Daily market update: Cryptocurrencies, Mixue Ice Cream and Tea, Bunzl

“Investors were remarkably calm given a whirlwind of geopolitical events over the past three days,” says Russ Mould, Investment Director at AJ Bell.

“Donald Trump accusing Volodymyr Zelenskyy of ‘gambling with World War Three’ could have easily triggered chaos on the markets, particularly as the meeting didn’t play out as expected. The fiery meeting involving the pair and JD Vance banished any hopes of a swift US-led resolution to the Russia/Ukraine war, although a European summit involving Zelenskyy was more encouraging.

“The European meeting saw leaders agree to boost defence spending and that had a direct read-across to defence stocks on the markets. BAE Systems’ shares jumped nearly 17% in early trading to a new record high as investors hoped increased government defence spending would improve its earnings outlook. Chemring jumped 5% and small cap defence player Cohort advanced 10%.

“Investors aren’t simply expecting a boost to defence companies from supplying equipment and services to Ukraine. They’re also focused on the potential for governments around the world now taking defence even more seriously and spending large swathes of money to help others while also defending their own land.

“Bookending the fiery meeting between the Ukraine and US officials were two other equally historical events. First was Keir Starmer’s meeting with Trump where relations were significantly more amicable.

“Importantly, Trump hinted that the UK might avoid tariffs. It’s far from a done deal, but it’s a significant step forward and the type of good news that Chancellor Rachel Reeves needs. Avoiding tariffs could also improve investor sentiment towards the UK stock market, something that’s also much needed.

“The other historical moment wrapped around the Trump and Vance’s dressing down of Zelenskyy was the long-awaited confirmation of a US cryptocurrency strategic reserve. This helped to stop the rot in the crypto market and put a new rocket underneath the likes of bitcoin, ether and XRP.

“Investors have been losing their risk appetite in recent weeks, with cryptos and shares in many big US tech companies slipping back. Cryptos bouncing on the strategic reserve details implies that investors might once again be happy to take higher risks – the acid test will be whether this appetite is sustained beyond a few days’ trading. Futures prices imply a lacklustre day for US equities which suggests that a good chunk of investors remain cautious.”

Cryptocurrencies

“Donald Trump’s plan for a strategic reserve of digital assets including crypto has lit a fire under the cryptocurrency space.

“Most other global governments have been wary of crypto but the new US administration has a different perspective.

“Since taking office, several enforcement actions against the industry have been quietly dropped but crypto prices have recently given back some of their earlier gains amid a wider sell-off of riskier assets.

“Trump’s latest announcement comes as several proposals are already working their way through federal and state legislatures – with plans for a cryptocurrency summit at the White House later this month.

“Investors will be spying the record levels above $100,000, which Bitcoin hit in January once again, with the price already bouncing more than 20% from its recent lows.

“The decision to create a reserve rather than a stockpile – while seemingly a subtle distinction – implies the government could actively buy cryptocurrencies at regular intervals rather than simply holding on to existing crypto holdings.”

Mixue Ice Cream and Tea

“It’s been ages since a Hong Kong IPO caught the eye of investors around the world, but we’ve now got a name that’s got everyone licking their lips. Mixue Ice Cream and Tea is a massive player in the takeaway drinks and sweet treats markets, with more than 45,000 stores across China and other locations such as Singapore and Thailand. Bigger than McDonald’s and Starbucks in terms of number of stores, it’s no wonder that investors in Asia have rushed to own its shares, which made their debut with a 40%+ jump on the first day of trading.

“The Chinese government has been doing everything it can to make the economy more reliant on domestic activity and a wave of stimulus measures were unveiled last year, which helped to improve investor sentiment towards the country.

“Mixue is a giant in the bubble tea market and its fortunes are heavily reliant on Chinese consumer spending. Its products are affordable treats which could give the business resilience in the face of any economic setback.

“Bubble tea is a highly competitive market but Mixue benefits from significant scale and brand strength. The market continues to grow in China and bubble tea is now growing in popularity in other parts of the world which explains why Mixue has its eyes on overseas expansion.”

Bunzl

“Bunzl is one of those necessary entities which helps other businesses operate, providing essential items like latex gloves to hospitals and disposable cups to cafes.

“Falling prices as we emerge from an inflationary period have been a headwind for Bunzl’s revenue growth and while this effect is beginning to wear off, underlying growth looks set to remain subdued.

“Bunzl typically pursues expansion through acquisitions so leaning on M&A is not unusual for the group, although the recently acquired catering outfit Nisbets had a tough 2024.

“Investors may have taken note of the uptick in net debt, although the company’s strong cash generation meant it still felt able to hike the dividend and unveil a major share buyback.”

Severfield

“Shares in structural steel business Severfield have collapsed on a major profit warning which paints a bleak picture for the company’s prospects.

“The company, which has worked on high-profile projects like the expansion of Lord’s cricket ground and the Tottenham Hotspur stadium, was being left to rust by investors after a series of projects were delayed or cancelled.

“This suggests the outlook for the wider construction space in the UK is looking constrained. While Severfield is more optimistic about the longer term, investors don’t seem to have much patience for this argument and the cancellation of a share buyback, while it may be prudent, is not going to win anybody round.”

These articles are for information purposes only and are not a personal recommendation or advice.