Category: Market News

ASOS plc (LSE:ASC) was upgraded to “Equal Weight” from “Underweight” by Barclays on Monday, with the bank citing moderating sales declines, proceeds from asset disposals and expectations for debt refinancing.

Barclays doubled its 12-month price target for the British online fashion retailer to 420p from 210p, compared with a recent trading price of 418p.

The bank said ASOS continues to face competitive pressure from companies including Shein and resale platforms such as Vinted, while pointing to operational changes and reductions in debt as factors in its revised assessment.

Warehouse sales reduce ASOS debt

Barclays highlighted changes to ASOS’s balance sheet following the sale of two warehouses, located in Lichfield in the UK and Atlanta in the U.S.

The transactions generated £115 million in net cash proceeds. Barclays projects net debt, excluding leases, of £63 million at the end of fiscal 2026, compared with £320 million in fiscal 2024.

The bank expects ASOS to undertake a broader debt refinancing in early 2027, replacing its convertible bonds with a term loan facility on what Barclays expects to be more favourable terms.

“We forecast clear positive equity free cash flow in FY28 and an EFCF yield of 11%, providing a much-needed valuation anchor,” Barclays analysts wrote.

Barclays forecasts ASOS’s interest expense will decline to £36 million in fiscal 2028 from £75 million in fiscal 2025.

Barclays forecasts return to GMV growth in FY27

Barclays expects the decline in ASOS’s group gross merchandise value to narrow to 5.5% in fiscal 2026.

The bank forecasts group GMV growth of 2.7% in fiscal 2027.

In its sector coverage, Barclays maintained an “Overweight” rating on German online fashion retailer Zalando SE and a €34.00 price target, citing the company’s balance sheet and existing cash generation.

Gold extended its decline on Monday, falling below $4,400 an ounce as investors assessed the implications of stronger-than-expected U.S. employment figures for the Federal Reserve’s September interest-rate decision.

Spot gold was down 0.8% at $4,396.29 an ounce at 02:34 ET (06:34 GMT), while gold futures declined by the same percentage to $4,441.85.

Other precious metals also moved lower. Silver fell 0.8% to $65.71 an ounce and platinum declined 0.6% to $1,811.42. The U.S. Dollar Index was broadly unchanged at 99.07.

Markets price higher probability of September rate increase

Monday’s decline followed a 1% fall in gold on Friday after U.S. employment data showed 162,000 jobs were added in August, above expectations. The unemployment rate was unchanged.

Markets subsequently placed the probability of a Federal Reserve rate increase at its September 15-16 meeting at around 60%.

Higher interest rates can affect demand for gold by increasing the relative returns available from interest-bearing assets.

The U.S. dollar also strengthened on Friday. Because gold is priced in dollars, movements in the U.S. currency can affect its cost for investors using other currencies.

Gold finished the previous week at $4,429 an ounce, a weekly decline of 0.6%, after moving above and below the $4,400 level.

Attention now turns to U.S. producer price data scheduled for Thursday and consumer price figures due on Friday. The reports will provide further information on inflation ahead of the Federal Reserve’s September meeting.

Hormuz developments put energy prices in focus

Markets were also assessing developments in the Strait of Hormuz and their potential effect on energy prices.

Iran said it had targeted three oil tankers in the strait and several vessels linked to the United States in retaliation for U.S. attacks on vessels during the weekend.

Brent crude was trading around $97 a barrel, putting additional focus on the potential implications of energy prices for inflation.

Gold has remained within a relatively narrow trading range since recovering from levels around $4,000 an ounce in July. Last week, the metal fell below its 200-day moving average of approximately $4,526.

IG senior market analyst Tony Sycamore said the move had not altered his medium-term assessment that gold established a base around the late-June low of $3,942.

Sycamore continues to favour buying pullbacks and expects gold eventually to move towards $5,000 an ounce.

Oil prices remained close to six-week highs on Monday as renewed attacks involving the United States and Iran kept traders focused on crude shipments through the Strait of Hormuz and other Middle Eastern waterways.

Brent crude futures slipped 9 cents, or 0.1%, to $96.19 a barrel at 0822 GMT. The contract had earlier reached $97.93, its highest level since July 24.

U.S. West Texas Intermediate crude declined 45 cents to $91.03 a barrel, remaining close to its recent six-week high.

The moves followed gains of around 8% for Brent and nearly 10% for WTI last week after attacks between the U.S. and Iran resumed.

Hormuz vessel traffic falls to lowest since May

U.S. Central Command said American forces struck three Iranian oil tankers on Saturday, including one off the coast of Kharg Island near Iran’s main oil export hub.

Iran’s Islamic Revolutionary Guard Corps navy said it targeted three oil tankers travelling through unauthorised routes in the Strait of Hormuz. It also said it targeted three additional U.S. vessels in other locations.

Marisks, a maritime intelligence firm, called Saturday’s attacks a “major escalation.”

“Commercial tankers are now being deliberately used as instruments of reciprocal economic pressure, substantially weakening the previous distinction between military confrontation and commercial shipping,” it added.

Data from analytics firm Kpler showed an average of 10 commodity vessels per day passed through the Strait of Hormuz during the past 10 days, the lowest level since May.

“If tanker traffic begins to slow materially, the market could price in a much larger supply shock. And there are already signs that this is happening,” said Priyanka Sachdeva, head of market insights at Phillip Nova.

Goldman Sachs said crude prices could reach as much as $120 a barrel if attacks on shipping increase.

Iran signals restricted zone as OPEC+ holds policy steady

Iran intends to announce a restricted zone outside the Strait of Hormuz in the coming days, according to Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, as cited by state media.

The planned zone comes as markets continue to assess the implications of reduced vessel traffic and military activity for Middle Eastern crude flows.

OPEC+ separately maintained its existing oil output policy for October at a meeting on Sunday.

The producer group said it needs to reach an agreement on new quotas before deciding on subsequent changes to production policy.

The Eurozone economy expanded by 0.6% in the second quarter compared with the previous three months on a seasonally adjusted basis, according to a new estimate released by Eurostat on Monday.

Compared with the same period a year earlier, gross domestic product in the 21-member currency area increased by 1.2%, data from the European Union’s statistics agency showed.

The figures come as the Eurozone economy faces higher energy prices linked to the Iran conflict, while investment in artificial intelligence has provided support to economic activity. Forecasters cited by Reuters have warned that growth this year could remain below the region’s already reduced potential.

In the first quarter, the Eurozone economy had recorded annualised growth of 0.6%.

Ireland records largest quarterly increase

Among individual member states, Ireland recorded the largest quarter-on-quarter expansion, with its economy growing by 10.2%.

Austria was the only member state to report a contraction, with gross domestic product declining by 0.1% from the previous quarter.

ECB interest-rate decision due this week

The data were released ahead of the European Central Bank’s latest monetary policy decision later this week.

Policymakers are widely expected to increase borrowing costs as the central bank assesses inflationary pressures associated with higher energy prices.

European and British wholesale natural gas prices rose around 2% on Monday, remaining close to their highest levels since late 2023 as markets assessed developments in the Persian Gulf and European gas storage levels ahead of winter.

The benchmark Dutch front-month gas contract gained 2% to trade near €73.80 per megawatt-hour, below the multi-year high of €74.32 reached last week.

In Britain, the equivalent NBP wholesale gas contract also rose 2% to around 182.50 pence per therm, compared with its 2023 high of 183.95 pence.

The price moves came as traders assessed the potential implications of developments affecting Middle Eastern energy shipping routes and the pace of European storage replenishment.

Iran plans restricted zone near Strait of Hormuz

Iranian authorities have announced plans to establish a restricted zone outside the Strait of Hormuz in the coming days. The announcement followed military activity over the weekend in which U.S. forces struck and disabled three Iranian oil tankers.

The U.S. said the strikes were carried out in response to an Islamic Revolutionary Guard Corps ballistic missile attack targeting two U.S. Navy warships in the region.

Approximately one-fifth of global liquefied natural gas traffic passes through the Strait of Hormuz, with Qatar a major source of those shipments. Restrictions affecting transit through the waterway could therefore affect LNG supplies available to international markets, including Europe.

European utilities are also competing with Asian buyers for uncommitted LNG cargoes from the Atlantic basin as they seek additional supplies.

European gas storage at about 62%

European gas storage facilities were approximately 62% full, according to data from Gas Infrastructure Europe, around 17 percentage points below the five-year seasonal average.

The source attributed slower storage injections during August to higher gas-fired electricity generation during periods of hot weather in Southern Europe, scheduled offshore pipeline maintenance in Norway and delays to Qatari LNG cargoes.

The storage position has increased the market’s focus on LNG availability during the autumn and winter, particularly if disruptions to seaborne supplies continue.

Energy prices add to focus on ECB meeting

Natural gas prices are also being monitored alongside Brent crude, which remained above $90 a barrel, as European markets assess the inflation outlook ahead of Thursday’s European Central Bank meeting.

Preliminary figures showed annual headline Eurozone inflation accelerated to 3.3% in August, with the energy component increasing 14.3%.

Money markets were pricing in a 25-basis-point interest-rate increase from the ECB at this week’s meeting.