Market snapshot: positive signs and a look at results from Hays

Buyers are back and chasing stocks higher despite an escalation of hostilities in the Middle East. ii's head of markets has the latest.

12th October 2026 08:27

by Richard Hunter from interactive investor

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US markets rounded off last week on a firm footing, with some weakness in the oil price and a pause in bond yields allowing the tech space to dominate sentiment once more.

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There was a bolt for the telecoms sector – which read across to the UK on Friday – as Space Exploration Technologies Corp Class A (NASDAQ:SPCX) announced a deal to buy a nationwide spectrum portfolio which weighed on the likes of AT&T Inc (NYSE:T) and Verizon Communications Inc (NYSE:VZ) as competition would likely intensify.

Elsewhere, however, the strength of the AI trade was in plain sight, with gains of 5% for Palantir Technologies Inc Ordinary Shares - Class A (NASDAQ:PLTR) and of 2% and 3% for Microsoft Corp (NASDAQ:MSFT)and Amazon.com Inc (NASDAQ:AMZN) respectively. The moves leave the main indices in rude health for the year and close to the record levels which they have breached on several occasions. In the year to date, a gain of 7.5% for the Dow Jones compares with spikes of 14.1% and 17.7% for the more tech-focused S&P500 and Nasdaq indices. Equity markets open today but bond markets are closed for Columbus Day.

There may be some trepidation from investors as the banks take centre stage this week, with updates from Citigroup Inc (NYSE:C), The Goldman Sachs Group Inc (NYSE:GS), JPMorgan Chase & Co (NYSE:JPM), Wells Fargo & Co (NYSE:WFC), Bank of America Corp (NYSE:BAC) and Morgan Stanley (NYSE:MS). Bank stocks have been under pressure leading into the results, with concerns ranging from higher defaults given elevated borrowing costs to the impact on depositors from AI sweeps which could move savings around automatically and therefore erode the traditional inertia which bank customers display. On the other hand, early rumours of record bonuses on Wall Street could imply that the trading and investment banking operations have had a strong quarter.

Even so, general expectations are extremely high for the quarterly reporting season, with earnings growth estimated to exceed 30%, which would add to the stellar 25% plus figures from the first two quarters. With AI infrastructure spending remaining in full swing, and with an estimated $70 billion of tariff refunds providing a further tailwind, the numbers should be strong although inevitably susceptible to any disappointments.

The Consumer Price Index reading on Wednesday will also be closely watched, although any upside surprise from the expected 3.7% headline figure would not be well received given the current perception for interest rates to stay on hold this month.

For the UK, the momentum continued after a brisk end to last week. Sentiment was boosted by some strength among the banks after recent weakness, similar to their US counterparts, and ahead of the quarterly reporting season which begins with Barclays (LSE:BARC) next week. Metlen Energy & Metals (LSE:MTLN) added more than 2% after announcing a joint venture with Thales and Leonardo to prepare for the potential opportunities arising from the Greek defence telecoms space programme.

The gain for the FTSE100 leaves the primary index ahead by 6.9% so far this year, with the FTSE250 having added 8% on the back of some increasing Merger & Acquisition activity, and with both seeing the benefit of overseas buying interest given their undemanding comparative valuations. Even so, with the tech euphoria rising again in the US, the road to recouping the previous high set in February could be a tough ask in the shorter term, with the FTSE100 some 3% away from that milestone.

Hays Q1

The recruitment company remains in a difficult spot and is cutting its cloth accordingly. Investors have been handsomely rewarded of late due to a cost saving programme which delivered £50 million last year and is likely to be repeated over this full-year period. In addition, and equally importantly, Hays (LSE:HAS) is divesting 13 businesses to focus on the remaining 16 potentially higher performing core countries.

With fewer geographies now covered, the actual net fees number is down across the board at 5%, including 7% in its largest market of Germany. On a like-for-like basis (LFL) however, the figure is marginally less painful, with a 6% reduction in Germany and 3% for the group overall. There is also a clear indication of where the pain is being most felt, with just a 1% decline in Temporary and Contracting roles on a LFL basis, but of 7% for permanent placements. In addition, net fees overall dropped by 2% in the month of September.

Hays is well aware of these challenges, not least of which are tough economic conditions which have hindered decision-making in hiring due to lower confidence and tighter budgets from companies, and the much-vaunted impact of the AI revolution on jobs which remains on the radar as a slow-burner. In addition, a recent dividend cut leaves the yield at a paltry 0.7% (previously over 4%) while the valuation of the shares does not look obviously cheap.

In response, the group is streamlining its strategy including a more focused geographical footprint as well as looking to recruit for more specialised positions which are expected to be less impacted by AI. Indeed, Hays’ own investment in AI could improve its productivity and profitability in due course.

Although the shares remain down by 58% over the last five years, the group’s more recent moves have led to a strong run indeed, with a rise of 109% over the last six months. This takes the price performance over the last year to a gain of 11.5%, largely in line with the 11% spike for the wider FTSE250.

It is possible that the valuation and this share price acceleration mean that the stock is up with events for now, and the fee performance has sorely disappointed investors, as evidenced by the share price reaction at the open. As such, the market consensus of the shares as a hold will likely remain in place, being indicative of the need for investors to see further and more sustained progress.

Lee Wild, head of ii editorial, owns Hays shares.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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