Morning Note: Market news and an update from spirits company Brown-Forman.

Market News

The gold price climbed to $3,480 per ounce on Monday, nearing a record high amid uncertainty over President Trump’s tariffs and increased bets for a US interest rate cut. Silver traded above $40 for the first time since 2011. In contrast, Bitcoin suffered its worst month since February (-7%) after touching record highs intra month.

A federal appeals court ruled that Trump’s global tariffs were illegally imposed under an emergency law, upholding a May ruling by the Court of International Trade. But these tariffs will be allowed to persist until 14 October, giving the Trump administration time to appeal to the Supreme Court.

Narendra Modi was due to hold talks with Vladimir Putin in Tianjin, China, today after resetting relations with Xi Jinping. The three leaders, who last met in 2024, seek to strengthen ties amid trade tensions with the US.

US equities ended last week on a subdued note – S&P 500 (-0.6%); Nasdaq (-1.2%) – dragged down by large tech stocks. The market is bracing for what is known as the weakest month for US shares, as institutional investors rebalance, retail traders slow their buying and volatility picks up. The market is closed today for Labor Day.

In Asia this morning, equities were mixed. Chipmakers pushed Japanese shares down 1.3%. Samsung Electronics Co. and SK Hynix Inc. tumbled after the US revoked China chip-gear permits. A gauge of technology firms in Hong Kong jumped as much as 1.7% with Alibaba surging 18%, the biggest intraday gain since November 2022.

The FTSE 100 is currently 0.3% higher at 9,210, while Sterling trades at $1.3525 and €1.1535. UK house prices unexpectedly fell in August, Nationwide data showed. The 0.1% month-on-month decline leaves the annual rise at 2.1%, versus a forecast of 2.7%.

Source: Bloomberg

Company News

At the end of last week, Brown-Forman released results for the three months to 31 July 2025, the first quarter of its fiscal year to end-April 2026. Revenue came in above market expectations and guidance for the full year was reiterated. In response, the shares were marked up by 6%.

Brown-Foreman is a US-listed spirits producer, which owns a portfolio of more than 40 premium brands including Jack Daniels. To take advantage of the premiumisation trend, the group has upgraded its portfolio over time towards the American whiskey and tequila categories and sold off non-core brands (such as Finlandia and Sonoma-Cutrer).

In the latest quarter, net sales, excluding excise taxes, fell by 3% to $924m, above the market forecast of $909m. The decline was largely driven by the absence of the prior-year transition services agreement (TSA) related to Sonoma-Cutrer. On an organic basis, sales were up 1%. The results reflect actions taken to strengthen the business in a challenging environment.

Net sales for whiskey products were flat on an organic basis. The result was due to strong initial shipments of Jack Daniel’s Tennessee Blackberry in preparation for the launch and growth of Jack Daniel’s Tennessee Apple in Brazil. This was offset by lower volumes of Jack Daniel’s Tennessee Whiskey in the US and Germany.

Net sales for the Tequila portfolio rose by 1% in organic terms, with Herradura down 15% driven by lower volumes in the US as the tequila category remains competitive. el Jimador’s net sales increased by 16%, driven by higher volumes in the US due to the roll-out of the new bottle design, inventory build ahead of the distributor transitions in 13 states, and new innovation launch of the Cristalino expression.

Net sales for the Ready-to-Drink (RTD) portfolio increased by 9% in organic terms, fueled by market share gains in a growing category.

By region, net sales growth in Emerging Markets (+25%) and the Travel Retail channel (+7%) was offset by declines in the US (-2%) and Developed International markets (-9%)

The gross margin remains high and rose by 40 basis points in the quarter to 59.8%, driven by the positive effect of the divestitures, partially offset by higher costs, unfavourable price/mix, and the negative effect of foreign exchange. Operating income rose by 2% in organic terms at $260m. Diluted EPS fell by 13% to 36c, in line with the market forecast.

The company has a strong balance sheet, with net debt of $1.9bn. A regular quarterly cash dividend has been paid for 81 consecutive years and has increased for 41 consecutive years. For the latest quarter, a payout of 22.65c has been declared, up 4% on last year.

Looking forward, the company anticipates the operating environment to remain challenging, with low visibility due to macroeconomic and geopolitical volatility as the company faces headwinds from consumer uncertainty and the potential impact from currently unknown tariffs. The current guidance for FY2026 is for an organic low single-digit decline in both net sales and operating income.

Source: Bloomberg