Author: Fiona Craig

The MSCI All Country World Index rose 2.4% in August, supported by stronger-than-expected corporate earnings, growing anticipation of interest rate cuts, and continued enthusiasm for artificial intelligence investments, according to analysis from Bank of America.

Since bottoming on April 8, global equities have climbed 28.1%, with Japan and Europe setting the pace. Japanese markets advanced 6.9% last month, while European equities gained 3.2%. By comparison, U.S. stocks increased a more modest 1.8%.

Sector performance was mixed. Tech hardware and materials led the global gains in August, up 8.3% and 6.9% respectively. Software stocks lost 3.8% and utilities slipped 0.6%, making them the weakest performers.

Japan stood out across industries, with telecoms (+19.0%), energy (+14.7%), and utilities (+14.2%) delivering the strongest returns worldwide. In contrast, Japanese semiconductor shares fell 6.3%, while European software (-5.7%) and Asia-Pacific ex-Japan healthcare (-5.4%) also underwhelmed.

Looking at the year to date, banks have taken the top spot globally, advancing 26.6% thanks largely to a 57.6% surge in European lenders. Telecom (+24.3%) and semiconductors (+23.0%) followed. On the weaker side, healthcare (+2.3%), tech hardware (+2.4%), and consumer discretionary (+5.0%) have been the laggards of 2025 so far.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Morgan Stanley has identified student housing as one of the most durable segments in Europe’s real estate market, naming Unite Group (LSE:UTG) its preferred stock in the sector.

The bank said that demand for student accommodation in the UK is likely to strengthen as tougher immigration rules in the U.S., Canada and Australia drive more international students toward British universities. Unite, the UK’s largest dedicated student housing operator, is expected to capture much of this demand.

UCAS figures show that acceptances for undergraduate courses in 2025/26 have risen 3% year-on-year, with the number of non-EU international students up 5%. Limited new supply alongside these trends is forecast to sustain rental growth above 4% for longer, compared with the 3–4% assumed by consensus. Unite itself has guided for like-for-like rental growth of 4–5% and occupancy above 97%.

Yet despite these fundamentals, Unite’s share price has lagged, ending Aug. 28 at 709p—near decade lows and well below Morgan Stanley’s 1,000p target. The bank attributed the weaker performance to slower booking progress this summer, but noted that this was largely a result of students holding back after some operators introduced late-cycle discounts last year.

Unite’s results underscore the resilience of the business. The company reported a 2024 net asset value per share of 972p, with Morgan Stanley projecting 1,034p for 2025 and 1,226p by 2027. Earnings per share are expected to climb from 46.6p in 2024 to 52.5p by 2027, while dividends are projected to grow from 37.3p to 41.9p in the same period. Debt remains manageable, with net debt to EBITDA forecast at 6.7x in 2025 and an EPRA loan-to-value ratio of 26%.

Another catalyst is Unite’s planned acquisition of Empiric Student Property. If approved, the deal would add roughly 7,700 beds to Unite’s existing 67,729, raising exposure to international students to 32%, postgraduate students to 19%, and high-tariff universities to 69% of its tenant base. Morgan Stanley expects the acquisition to be earnings neutral in its first year and accretive thereafter as cost synergies are realized.

Summarizing its view, the bank said Unite combines size, access to the most resilient demand pools and an attractive valuation. “Student accommodation in Europe offers a great narrative,” the brokerage said, pointing to rising international enrollment and supply constraints. It maintained its “overweight” rating, with an implied upside of 41% from current levels.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

RBC Capital Markets sees limited upside for the European retail sector, cautioning that sluggish consumer spending is likely to outweigh benefits from healthier margin conditions.

In a report published Monday, the bank said its most recent pricing survey of the UK apparel market revealed largely steady prices. It found Marks & Spencer, Zalando, and H&M becoming more competitive compared with last year. At the budget end of the spectrum, Shein gained share against Primark, while online fast-fashion player PrettyLittleThing became more expensive.

RBC argued that these shifts in pricing dynamics won’t be enough to counter household concerns over stretched cash flow, higher taxes, and elevated living costs.

Still, the brokerage highlighted that gross margin prospects for apparel retailers remain favorable, pointing to a 5% year-over-year decline in the U.S. dollar versus both the euro and the pound in the second quarter. Along with ample sourcing capacity and a supportive buying environment, this trend gives retailers flexibility to either bolster profitability or reinvest in their assortments.

Even so, RBC stressed that “the main challenge for the sector will be gaining top line momentum,” citing more difficult year-on-year comparisons following a strong Autumn 2024 trading season.

The outlook for corporate earnings has also shifted. RBC kept forecasts for Inditex steady but only anticipates modest earnings growth, with EPS seen up 2% in 2025 and 7% in 2026. Projections for H&M were trimmed by 1% to 7% for 2025-26, as gains in womenswear have yet to carry over to other categories. Estimates for JD Sports (LSE:JD.) were raised by 3% to 5% for 2026-27, while cuts were made to Boohoo and WH Smith (LSE:SMWH), with the latter’s 2026 pre-tax profit estimate reduced by 22%.

Stock calls reflected the split outlook. RBC rated Next (LSE:NXT), Marks & Spencer (LSE:MKS), JD Sports, and Zalando (TG:ZAL) “outperform.” Inditex, Boohoo (LSE:DEBS), and Ocado (LSE:OCDO) were placed at “underperform.” H&M was rated “sector perform,” with a SEK145 target price, while Inditex was assigned a €43 target under the same rating. WH Smith’s target price was lowered to 850p from £12, while JD Sports’ was raised to 110p from 95p.

Valuations also illustrate the tougher growth picture. Inditex trades around 22.5 times 2025 earnings with a 4% dividend yield, while H&M is at roughly 18.5 times 2026 earnings with a 5% yield. RBC called Inditex’s current multiple “full” given its normalized growth outlook, while stressing that H&M must deliver stronger sales momentum to merit a rerating.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

London stocks started the week on a positive note, with the FTSE 100 inching up on Monday as the pound advanced against the U.S. dollar.

By 11:04 GMT, the UK’s blue-chip index was up 0.1%, while sterling gained 0.2% versus the dollar, pushing above the 1.35 level. Elsewhere in Europe, Germany’s DAX added 0.3% and France’s CAC 40 ticked 0.09% higher.

BAE climbs after Norway frigate deal

Defense contractor BAE Systems PLC (LSE:BA.) was among the standout performers after Norway confirmed it would purchase new Type 26 frigates from the UK in what officials described as the country’s biggest military procurement in history.

Prime Minister Jonas Gahr Støre said on Sunday that the UK partnership offers the strongest foundation for achieving Norway’s defense goals, as approved by parliament. Deliveries of the frigates are expected to begin in 2030. The selection followed a months-long review of proposals from France, Germany, the U.S., and the UK.

Kainos surges on raised revenue outlook

Kainos Group PLC (LSE:KNOS) saw its shares rocket more than 19% after the IT services firm lifted its full-year revenue forecast, crediting better-than-expected sales in the first half.

The company said adjusted pre-tax profit should be in line with consensus projections of £65.1 million to £74.7 million, based on revenue estimates of £393.4 million. The upbeat guidance follows a strong finish to the previous financial year.

Domino’s announces buyback

Domino’s Pizza Group PLC (LSE:DOM) rose over 4% after revealing a £20 million share repurchase program. The buyback, which began immediately, is intended to reduce share capital and will run until completion.

Tesco boosted by JPMorgan upgrade

Shares in Tesco PLC (LSE:TSCO) gained more than 2% after JPMorgan added the supermarket chain to its Positive Catalyst Watch. The bank reiterated its “overweight” rating and lifted its price target to 500p from 450p, citing strong earnings momentum and improved margin visibility.

CMA probes Greencore-Bakkavor tie-up

Separately, the UK Competition and Markets Authority opened a preliminary review into Greencore Group’s (LSE:GNC) proposed £1.2 billion takeover of Bakkavor Group PLC (LSE:BAKK).

The merger would unite two of the UK’s largest suppliers of convenience and chilled foods. The CMA said on Monday that it had gathered sufficient information to launch its initial investigation.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Markets enter a holiday-shortened week under the shadow of legal uncertainty surrounding U.S. tariffs. Investors are also preparing for critical employment data releases, a series of business activity metrics, and the Federal Reserve’s “Beige Book.” On the earnings front, semiconductor company Broadcom and software giant Salesforce are set to take center stage.

Legal dispute over Trump-era tariffs

The tariffs implemented during the Trump administration have faced multiple legal challenges, particularly from parties questioning the president’s use of emergency powers to impose import duties.

Investors are closely monitoring a pivotal decision from the U.S. Court of Appeals for the Federal Circuit issued late Friday, which rejected President Donald Trump’s broad tariffs. The White House has until mid-October to appeal to the Supreme Court, or the ruling will take effect.

Reports suggest that Trump officials anticipated the Supreme Court would ultimately have to resolve the matter, and the administration remains confident that the tariffs—and Trump’s assertion of authority to enact them—will eventually receive support from the court’s conservative majority.

“Global trading partners will no doubt find it premature to be celebrating just yet, but we’ll be interested in seeing whether the Treasury market comes under any further pressure if the US has to hand back already received tariff revenues,” analysts at ING said in a note.

Jobs data takes the spotlight

Friday’s labor market report is expected to provide insight into the broader economy and act as a key test of investor confidence in a potential Fed rate cut at the September meeting.

Last month’s softer-than-expected payrolls data increased expectations for a reduction in borrowing costs, despite ongoing concerns about persistent inflation.

Fed Chair Jerome Powell also cautioned in a speech at an economic symposium in Wyoming that risks to the labor market were rising. As of Monday morning, the CME FedWatch Tool indicated more than an 87% probability that the Fed will cut rates by 25 basis points from the current 4.25%-4.5% range at the conclusion of its two-day meeting on Sept. 16-17.

Economists are projecting that August nonfarm payrolls will come in at 74,000, close to July’s 73,000. Controversy over prior revisions led to the dismissal of the commissioner of the Bureau of Labor Statistics.

U.S. ISM manufacturing and services data

This week’s calendar also includes readings on private-sector employment, job openings, and key business activity figures, providing insight into the effects of Trump’s tariffs.

The Institute for Supply Management’s (ISM) manufacturing PMI for August is forecast at 48.9, up from 48.0 in July. Meanwhile, the ISM services PMI is expected at 50.5, slightly above July’s 50.1. Readings below 50 indicate contraction, while levels above 50 signal expansion.

Manufacturing, which accounts for just over 10% of the U.S. economy, contracted for the fifth consecutive month in July, with employment at factories falling to a five-year low. Services, which make up more than two-thirds of the economy, were mostly flat, with employment trends weakening.

Beige Book preview

The Fed will publish its latest “Beige Book” on Wednesday, providing one of the final snapshots of economic conditions before the September policy meeting.

The report, the first since July, highlighted concerns from contacts across industries about ongoing cost pressures. “This would increase the likelihood that consumer prices will start to rise more rapidly by late summer,” it noted, adding that all 12 Fed districts reported impacts from Trump’s trade policies.

The Beige Book also showed that many companies were delaying hiring and layoffs amid uncertainty over tariffs, signaling caution in business activity.

Earnings focus: Broadcom and Salesforce

Broadcom (NASDAQ:AVGO) will lead the earnings schedule this week. Its quarterly report may provide insight into AI-related spending trends, which have weakened after several tech companies reported disappointing results.

Last week, Nvidia (NASDAQ:NVDA), a key player in AI, released a cautious sales forecast for the current quarter. While still sizable in absolute terms, the outlook disappointed investors who have come to expect exceptional figures from the AI bellwether.

“While investors are pulling back from AI, they seem to be returning to software, an industry many fear could suffer displacement/disruption risk from AI,” analysts at Vital Knowledge said in a note. They added that Salesforce’s results on Wednesday will be “a big test for the group.”

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Eurozone manufacturing activity expanded in August for the first time since mid-2022, driven by stronger domestic demand and increased production, according to survey data released Monday.

The HCOB Eurozone Manufacturing PMI climbed to 50.7, up from 49.8 in July and slightly above the preliminary estimate of 50.5. This represents the highest reading in over three years and marks the first time the index has surpassed the 50.0 growth threshold since June 2022.

The return to expansion signals a potential positive shift in momentum for the bloc’s manufacturing sector after more than two years of contraction. Respondents to the survey pointed to rising domestic orders and a rebound in output as key factors behind the improvement, boosting optimism about future activity.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

BAE Systems (LSE:BA.) shares rose Monday after Norway selected the United Kingdom to supply new Type 26 frigates in what officials are calling the largest defense procurement in the country’s history.

Norwegian Prime Minister Jonas Gahr Støre announced the decision on Sunday, highlighting that the partnership with the UK offers the strongest foundation for achieving defense objectives approved by the Storting, Norway’s parliament. Deliveries of the frigates are expected to begin in 2030.

The decision follows months of evaluation, during which proposals from France, Germany, the United States, and the UK were assessed. Støre described the choice as challenging, noting that all four nations offered competitive bids, but the Chief of Defence recommended the UK, calling it a historic step in defense cooperation.

Under the agreement, both the British and Norwegian navies will acquire Type 26 frigates with matching technical specifications, allowing for joint operations, training, and maintenance. Norwegian Defense Minister Tore O. Sandvik said this compatibility will help lower costs and enable crew interchangeability between the two navies.

The vessels will carry anti-submarine helicopters, though the specific model has yet to be decided. Authorities are also reviewing options for unmanned systems. A binding intergovernmental agreement between Norway and the UK is expected soon, after which both governments will negotiate contracts with BAE Systems to finalize pricing and delivery timelines. Sandvik added that the Storting will later review and approve the investment decision.

The deal includes a commitment to industrial collaboration, with UK authorities guaranteeing cooperation with Norwegian industry equivalent to the contract’s full value. Støre emphasized that Norwegian companies will play a key role in the maintenance and upgrading of the ships, and both countries have identified potential areas for joint technological and industrial projects.

Officials stressed that the frigates are designed for submarine detection and combat. Each Type 26 vessel will displace 7,600 tons, measure 151.4 meters in length, reach speeds exceeding 26 knots, and cover a range of over 7,000 nautical miles. They will carry a crew of approximately 166, with room for up to 208 personnel, and include cargo space for unmanned vehicles.

Støre said the partnership will enhance NATO’s ability to monitor and secure northern maritime areas, underlining the importance of shared security interests with the UK.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

European equities nudged higher on Monday, supported in part by a rise in Danish pharmaceutical company Novo Nordisk (NYSE:NVO).

The company’s stock surged 2.8% in Copenhagen after data indicated that its popular weight-loss drug Wegovy provided stronger heart-protective benefits than a competing treatment from U.S. firm Eli Lilly (NYSE:LLY). Novo’s shares had been under pressure recently after the company lowered its 2025 sales growth forecast due to competition from copycat versions of Wegovy.

A rally in healthcare stocks helped lift the pan-European Stoxx 600 by 0.4%, while Germany’s Dax climbed 0.5%, the U.K.’s FTSE 100 added 0.3%, and France’s CAC 40 advanced 0.3% by 08:12 GMT.

Defense stocks also saw gains after Norway announced it would collaborate with the U.K. on a £10 billion frigate acquisition program, with shares in BAE Systems (LSE:BA.) particularly buoyant.

Trading volumes are expected to remain light as U.S. markets are closed for Labor Day. Investors were also digesting a key ruling from the U.S. Court of Appeals for the Federal Circuit issued Friday, which rejected President Donald Trump’s broad tariffs.

“Global trading partners will no doubt find it premature to be celebrating just yet, but we’ll be interested in seeing whether the Treasury market comes under any further pressure if the U.S. has to hand back already received tariff revenues,” analysts at ING said in a note.

The White House has until mid-October to appeal to the Supreme Court. Media reports suggest that Trump officials had anticipated the high court would eventually need to resolve the issue, and the administration remains confident that the tariffs — and Trump’s authority to impose them — will ultimately gain support from the court’s conservative majority.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Britain’s manufacturing sector saw activity decline in August as new orders softened, impacted by global trade frictions and recent increases in domestic taxes, according to Monday’s survey data.

The S&P Global/CIPS Manufacturing PMI fell to 47.0 in August from 48.0 in July, marking the first decrease in five months. The reading also came in below the preliminary estimate of 47.3 and remained below the 50 mark that separates expansion from contraction, extending the industry’s downturn to an 11th consecutive month.

Survey respondents highlighted weak demand, international tariff pressures, and rising client costs as key challenges. Additional headwinds included the April increase in the minimum wage and higher employer taxes, while both export orders and overall demand shrank at their fastest pace in four months.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Domino’s Pizza Group (LSE:DOM) saw its shares climb more than 4% on Monday after unveiling a £20 million share repurchase plan.

The initiative, which started immediately, aims to reduce the company’s share capital by acquiring up to 39,471,274 ordinary shares, each valued at 25/48 pence. All repurchased shares will be canceled.

The buyback will take place on the London Stock Exchange under authority granted by shareholders at Domino’s annual general meeting in April. This authorization remains valid until the company’s next AGM in 2026, or earlier on July 24, 2026.

Domino’s has appointed Panmure Liberum Limited to oversee the transactions, ensuring they remain within program parameters, including during trading blackout periods.

The company also confirmed that its guidance for fiscal year 2025 is largely unchanged, with the exception of projected year-end net debt, now expected to fall between £280 million and £300 million.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.