Daily market update: Unilever, Barclays, Samsung Electronics

If Monday was all about the soaraway stock market debut of China’s memory chips maker CXMT, Tuesday is getting off to a stickier start thanks to huge falls in the leading Korean and Japanese producers, Samsung Electronics, SK Hynix, and Kioxia.

Such were the falls that they dragged Korea’s KOSPI index down by 10% and Japan’s Nikkei lost 4% of its value. America’s technology-laden NASDAQ is also taking heed and looks set to open down around 1%.

SK Hynix’s local shares are now down by almost half from their June peak and their US listed stock now stands below the offer price of 10 July, despite the ongoing boom in capital expenditure by the so-called Artificial Intelligence (AI) hyperscalers. This raises the stakes so far as the results due from both Microsoft and Amazon on Wednesday and Thursday respectively, especially as investors do not seem to be warming to NVIDIA’s plan to help finance the construction of a large data centre by OpenAI in the US, the graphics processing unit (GPU) specialist’s latest multi-billion plan to help fund the roll out of AI.

NVIDIA’s commitments keep adding up and, for some, bring back only bad memories of how broadband and telecom equipment companies came badly unstuck when they financed customer purchases at the turn of the century, when such schemes helped to inflate, and then puncture, both underlying demand for kit and share prices, with the result that the technology, media and telecoms bubble blew and then burst.

Back on the domestic front, the UK’s first-half results season is about to hit top gear. Almost a third of the FTSE 100’s members are due to report results or offer trading updates this week, and analysts’ consensus forecasts suggest they are set to make £162 billion between them in 2026 as a whole, or 56% of the index’s aggregate expected pre-tax income of £291 billion.

This period is therefore a key test of UK plc’s earnings momentum. Analysts have consistently upgraded profit forecasts in 2026, in aggregate, despite the uncertainty caused by the UK’s murky economic outlook, the war in the Middle East and American tariffs, and FTSE 100 constituents, going into this week, had served up 31 positive earnings surprises and 21 negative ones.

Vodafone’s beat and AstraZeneca’s solid numbers on Monday represented a good start, and Unilever and Barclays have added to the feel-good factor with upside surprises of their own. That said, their respective first-half figures drew contrasting responses from investors.

Unilever

Unilever’s shares shot to the top of the FTSE 100 leaderboard, and their highest mark since March, as the consumer goods giant’s first-half results pleased and chief executive Fernando Fernandez raised sales and profit expectations for 2026 overall.

Shareholders will be particularly pleased to see an acceleration in organic sales growth to 5.8% year-on-year in the second quarter, the fastest rate of increase in more than a decade and well ahead of analysts’ forecasts.

Volume growth was the key, as pricing remained muted, and Beauty, Personal Care and Home Care led the charge. The only disappointment was Food, and Mr Fernandez will doubtless see that as a vindication of his strategy to spin off that unit and combine it with America’s McCormick. The deal is on track to complete in the middle of 2027 and, after last December’s demerger of The Magnum Ice Cream Company, will leave Unilever as a pure play on health and personal care, where key brands include Dove, Persil, Domestos and Lifebuoy.

Meantime, management expects stronger prices in the second half of this year, after modest increases between January and June. This should help to offset input cost increases, boost profit margins, and support the cash flow that funds cash returns to shareholders.

Unilever has completed its planned €1.5 billion share buyback for this year, but the company nudged up its dividend by 3% compared to the second quarter a year ago and stuck to its plan of €6 billion in buybacks in total across 2026 to 2029.

Barclays

Barclays’ interim results did not get the same warm welcome as those of Unilever, even though the bank’s second-quarter pre-tax profit of £3.2 billion beat the consensus forecast of £3.1 billion, the board sanctioned a huge increase in the dividend and topped up the share buyback programme by another £1 billion and boss C.S. Venkatakrishan raised profits forecasts for the year.

The indifference may lie with the mix of earnings and concerns over quality rather than quantity, as the investment bank provided the bulk of the upside profit surprise while the sale of an American Airlines co-branded credit card operation and the acquisition of Best Egg gave a bit of a messy feel to the numbers.

However, this is nit-picking, and the headline is that the second-quarter’s pre-tax profit was nearly a third higher than a year ago, while the first-half dividend is up by nearly 100% and total first-half cash returns, including buybacks, are up by nearly 70%.

The UK economy may not be firing on all cylinders, but it is not dropping in a hole either, while the US continues to perform. Global interest rates are relatively stable, net interest margins are strong, sour loan losses modest, and the investment bank is able to make the most of volatility in the financial markets, across equities, bonds, currencies, and commodities.

If Barclays is ever going to make serious money it is now, and the bank is delivering, helped by how it is keeping its nose clear and incurring only modest regulatory and litigation costs; they came to just £4 million between April and June. All of this helps to explain why Barclays’ shares trade at 1.2 times tangible net asset value per share, and not at the discount that prevailed throughout the 2010s and early 2020s.

Perhaps the only worry is whether this bumper period attracts the attentions of a cash-strapped government, which is looking for ways in which it can raise funds to pay for its policy agenda.

JP Morgan Chase’s Jamie Dimon has already railed against the possibility of higher taxes on bank earnings, but such a levy would be an easy sell to politicians and the public alike, even if the memories of the Great Financial Crisis are fading, given it started nearly twenty years ago. Hiking the dividend and adding to the share buyback programme will hardly help to convince policy makers that such a levy cannot be afforded, or will damage lending, either.