade with a bumper set of fourth-quarter results.

Having risen heading into the numbers, the share price reaction was relatively muted on the actual results in pre-market trading, reflecting the stock’s stratospheric trajectory in 2026.

Saying an AI company has produced a record performance has become as routine as a walk in the park, but the numbers were still eye-catching as revenue surged 380% to more than $54 billion, with earnings up 11-fold.

Demand for the company’s HBM (High Bandwidth Memory) has gone through the roof. This is a specialised form of memory that only a handful of companies, including Micron, can produce at the scale required by the AI data centre build-out.

The maxim is you must spend money to make money, and Micron has announced plans to significantly increase capital expenditure. Demand in the short term looks secure, with the company’s HBM chips sold out through the remainder of this year.

However, memory chip firms have historically been highly cyclical and there may be a modicum of concern that this heavy spending could come back to haunt Micron if or when demand cools.

Micron guided for a slight easing of gross margins in the first quarter as it faced higher input costs as demand for all sorts of components surges thanks to the AI-related demand.

Topps Tiles

Blaming the weather is up there with the dog ate my homework in the eyes of most investors when it comes to excuses for weaker performance and, accordingly, Topps Tiles got a negative reaction to its latest update.

The company reported a hit to fourth-quarter trading from the summer heatwaves, particularly for trade customers and housebuilders as the extreme temperatures disrupted work. The company signalled it saw a pick-up in September.

Otherwise, performance was relatively resilient as cost cutting helped support profitability and allowed Topps to stick with full-year guidance.

The company will hope news of a new scheme to help first-time buyers onto the property ladder can help support demand in what remains a subdued property and home renovation market.

Land Securities

Land Securities has made an important acquisition in the retail sector with the purchase of Gateshead’s Metrocentre, close to Newcastle city centre.

Ranked as a top 10 shopping centre destination in the UK based on sales, Metrocentre becomes a flagship asset for the property group and accelerates its position as a retail landlord in larger shopping centres. Tenants include Apple, Zara and Marks & Spencer, the sort of names that won’t give Land Securities a sleepless night over whether the rent will be paid.

Metrocentre looks like an ideal fit for Land Securities’ portfolio that includes stakes in retail sites across the UK such as Bluewater in Kent and Liverpool’s ONE centre. Land Securities also has a range of office workspaces.

Mike Ashley won’t be pleased as Frasers Group was rumoured to be in the running to buy Metrocentre. Frasers’ Sports Direct and Flannels brands are prominently displayed on the front of the shopping centre, and the group is a key tenant.

Frasers owns several shopping centres and retail parks in the UK and Metrocentre would have been a trophy asset to add to its portfolio, given Ashley’s association with Newcastle. As the former owner of Newcastle United Football Club, Ashley has deep ties with the city.

Boots

Boots is reportedly being sold to Canada’s Weston family for close to $9 billion. Private equity group Sycamore acquired Boots last year through the $23.7 billion acquisition of parent group Walgreens Boots Alliance. It was never seen as a long-term owner of the UK chemist chain, and there have been various rumours around either selling the business or floating it on a stock market.

If the deal with the Weston family comes to pass, it seems unlikely that an Initial Public Offering (IPO) of Boots would happen any time soon. Stock market flotations are typically an exit route for an owner or a large shareholder. The exception is when an owner wants to raise a substantial amount of money and uses an IPO to tap a large pool of capital.

This would be a major blow to the London Stock Exchange which has desperately been trying to attract more companies to float in London. Boots is a major name on the high street and exactly the type of brand that could attract retail investors keen to put money into a name they know well.

The Weston family have fingers in many pies including Primark’s parent Associated British Foods and department store Fortnum & Mason in the UK, and in Canada they own Loblaws supermarkets and Shoppers Drug Mart pharmacy chain. They have considerable experience with retail and Boots would be a logical addition to their empire. The family are likely to focus on making Boots run more efficiently and driving growth, potentially investing big sums to improve stores and making it more relevant for the modern age.