Weekly Market Update: 2nd Apr
02/04/2026
Rachel Winter discusses the worst quarter for markets since 2022, the rise in UK mortgage rates, and Unilever’s deal with McCormick.
Rachel Winter
Partner, Investment Management
Transcript
Good morning and welcome to the Killik & Co market update.
We’re still seeing a lot of volatility in markets as the situation in Iran rumbles on. In March, oil prices achieved their biggest monthly increase in history , with a rise of over 60%. Here’s the one year chart. The price for a barrel of brent crude had gone as high as $119 per barrel, but today it’s back down to $101 and that’s following a social media post from the US president suggesting that the US has nearly achieved its aims in Iran and that the US might withdraw within the next 2-3 weeks, although subsequent posts have suggested their could be more escalation in the meantime. The situation is still extremely uncertain.
Stock markets have endured their worst quarter since 2022. Here are the performances for the month of March, measured in sterling terms. The S&P 500 is in the blue, down just over 3%. The MSCI Europe in black is down 8.5%, the MSCI Emerging Markets index is down just over 11%, and Japan’s Nikkei 225 is down just over 13%. The performances are largely based on how dependent the regions are on imported oil. The US is largely self sufficient in terms of oil production, but the other three regions are net importers and will be more negatively impacted by higher oil prices.
Looking at emerging markets in particular, we have seen a differing performance between different regions. The green line here shows the performance of the broader MSCI emerging markets index over the last year. The pink line shows the emerging markets Latin American index. Brazil accounts for around 60% of the latin American index and is an oil exporter, and so arguably it will be a beneficiary of higher oil prices.
We’ve seen quite a move upwards in UK mortgage rates as a result of the situation in the middle east. This chart shows how the rates for 2 year fixes and 5 year fixes have moved since mid February. back then a 2 year fix was 3.51% and a 5 year was 3.73%. now, a 2 year fix is 4.47% and a 4 year is 4.01%. it’s unusual for the shorter period to have higher rates, and suggests that lenders currently see more risk in the short term than the long term.
The higher mortgage rates have had a negative impact on UK hosuebuilders. Here’s a comparison over the last year. The black dashed line shows the broader FTSE All shares index, and the other lines show three major housebuilders – barratt, Berkeley group and taylor Wimpey. All have significantly underperformed the FTSE since February – higher mortgage rates mean less demand for houses.
And lastly, Unilever has announced a major deal with a US food company called McCormick. Unilever is currently the 6th biggest company in the FTSE 100 with a market cap of £91bn. Here’s the current top ten – AstraZeneca and HSBC are at the top there.
Here’s a breakdown of where Unilever’s revenue comes from – it’s a fairly even four way split between home care, personal care, beauty and food. Unilever has been trying to simplify itself in recent years and has already been shedding various food and drinks brands – for example, it spun off its ice cream business last year. It still owns lots of food brands, including marmite and hellmans, and It has now decided to combine the rest of its food business with McCormick, which owns french’s mustard.
The deal is inkeeping with Unilever’s stated ambition to simplify itself further, but the deal is quite complex. It is not expected to complete until mid 2027, and unilever shareholders will end up with some shares in the new McCormick. The reactions of both unilever and mccormick shares was rather negative when the news was announced – here are the two share prices over the last year. This is largely likely due to the complexity and long timeline. Unilever is covered by our Research team so do give us a call to discuss in more detail.
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