Market Report: investors get to work as earnings season kicks up a gear
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “Results season is in full swing as several FTSE 100 giants reported this morning. The index ticked higher in early trading as investors try to make heads and tails of global trade developments, as well as corporate earnings. European stocks also ticked higher after a poor day yesterday, as investors weighed the broader fallout from a US-EU trade deal that’s stirred more concern than confidence across the bloc. The agreement, widely viewed as tilting in Washington’s favour, risks deepening growth anxiety in core Eurozone economies already grappling with fragile momentum.
Barclays delivered a strong earnings beat, driven by a resurgent investment banking division thriving in today’s volatility – mirroring the strength seen across US peers. Gains in fixed income and equities trading helped the bank to outpace its US rivals, a space where it’s often underestimated but clearly still in the fight. Broader performance was solid, with stable US credit card delinquencies offering relief on one of the more closely watched consumer risk fronts. While capital returns came in slightly below expectations, the underlying momentum and undemanding valuation should be enough to keep investors happy.
US markets are on a heater, and while the S&P 500’s modest 0.02% gain wouldn’t normally turn heads, last night’s close was its sixth consecutive record high. Investors took the EU’s expected 15% tariff move in stride, the latest indicator that this Trump administration is getting some big deals done, and any tariff war risk built into stock valuations has all but disappeared. Focus now shifts to China trade talks and a jam-packed week ahead, with a quarter of the S&P 500 index reporting earnings, a critical Fed decision, and no shortage of data poised to test the market’s nerve.
Brent oil prices held near $70 on Tuesday, steadying after a more than 2% surge sparked by renewed fears of tighter global supply, as President Trump abruptly slashed Russia’s timeline to broker peace in Ukraine. The move, shortening the ceasefire window from 50 days to just 10-12, comes alongside fresh EU sanctions, including a lower oil price cap and tougher banking restrictions, further squeezing Moscow’s export routes. With trade tensions easing elsewhere, the market’s focus now shifts to China, where expectations of a tariff truce extension are keeping demand hopes afloat.”
Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Greggs’ first-half growth hasn’t been as strong as markets originally hoped, with the hot weather being blamed for a drop in customer footfall and sales. With less demand for its flaky bakes, and cost inflation expected to run at around 6%, full-year operating profits now look set to fall to below last year’s level of £195.3m. These challenges have seen the Greggs’ share price fall by more than 40% over the last 12 months. While these issues shouldn’t be overlooked, they appear to be well baked into the valuation now, and the longer-term investment case remains intact.
Growth is a key focus for the group. The number of shops is set to rise to over 3,000 over the next few years, with management doubling down on its guidance to open between 140 and 150 new stores in 2025. Many of these stores will be open into the evening, which happens to be the group’s fastest-growing daypart. And from September, a new partnership with Tesco means customers will be able to snap up Greggs’ frozen ‘Bake at Home’ range at more than 800 Tesco stores. There’s a lot to like about Greggs’ proposition and long-term outlook. But in the near term, there are some hurdles for the nation’s most popular bakery to jump, so investors will need some patience if Greggs is to prove it’s worth its crust.”