Investors will be relieved to see further gains for European stocks after recent market turmoil.
It implies some faith on the part of markets that an off-ramp can be found for all parties in the Iran conflict before the economic damage becomes too acute.
Asian indices were higher, taking their lead from yesterday’s bounce back in the US and Europe. Countries in this part of the world are particularly exposed to the crisis given much of their energy needs are served by oil and gas shipments through the Strait of Hormuz.
For now, the fighting continues and that’s kept oil prices in alarm bell territory above $100 per barrel and natural gas elevated too. Though in both cases prices are below their recent highs.
Disputed claims on both sides means we’re now in a waiting game to see evidence of tangible mediation efforts to end the war. The whiff of anything positive or negative is likely to have an outsized impact on markets and the prevailing mood remaining hesitant and tetchy.
Miners and defence names were under pressure in early trading in London while retail stocks and energy names, recovering some of the ground lost in yesterday’s yo-yo session, were among those sustaining a rise for the FTSE 100.
Shareholders in Fevertree will hope the short-term pain revealed in its full-year results is a precursor to long-term gains. The company has seen margins slump thanks not only to an environmental levy but also to costs associated with its distribution partnership with Molson Coors.
This partnership should up its game in the US, in terms of its ability to get its product in front of consumers and, assuming it does, the initial impact on profitability may well prove to have been worth it.
Kingfisher
It looks like we’re in another wave of ‘do it for me’ in terms of home improvements as B&Q owner Kingfisher reports a surge in sales to tradespeople. A lot of people can’t be bothered with spending their evenings and weekends painting the house or fixing a fence. It’s a lot simpler to get a tradesperson to do the work, and those experts must source the materials from somewhere.
B&Q has been pushing hard on the trade channel in recent years, and its efforts are now paying off. Tradespeople want to be able to go to a store, find what they need quickly, and not pay through the nose for goods as that cost is passed onto the end-customer.
Tradespeople go to a store for a specific reason and offering an efficient service is key to winning or losing, as there are plenty of other building materials suppliers who would be happy to serve them.
Kingfisher says tradespeople visit more frequently and spend more money than the average retail customer. That makes sense as from the tradesperson’s perspective, this is not a discretionary spend. They’re in the store for a specific reason and not simply to browse. It is clear why Kingfisher is making this customer type a priority.
Vets / Pets at Home / CVS
There is long-awaited clarity on reforms to the vet sector. Vets must now cap prescription fees and publish price lists to improve transparency and make it easier for customers to compare costs and shop around.
The competition watchdog has been sniffing around the sector for some time, casting uncertainty over the likes of CVS and Pets at Home. Shares in both companies have bounced on the reforms as the new rules provide clarity to investors on the lay of the land.
The reforms are expected to drive down prices which isn’t good for CVS and Pets at Home’s earnings prospects, but so much bad news around potential changes to the sector have already been priced into their shares. Their job is to now gain customers’ trust and win more business.
Estee Lauder / Puig
US cosmetics group Estee Lauder is going for a Mediterranean flair after starting takeover talks with Spanish beauty group Puig.
While there might be a crossover in customer base, there are distinct differences between the frequency of their product sales. Estee Lauder is focused on skincare, makeup and haircare, which are the type of products people buy more regularly than the designer clothing offered by Puig. The key area where there is a clear overlap between the two brands is fragrances and perfumes.
One could make a good argument that the two companies’ activities are complementary, yet a business combination would bring execution risks and most likely cultural differences.
Estee Lauder has lost its footing in recent years and needs to do something radical to get back on top. A takeover of Puig is an interesting proposition, but history suggests that bolting two companies together is not a guaranteed recipe for success.
Bellway
It’s fair to say 2026 is not playing out as housebuilders would have hoped or expected. A picture of gently easing interest rates, manageable cost inflation and recovering demand has been torn up by events in the Middle East.
While Bellway has not seen any direct impact on trading so far from the Iran war, the company is clear in pointing out the obvious impacts it could have and has wasted no time in trimming its margin guidance.
The longer the current situation goes on, the larger the likely impact on build cost inflation, buyer confidence in the property market, and on mortgage affordability and availability too.
This could put Bellway and its peers in an ever-tightening vice where their margins are squeezed by falling sale prices and rising costs.
Bellway points to its robust balance sheet and land bank as evidence it can prosper in stable conditions. However, given the number of shocks thrown at the sector over the last decade, instability looks like a new normal that Bellway and its peers may need to adjust to.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
