Morning Note: Market News and an Update from Bunzl.

Market News

Global stocks slumped as investors rotated out of some of this year’s high-performing technology shares while awaiting further developments in US-Iran peace talks. In the US – S&P 500 (-0.4%); Nasdaq (-1.3%) – rising bond yields dragged the mega-cap tech stocks lower, with Alphabet, Amazon, and Microsoft all falling heavily. SpaceX fell by 16% after announcing the start of what is anticipated to be a massive AI-focused borrowing spree. Attention is now shifting to memory chipmaker Micron Technology’s quarterly results tomorrow, which could be a critical test of whether AI spending can sustain its own rally.

In Asia this morning, a gauge of stocks plunged more than 2.5%, and South Korea’s Kospi tumbled over 8%, triggering a trading halt, on renewed concern that a rally in heavyweight chip names has become overstretched. Other markets also fell: Nikkei 225 (-3.3%); Hang Seng (-2.2%); Shanghai Composite (-1.6%). The FTSE 100 is currently 0.6% lower at 10,372.

The Japanese yen fell to 161.5 per dollar, hovering near its weakest levels since 1986 as repeated verbal intervention efforts from Tokyo failed to stem the currency’s decline. Finance Minister Satsuki Katayama said she spoke by phone with US Treasury Secretary Scott Bessent, reaffirming an agreement to coordinate ‘bold action’ in currency markets if needed.

The Fed’s Austan Goolsbee said he remains concerned about inflation and questioned whether the forces pushing prices higher will prove temporary. The US 10-year Treasury is yielding 4.49%, while gold has slumped by 2% to $4,115 an ounce. Hedge funds have boosted bullish wagers on gold to the highest since January on optimism that the interim truce will reopen the Strait of Hormuz and ease inflation risks that have fuelled bets on higher rates for longer, a headwind for the precious metal. The jump came before the recent Fed hawkish comments sent the price lower.

Brent Crude fell below $77 a barrel. More than 30 million barrels of Iranian crude had already departed the Islamic Republic for Asia in the past week — just before the US waived sanctions on the cargoes.

It looks increasingly likely that Andy Burnham will be crowned Labour leader unopposed after Starmer’s resignation. Burnham will vow to protect the economy and stick to fiscal rules in a major speech next week as he gets ready to take power. JPMorgan reinstated its bullish view on the pound as political uncertainty in the UK starts to fade. Sterling trades at $1.3235 and €1.1585, while the 10-year Gilt yields 4.78%.

After a long search, Heineken has announced its new CEO will be an external appointment: Rafa Oliveira, the CEO of JDE Peet’s N.V., the world’s largest pure-play coffee and tea company, and formerly President International Markets of Kraft Heinz. Oliveira’s 4-year term will commence on 1 October, and he has been tasked with accelerating the execution of the company’s existing EverGreen 2030 strategy. The shares are up 2% in early trading.

Source: Bloomberg

Company News

Bunzl has updated the market prior to entering its closed period for the half-year ending 30 June 2026. Despite the ongoing macro-economic challenges, the company is expecting to deliver an improved performance in the period. In response, the company has raised its guidance for 2026, sending the shares up 2% in early trading.

Bunzl is a specialist international distribution and services group. The company provides an efficient and cost effective one-stop-shop solution to enable its customers to reduce or eliminate the ‘hidden’ costs of sourcing and distributing a broad range of goods that are essential to the successful operation of their businesses but which they do not themselves resell – think disposable tableware, rubber gloves, and plastic trays. The strategy is to expand the business through organic growth, consolidating markets through focused acquisitions, and continuously improving operating efficiency. The group is also supporting customers looking to transition towards packaging better suited to the circular economy, with around half of Bunzl’s packaging sales made from alternative materials. The group now processes around three quarters of orders digitally, supporting customer retention and enhancing operational efficiency.

Today’s statement highlights an improved performance. Group revenue over the first half is expected to grow by around 4% at constant exchange rates, with underlying revenue growth of around 3%. Acquisitions, net of disposals, are expected to contribute growth of around 1% to the group, and currency is expected to have a relatively neutral impact on revenue at actual exchange rates.

The company expects growth to be supported by inflation across certain categories in the second quarter, with product-cost increases driven by geopolitical events.

Volume growth is expected to be driven by North America, with good growth in the group’s Distribution business. The Distribution business continues to see operational progress as a result of actions taken, with encouraging volume growth across customers and supported by the additional benefit from new business wins that were achieved towards the end of last year.

The group expects good year-on-year growth in adjusted operating profit over the first half at constant exchange rates. Operating margin is expected to be up modestly year-on-year due to the net impact of inflation in the second quarter, much of which is expected to be temporary in nature, and the annualisation of Nisbets acquisition synergies.  

In April, the company completed the acquisition of Scientifix Group, an Australian distributor of critical products and services to the Life Sciences and Biotechnology sectors that will expand the category offering of the existing business. The acquisition pipeline remains active and the company continues to expect 2026 to be an improved year for acquisitions.

Looking ahead to the full year, while management remains mindful of continuing macroeconomic and geopolitical uncertainties, they are encouraged by the company’s performance and upgrade its 2026 guidance. The group now expects revenue growth at constant exchange rates to be driven by modest underlying revenue growth, supported by some inflation, alongside a small benefit from acquisitions. Operating margin guidance is unchanged, and the company continues to expect it to be slightly down year-on-year.

Source: Bloomberg