Category: Market News

Safe-haven demand offsets pressure from higher yields

Gold prices remained firmly higher on Wednesday, holding above the $4,130-per-ounce mark as investors sought safe-haven assets amid worsening geopolitical tensions in the Middle East. The precious metal continued to advance despite a firmer U.S. dollar and rising Treasury yields, with markets also weighing the inflationary effects of elevated oil prices ahead of the Federal Reserve’s upcoming policy meeting.

At 02:08 ET (06:08 GMT), XAU/USD gained 1.3% to $4,132.79 an ounce, while Gold Futures climbed 1.5% to $4,137.09. XAG/USD rose 1.5% to $59.71 an ounce, while XPT/USD advanced 2.3% to $1,666.59.

Markets watch Fed meeting as oil prices stay elevated

The precious metal added to the previous session’s rally of nearly 2% as investors monitored mounting threats to global energy supplies, raising concerns that inflation could remain stubbornly high and influence the Federal Reserve’s policy path.

Attention is shifting toward next week’s Fed meeting, where policymakers are expected to keep interest rates unchanged. However, traders are looking for any indication that officials may continue signalling a prolonged period of restrictive monetary policy if energy-related inflationary pressures persist.

Meanwhile, U.S. President Donald Trump reiterated that Washington remained open to negotiations with Iran, even as U.S. military operations entered an 11th consecutive night and Tehran continued retaliatory strikes. Developments around critical shipping corridors, including the Strait of Hormuz and the Red Sea, also remained closely watched.

Oil prices continued to trade above $90 per barrel after extending their July advance, with persistent attacks in the Gulf region and renewed concerns over maritime security reinforcing fears of supply disruptions.

Analysts see improving technical conditions

Tony Sycamore, market analyst at IG, said gold’s rebound despite a stronger U.S. dollar and rising Treasury yields suggests investors are beginning to re-establish the metal’s traditional safe-haven role as geopolitical tensions intensify.

“Gold finished higher overnight, brushing off the headwinds of a stronger U.S. dollar and rising yields,” Sycamore said, adding that cleaner retail positioning may also be helping bullion regain its safe-haven appeal despite continued strength in U.S. equities.

Sycamore said initial signs of a base are emerging around the late-June low of $3,942. A sustained break above downtrend resistance near $4,120, followed by a move through the early-July high of $4,202, would strengthen the case for a broader recovery toward the 200-day moving average near $4,494.

He added that IG remains cautiously bullish on gold while prices hold above the late-June low, which continues to serve as the key technical reassessment level.

Silver also continued its upward move after surging more than 4% in the previous session as traders tracked geopolitical developments alongside expectations for future Federal Reserve policy.

European government bond yields traded near multi-month highs on Wednesday as rising crude oil prices and renewed geopolitical tensions in the Middle East strengthened expectations that interest rates could remain higher for longer across the region.

Fixed-income investors continued to reassess the inflation outlook, with persistent energy market volatility reducing expectations for near-term monetary easing by major central banks.

German Bund yields stay close to recent highs

Germany’s benchmark 10-year Bund yield was little changed at around 3.16%, remaining close to the highest levels seen since May 2026.

The policy-sensitive two-year German government bond yield also held firm near 2.79%, after reaching an intraday high of 2.817% earlier in the week, its strongest level since the beginning of 2024.

The resilience of shorter-dated yields reflects growing market expectations that higher energy costs could keep inflationary pressures elevated and delay future interest-rate cuts.

Energy markets reshape interest-rate expectations

Oil prices continued to edge higher after renewed Houthi attacks on commercial shipping in the Red Sea increased concerns over global energy supplies.

Investors remain concerned that continued disruptions to key maritime trade routes could increase transport and fuel costs, feeding into consumer inflation and limiting the flexibility of central banks to ease monetary policy.

The renewed strength in energy prices has reinforced the relationship between oil markets and short-term interest-rate expectations across Europe.

ECB decision in focus

The European Central Bank is scheduled to announce its latest monetary policy decision on Thursday, with markets broadly expecting policymakers to leave the deposit rate unchanged at 2.25%.

However, interest-rate derivatives increasingly suggest investors are pricing in the possibility of additional policy tightening by early 2027, with expectations for a potential rate increase in September gaining traction.

UK fiscal policy supports gilt market

In the UK, investors continued to assess the interaction between monetary and fiscal policy. Prime Minister Andy Burnham’s commitment to maintaining fiscal discipline has helped support the gilt market, even as rising global energy prices continue to place upward pressure on sovereign bond yields.

Elsewhere in Europe, long-term government bond yields in France and Italy broadly followed the move higher in German Bunds, while yield spreads remained relatively stable as markets adapted to a prolonged period of elevated borrowing costs.

Henry Boot PLC (LSE:BOOT) shares fell 5.1% after the property development and land promotion group warned that profit before tax for the year ending 31 December 2026 is expected to come in significantly below current market expectations, reflecting weaker trading conditions and reduced transaction activity across its core markets.

Land sales decline amid cautious market conditions

The company said its Hallam Land division completed the sale of 556 plots during the first half of 2026, compared with 1,222 plots in the same period last year. Management now expects total plot sales for the full year to be materially lower than the 3,957 plots achieved in 2025.

Henry Boot attributed the slowdown to reduced land acquisition activity by housebuilders, as ongoing political uncertainty in the UK and conflict in the Middle East have weakened confidence across the residential development market.

“Market conditions remain challenging and the group’s financial performance for the first half of the year is expected to be below the equivalent period in the prior year,” the company stated in its trading update.

Housebuilding division faces cost pressures

Stonebridge Homes completed 72 properties during the first six months of the year, down from 85 completions in the corresponding period of 2025. The business is now expected to record an operating loss for 2026, with profitability affected by the cost of extending site programmes due to slower sales and build cost inflation of around 5%, largely driven by higher energy prices.

The average sales rate also weakened, falling to 0.38 homes per outlet per week from 0.42 a year earlier.

Debt rises while commercial developments perform well

Net debt increased to £132.9 million at 30 June 2026, compared with £108.0 million at the end of 2025. During June, the company agreed amendments to its £155 million secured loan facility, revising interest cover covenant requirements for June and September 2026.

Despite the weaker residential market, Henry Boot reported continued strength within its HBD development business. Demand for industrial and logistics space remained robust, with 75% of the Origin joint venture developments now either let or under offer, compared with just 9% at the beginning of the year.

About Henry Boot

Henry Boot PLC is a UK property development and investment company with operations spanning land promotion, commercial property development, homebuilding and construction. Through businesses including Hallam Land, HBD and Stonebridge Homes, the group develops residential, industrial, logistics and mixed-use projects across the UK.

Reach plc (LSE:RCH) reported revenue of £232.9 million for the six months ended 30 June 2026, a 9% decline from the previous year as both its print and digital businesses continued to face challenging market conditions. Print revenue fell 8.3%, reflecting lower newspaper circulation, although advertising and circulation income proved more resilient than the decline in volumes. Digital revenue dropped 11.4%, largely due to reduced referral traffic from Google, which contributed to a 40% fall in on-platform page views.

Cost savings protect profitability

Despite the lower revenue base, adjusted operating profit slipped only modestly to £43 million, while the adjusted operating margin improved to 18.5%. The performance was supported by a 10.3% reduction in operating costs following restructuring initiatives and the continued rationalisation of the company’s print production network.

On a statutory basis, Reach recorded an operating loss of £43.5 million, reflecting non-cash impairment charges associated with print site closures, the amortisation of publishing rights and newspaper titles, together with higher restructuring costs.

Strong cash generation improves financial flexibility

The publisher generated adjusted operating cash flow of £48.8 million during the period, with cash conversion reaching 113%. Net debt declined to £47.5 million, leaving leverage at just 0.4 times.

Reach also reported an improvement in its defined benefit pension scheme, which moved into a small IAS 19 surplus. Deficit reduction payments are expected to reduce over the coming years before ending in 2028, providing additional flexibility for future capital allocation.

Focus shifts towards digital growth

The company has reset its dividend policy, reducing the interim dividend to 1.44 pence per share in order to direct more capital towards investment in digital products, subscriptions and video content.

Management said the strategy is designed to reduce reliance on referral traffic from search engines by increasing direct audience engagement and expanding higher-value digital revenue streams. The group is also exploring the use of artificial intelligence tools and potential AI licensing opportunities to support long-term revenue diversification while maintaining disciplined cost control.

Reach expects to meet market expectations for the 2026 financial year and anticipates operating margins will remain broadly stable during 2027 despite ongoing structural pressures in the publishing industry.

Investment outlook

Reach’s valuation remains attractive, supported by a relatively low price-to-earnings ratio and a high dividend yield. However, this is offset by long-term revenue declines, weaker operating fundamentals and the significant statutory loss reported during the period.

Technical indicators also remain weak despite oversold conditions, suggesting investors continue to take a cautious view of the group’s transformation strategy.

About Reach

Reach plc is the largest commercial news publisher in the UK and Ireland, operating around 120 national, regional and digital media brands, including the Mirror, Express, Daily Record, Daily Star and a wide range of local news titles. The company reaches more than two-thirds of the UK online population while also serving international audiences through its expanding digital platforms.

Reach generates revenue through a combination of print circulation, advertising, digital publishing, subscriptions and other online services. Its long-term strategy focuses on growing direct digital revenues, expanding video and premium content, improving operational efficiency and reducing reliance on third-party traffic sources, while continuing to manage its legacy print operations and pension commitments.