Author: Fiona Craig

SThree (LSE:STEM) has raised its full-year profit guidance after reporting a 2% year-on-year decline in third-quarter net fees, with its contract business showing a smaller decline and the contractor order book increasing.

The STEM workforce consultancy now expects profit before tax of at least £12 million for FY26, ahead of its previous guidance. The revised outlook reflects working capital efficiencies and one-off benefits.

Third-quarter net fees declined 2% compared with the same period last year, marking the third consecutive quarter of sequential improvement. Contract net fees fell 1%, while permanent recruitment fees decreased 8%.

Contractor Order Book Increases to £148 Million

SThree reported new business growth in six of its 11 contract markets during the quarter, contributing to a 5% increase in its contractor order book to £148 million.

According to the company, the order book provides visibility over approximately five months of future net fees.

Contract recruitment continues to account for the majority of SThree’s net fees, with the group maintaining its focus on specialist placements across technology, engineering and life sciences.

The company said improving trends in its contract business contributed to its outlook, although trading conditions remained subdued in several markets.

US and Life Sciences Growth Offset Regional Declines

Performance varied across SThree’s geographical markets and specialist sectors during the third quarter.

The USA recorded double-digit growth, while the life sciences business returned to growth, with net fees increasing 8%.

These gains were offset by declines in Germany, the UK, Japan and parts of the Middle East and Asia.

The USA, Germany and the Netherlands remain SThree’s largest markets, with the group’s performance reflecting differences in recruitment demand across regions and sectors.

Net Cash Reaches £36 Million as Cost Programme Continues

SThree reported a net cash position of £36 million and continued its share buyback programme of up to £20 million.

The company is also implementing a cost-optimisation programme, which has reduced headcount by 7% since the end of the previous financial year.

Management attributed the increase in full-year profit expectations partly to working capital efficiencies and one-off benefits.

The group continues to invest in technology and data capabilities, including proprietary agentic artificial intelligence tools, which it expects to support productivity improvements.

FY26 Profit Guidance Raised

SThree now anticipates profit before tax of at least £12 million for FY26, exceeding its previous expectations.

The revised guidance follows three consecutive quarters of sequential improvement in net fee performance, alongside growth in the contractor order book.

Management expects its contract-focused business model and technology investments to support future growth, while acknowledging that recruitment conditions remain subdued in several European and Asian markets.

The company’s near-term performance will continue to reflect regional recruitment activity, contract demand and the contribution of its ongoing cost-optimisation programme.

Henry Boot (LSE:BOOT) reported a pre-tax loss of £6.3 million for the first half of 2026, as lower residential land and property transaction volumes affected the UK land promotion, property development and housebuilding group’s financial performance.

Revenue declined to £80.7 million, while net asset value (NAV) per share decreased slightly. Net debt increased to £132.9 million, reflecting investment in planning activities and higher deferred payments.

The company expects earnings to be weighted towards the second half of the year, supported by land transactions, housebuilding completions and property lettings.

Land Portfolio and Development Pipeline

Henry Boot’s strategic land portfolio comprises 107,924 potential residential plots, providing the group with a substantial inventory of land for future promotion and development.

The company also has a development pipeline valued at approximately £1.4 billion, including a largely pre-let programme with a gross development value (GDV) of £161 million.

Its industrial and logistics activities include joint venture projects that are progressing through development. The group also holds an industrial and logistics-focused investment portfolio valued at approximately £120 million.

Management continues to highlight the potential value of its land holdings and development pipeline, although the timing of transactions and project completions remains relevant to the recognition of earnings.

Second-Half Earnings Expected to Benefit From Transactions and Completions

Henry Boot expects its financial performance for 2026 to be weighted towards the second half, with several land transactions either secured or at advanced stages.

The company anticipates contributions from residential land deals, home completions and property lettings during the remainder of the year.

At Stonebridge Homes, the group’s housebuilding division, completion volumes are expected to be slightly higher than in the previous year, alongside an increase in average selling prices.

However, sales rates have moderated slightly, while customer incentives remain broadly stable.

Bank Facility Increased to £165 Million

Henry Boot has expanded its banking facility to £165 million, providing additional financial flexibility as it progresses its development activities and manages its land portfolio.

The increase follows a rise in net debt to £132.9 million during the first half, partly associated with planning investment and deferred payments.

The board has identified cash generation and cost control as priorities, rather than seeking to maximise short-term earnings.

The company is also undertaking a strategic review under its new chief executive, with the review focused on identifying opportunities to realise long-term value from the group’s operations and assets.

Market Conditions and Outlook

Henry Boot said subdued transaction volumes in residential land and property markets affected its first-half performance.

The group continues to identify underlying demand in its core residential and industrial markets as a factor supporting its longer-term outlook, although the timing of a recovery remains dependent on economic and market conditions.

For the remainder of 2026, management expects land transactions, housebuilding completions and lettings to contribute to a second-half weighting in earnings.

The strategic review, cash generation and execution of the development pipeline remain central to the group’s stated priorities.

Gold prices moved lower on Monday as a stronger US dollar and expectations of further Federal Reserve monetary tightening weighed on the precious metal.

Spot gold declined 0.7% to $4,345.76 an ounce by 06:58 ET (10:58 GMT), while gold futures fell 1.0% to $4,383.10 an ounce.

The decline came after the Federal Reserve raised interest rates last week for the first time since 2023 and indicated that additional increases could follow before the end of the year as policymakers seek to contain inflation linked to energy costs.

Fed Policy Expectations Remain Central to Gold Trading

Investors continued to assess the implications of the Federal Reserve’s latest decision and the possibility of another rate increase in December.

“Gold edged lower at the start of the week as investors assessed the implications of the Federal Reserve’s first rate hike since 2023 and the prospect of further policy tightening,” ING analysts wrote in a note.

Higher interest rates tend to present a challenge for gold because it does not pay interest, making income-generating assets comparatively more attractive.

Nevertheless, bullion recorded gains over the previous week, partly supported by a decline in crude oil prices.

ING noted that recent remarks from Federal Reserve officials had reinforced expectations of a prolonged period of restrictive monetary policy.

“Comments from Fed officials reinforced concerns that inflation remains elevated, supporting expectations that rates will stay higher for longer,” the analysts said.

According to CME FedWatch, market pricing indicated an approximately 88% probability of another Federal Reserve rate increase as soon as December.

That probability represents traders’ expectations rather than a commitment by the central bank.

Stronger Dollar Makes Gold More Expensive for Overseas Buyers

The US dollar index advanced 0.1% to 100.30, adding to the pressure on gold.

The index tracks the dollar’s performance against a basket of major currencies.

When the US currency strengthens, dollar-denominated commodities such as gold become more expensive for buyers holding other currencies, potentially weighing on demand.

The combination of a firmer dollar and expectations of higher interest rates contributed to Monday’s decline in bullion.

Falling Oil Prices Offer Some Relief From Inflation Concerns

Crude oil extended its recent losses on Monday as investors considered the possibility of diplomatic progress concerning the conflict involving Iran ahead of this week’s United Nations General Assembly.

Reports of improving oil flows from the Gulf also contributed to expectations that supply conditions could ease.

Lower crude prices may help reduce energy-related inflation pressures, although Federal Reserve officials have continued to express concern about elevated inflation.

For gold, the immediate market focus remains on the outlook for US interest rates, movements in the dollar and developments in energy markets.

Bitcoin climbed above $84,000 on Monday as cryptocurrency markets extended their recovery following a US regulatory decision allowing eligible platforms to trade tokenised equities under specified conditions.

The digital asset rose 4.9% to $84,371.90 by 05:30 ET (09:30 GMT), taking its gains over the preceding week to approximately 5%.

The rebound followed a period of volatility in which Bitcoin dropped below $76,000 after the Federal Reserve raised interest rates last week.

Lower oil prices and encouraging developments in US-China trade discussions also contributed to improved sentiment across financial markets.

SEC Grants Five-Year Exemption for Tokenised Stock Trading

The US Securities and Exchange Commission (SEC) announced a temporary five-year exemption on Thursday, permitting qualifying trading venues to facilitate transactions in tokenised US stocks through blockchain-based platforms.

The exemption is subject to conditions intended to maintain investor protections while supporting financial innovation.

The announcement increased expectations that blockchain infrastructure could play a larger role in trading traditional financial assets.

Cryptocurrency-related equities responded with substantial gains on Friday. Coinbase (NASDAQ:COIN) rose 12%, Strategy (NASDAQ:MSTR) advanced 16% and Robinhood (NASDAQ:HOOD) gained 9%.

Among digital assets, Zcash climbed approximately 3% to above $1,500.

NEAR surged around 23% as activity involving Zcash increased on its cross-chain swap service.

The SEC’s decision applies to qualifying venues and does not remove regulatory requirements for tokenised securities generally.

Falling Crude Prices Ease Some Inflation Concerns

The cryptocurrency recovery coincided with gains in Asian stock markets and US equity futures following positive signals from trade negotiations between Washington and Beijing.

Investors were awaiting a meeting between US President Donald Trump and Chinese President Xi Jinping for further indications about the direction of bilateral trade relations.

Meanwhile, Brent crude declined approximately 2% to below $102 per barrel, extending a four-session losing streak.

Expectations of increased oil supply from the Middle East helped ease concerns about energy costs and their potential contribution to inflation.

Nevertheless, higher US Treasury yields and the possibility of further Federal Reserve interest rate increases remain potential headwinds for Bitcoin.

XRP, Ethereum and Dogecoin Join Cryptocurrency Rally

The advance extended across the broader digital asset market, with most major alternative cryptocurrencies trading higher on Monday.

Ethereum increased 5.8% to $2,728.92, while XRP gained 7% to $1.48.

Solana rose 7.3%, Cardano advanced 8.7% and BNB climbed 4.5%.

Dogecoin, among the most widely traded meme cryptocurrencies, recorded a gain of more than 9%.

The market-wide rebound followed the SEC announcement and an improvement in broader risk sentiment. Further movements will depend on regulatory developments, monetary policy expectations and trading demand.

UBS has revised its palladium price forecasts upwards for the final months of 2026 and the first half of 2027, pointing to a tighter physical market as mine production declines and automotive demand proves more resilient than expected.

The bank increased its December 2026 and March 2027 projections by $200 per ounce each. Its June 2027 estimate was raised by $100 per ounce.

UBS did not disclose the revised absolute price targets in the information provided and continues to take a cautious view of palladium’s longer-term demand prospects.

Slower Vehicle Transition Supports Consumption

Palladium prices have exceeded the bank’s previous expectations as the decline in global consumption has been less pronounced than anticipated.

Worldwide demand decreased only slightly in 2025 and is forecast to remain broadly unchanged in 2026.

One factor supporting consumption is the slower transition away from internal combustion engines.

Hybrid vehicles continue to gain adoption in markets where gasoline-powered cars account for a substantial share of the fleet, including the United States, Brazil and parts of Asia.

Many hybrid vehicles still require catalytic converters, which use palladium to reduce harmful exhaust emissions.

The metal’s widening price discount relative to platinum has also made it more economical for manufacturers to substitute palladium for platinum in certain catalytic converter applications.

These developments have helped sustain near-term demand despite the broader shift towards electric vehicles.

UBS nevertheless expects palladium consumption to weaken over the longer term as vehicle electrification progresses and production of internal combustion-engine models declines.

Russian and South African Output Constrains Supply

The bank’s revised forecasts also reflect weaker primary supply.

Global palladium mine production contracted in 2025 and is expected to decline again in 2026.

In Russia, falling ore grades are affecting output. South African producers, meanwhile, continue to focus on capital discipline rather than expanding production volumes.

Recycling is providing an increasing contribution to supply, but UBS expects the additional recovered material to offset only part of the reduction in mine production.

With global demand forecast to remain relatively stable this year, the decline in primary output is contributing to tighter physical market conditions.

UBS considers these supply constraints likely to limit further downside in palladium prices during 2026.

The bank’s higher near-term forecasts therefore reflect current supply and demand conditions rather than a change in its longer-term assessment, which remains affected by the expected decline in combustion-engine vehicle production.

Oil prices fell to an 11-day low on Monday as a recovery in Saudi Arabian exports and the prospect of diplomatic engagement between the United States and Iran eased some concerns about Middle Eastern supplies.

Both Brent crude and US West Texas Intermediate (WTI) futures reached their lowest levels since 10 September earlier in the session.

At 08:59 GMT, November Brent futures traded at $101.75 a barrel, down $2.12, or 2%.

The October WTI contract, which expires on Tuesday, declined $1.96, or 2%, to $98.34 a barrel. The November WTI contract stood at $94.16.

UN Meeting Raises Possibility of Diplomatic Engagement

Investors were monitoring developments ahead of this week’s United Nations General Assembly in New York, where Iranian President Masoud Pezeshkian is expected to attend.

US President Donald Trump indicated that he would be open to meeting Pezeshkian, despite a fresh exchange of threats between Washington and Tehran on Sunday.

Tim Waterer, chief market analyst at KCM Trade, said expectations of diplomatic progress were influencing oil prices.

“It seems that a degree of risk premium is being removed from oil prices on hopes that a diplomatic path to de-escalate the US-Iran war may arrive this week,” Waterer said.

Separately, Al Jazeera reported that Iran had communicated its conditions for returning to negotiations through mediators, citing an interview with Iranian security official Mohsen Rezaei on Saturday.

The possibility of talks has not eliminated the risk of further military escalation.

On Monday, a spokesperson for Iran’s Revolutionary Guards warned that the country would use new weapons and strike previously untargeted locations in response to another US offensive, according to the Fars news agency.

Houthi Attacks Add to Regional Supply Risks

Tensions also remained elevated following reported attacks by Yemen’s Iran-backed Houthis against Saudi Arabia.

The Houthis said they had launched missiles and drones at “sensitive” sites in Riyadh on Saturday and targeted an Aramco facility in Yanbu, an important oil export centre on the Red Sea.

Three Iranian sources familiar with the situation said China had asked Tehran to help restrain the Houthis after Saudi Arabia appealed to Beijing following the attacks.

The disruption to Saudi Aramco’s East-West pipeline has affected shipments through Yanbu, leading the company to redirect more crude exports through the Strait of Hormuz during September and October.

The shift has helped maintain Saudi export volumes despite damage to the pipeline.

Satellite Data Points to Higher Saudi Export Volumes

JPMorgan analysts said in a note dated 18 September that Middle Eastern oil shipments had remained relatively strong despite the disruption to Saudi infrastructure.

“Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia’s East-West pipeline,” the analysts said.

Satellite data cited by the bank showed that Saudi crude shipments through the Strait of Hormuz averaged 2.9 million barrels per day over the previous six days.

That compared with approximately 700,000 barrels per day in August, indicating a substantial increase in volumes using the route.

“The most notable pivot has come from Saudi Arabia,” JPMorgan’s analysts said.

The rise in Saudi exports and the prospect of diplomatic discussions have contributed to Monday’s decline in crude prices.

Nevertheless, uncertainty remains over the outcome of any potential US-Iran engagement, while continued attacks on energy infrastructure could affect the availability and transportation of Middle Eastern oil.