Daily market update: Gilt yields pull back as Starmer calms markets, Currys in fine form

  “After yesterday’s political chaos around the future of Rachel Reeves as chancellor triggered a spike in UK government bond yields, prime minister Keir Starmer has now brought a sense of calm to markets,” says Dan Coatsworth, investment analyst at AJ Bell.

“Starmer declaring his support for the chancellor has led to gilt yields pulling back and sterling rebounding after yesterday’s slump against the dollar. The initial sell-off in gilts and the pound was the market’s way of saying it was losing faith in the economic outlook and political stability.

“It was an electric shock for investors but today’s rebound suggests that crisis has been averted, at least for now. UK economically sensitive assets were in relief mode, including a rally in housebuilders and banks.

“A trade agreement between the US and Vietnam adds another country to the list of deals that have beaten the 9 July deadline, although that list is still very short.

“In true Trump style, the framework agreement looks heavily weighted in favour of the US, with Vietnam being charged 20% tariffs on imports into the US. That explains why shares in the likes of Nike and Lululemon were initially volatile on the news as Vietnam is a big manufacturing hub for shoes and clothes. While the tariff rate is lower than previously indicated, investors might have hoped for something better than 20%.

“Summer used to be a time to leave all your worries at home and jet off for a relaxing break overseas. Now it’s a time to be stressed about whether your flight will go ahead, given that air traffic control strikes are back with a vengeance. Ryanair has cancelled 170 flights because of ATC strikes, meaning lost revenue and potential loss of trust from some travellers.”

Currys

“Currys has regained its spark and proved there is still life in physical retail. The company’s turnaround efforts have been impressive and the latest update shows a business in fine form.

“While there are plenty of places to buy laptops and phones online, Currys has benefited from positioning itself as destination to get advice on products and help if something goes wrong afterwards.

“A lot of people want to talk to someone in person about product ranges and how to get broken products fixed. Currys has cracked this model with consumers and it’s now chasing the small business market such as selling laptops to companies with less than 100 employees.

“It's not just about greeting customers with a smile when they walk through the door. It’s also about running a business as efficiently as possible, particularly when cost pressures remain intense and it has to deal with unfavourable foreign exchange rates.

“Fortunately, there are some tailwinds to drive more footfall. Laptop companies are pushing AI computers hard and that creates a buzz among consumers looking to upgrade to the latest technology. The launch of the Nintendo Switch 2 and Xbox ROG Ally handheld consoles also means there is new hardware to attract gaming fans.

“The retailer has its eyes on a new prize – products that have a tech angle which you might not necessarily associate with Currys. It is looking at doing more with pet tech and grilling gadgets which it believes are a natural extension to what the business already offers. These may only take up a small amount of shelf space, but there is a good chance they will appeal to the same type of person who already visits a Currys store.”

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