Must read: FTSE 100, sterling, bonds, Watches of Switzerland

GLOBAL MARKETS 

The FTSE 100 is eking out a very modest gain supported by Fresnillo (LSE:FRES) thanks to safe-haven demand for silver and gold. Limiting further upside for the FTSE 100 are the insurers M&G Ordinary Shares (LSE:MNG), Prudential (LSE:PRU), and Hiscox Ltd (LSE:HSX) which are under pressure after M&G’s half-year profit missed expectations. In Europe, shares in adidas AG (XETRA:ADS) are outperforming after Jefferies raised the stock from a hold to a buy. 

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The European and US sell-off in long-dated bonds has spread to Japan, with its 30-year yield hitting an all-time high and its 20-year yield reaching the highest since 1999. Both the pound and the Japanese yen are also under pressure, reflecting concerns about rising debts and weakening public finances in some of the world’s major economies. 

China’s RatingDog private services PMI rose to 53 in August to reach the highest since May 2024, above the 50 boom-bust divide. However, Chinese stocks markets were under pressure after President Xi Jinping warned of ‘peace or war’ during a military parade attended by Russian President Putin and North Korea’s leader Kim Jong Un. 

Australia’s second quarter GDP hit 0.6% quarter-on-quarter, up from 0.3% in Q1 and ahead of forecasts for 0.5%, marking the 15th straight quarter of growth thanks to strong household and government spending. Year-on-year, GDP grew by 1.8%, the fastest growth rate since September 2023. 

US futures are pointing to a higher open, on track to regain ground after the major averages on Wall Street closed Tuesday lower as the sell-off in bonds sparked risk-off sentiment, putting pressure on equities. Alphabet Inc Class A (NASDAQ:GOOGL) shares soared after-hours following a major legal win after a federal judge allowed Google to avoid a breakup. The tech giant does not have to sell its Chrome browser after it was ruled that the company violated antitrust laws last year. However, it does have to share information with competitors. Shares in Apple Inc (NASDAQ:AAPL) also enjoyed a boost. 

In commodities, gold continues to trade at record highs while brent crude is trading near four-week highs, supported by fresh US sanctions on shipping vessels used to smuggle Iranian oil, potentially leading to lower supply.

WATCHES OF SWITZERLAND 

Watches of Switzerland Group (LSE:WOSG) said it does not anticipate any material impact from US tariffs in the first half, and it anticipates ‘good’ half-year results, meeting its own expectations. The company said it has seen ‘consistently strong trading’, particularly in the US. 

Despite the backdrop of tariffs and macroeconomic uncertainty, Watches of Switzerland appears to be demonstrating resilience in the face of these headwinds. Its Pre-owned business is growing well, its flagship Rolex Boutique on Old Bond Street is exceeding its expectations, and ecommerce sales have shown good growth. Plus, it is launching a new ad campaign to go with its acquisition of Roberto Coin. In terms of tariffs, its brand partners increased inventories to shield against the levies and so far it isn’t anticipating a material impact at least in the first half. 

In a vote of confidence, some analysts are now feeling more optimistic towards the stock, with Deutsche Bank upgrading shares to a buy from a hold. Shares in the company are soaring this morning with investors breathing a sigh of relief that Watches of Switzerland is successfully navigating the pressures from Trump’s import levies. Today’s move is helping to reverse some of this year’s year-to-date slide in its shares. Plus after HSBC’s upgrade to European stocks like LVMH and Kering this week, the luxury sector is starting to look interesting once again for investors.