Market Overview

Dear Investor,

This week has put the health of the UK economy under the spotlight, and markets have responded with unease. Fresh data showing a 0.1% contraction in GDP for September reignited concerns about slowing growth just as the government’s fiscal plans came into question. The weakness was partly linked to a cyberattack at Jaguar Land Rover, but it also pointed to a broader loss of momentum. By Thursday, attention had shifted to Westminster, where reports that the government had abandoned plans to raise income tax rates triggered a sharp market sell-off.

The Treasury moved quickly to contain the fallout, assuring investors that Rachel Reeves still intends to keep a £15 billion fiscal buffer after an improved outlook from the Office for Budget Responsibility narrowed the expected shortfall from £30 billion to nearer £20 billion. Those reassurances helped steady gilt markets by Friday, but sentiment remains cautious. The episode underscored how fragile confidence has become and how sensitive investors are to even small shifts in fiscal tone.

For investors, it was a week where weak data met political drama. The chances of a December rate cut have increased as growth cools and market nerves tighten, yet all eyes are now on the Budget. The question is no longer whether the government can balance the books, but whether it can restore belief that Britain’s economic story is still heading in the right direction.

Wishing you a fantastic weekend,

Tom

Market Movers

On the rise

SSE (LSE:SSE) +19.1% on the week

SSE shares climbed this week after the group unveiled a transformational £33 billion five-year investment plan alongside its half-year results. The move will triple spending and strengthen SSE’s position at the centre of Britain’s energy transition, with about 80% of capital directed towards regulated UK electricity networks and the remainder focused on renewables and flexible generation. Management expects the plan to lift earnings by around 50% by 2030 and expand the regulated asset base from £14 billion to roughly £40 billion by the end of the decade.

Chief Executive Martin Pibworth described the investment programme as a once-in-a-generation opportunity to modernise the UK’s electricity system and support thousands of jobs. The plan will be financed through cash flow, debt, asset sales and a £2 billion equity placing, with management maintaining a disciplined balance sheet and reaffirming full-year guidance. Capital expenditure is expected to exceed £3 billion this year as major transmission and offshore wind projects gather momentum.

REGENCY VIEW:

SSE is shifting from dependable utility to growth-driven infrastructure leader. The near-term numbers may be muted, but the £33 billion plan puts a strong current behind the long-term investment case.

On the slide: The Works (AIM:WRKS) -15.4% on the week

Shares in The Works slipped this week after the retailer reported a small dip in half-year sales and ongoing challenges in its online business. Total sales for the 26 weeks to 2 November came in at £123.8 million, down 0.3% on last year, though store like-for-likes rose 4% thanks to better marketing, new product ranges and improvements in store operations. The strong in-store performance wasn’t enough to offset a 36% collapse in online sales, which now account for less than a tenth of total revenue, following problems with a new third-party fulfilment partner.

Even so, investors are clearly wary of the near-term headwinds. While The Works continues to carve out a niche with its family-friendly, screen-free product range, the ongoing logistics issues risk dulling momentum through the vital festive quarter. With consumer confidence still subdued and online operations under repair, the market wants to see smoother execution before sentiment recovers.

REGENCY VIEW:

The Works is doing plenty right in its stores, but the online disruption has stolen the spotlight. For now, it’s less a question of what customers want and more about whether the company can get it to them fast enough.

Sector Snapshot

Healthcare and Utilities took centre stage this week, driving a clear defensive rebound as investors gravitated back toward sectors offering earnings stability and predictable cash flow. Materials also posted strong gains, extending its recovery on the back of firmer commodity sentiment, while Telecom and Energy added modest support.

At the softer end, Industrials saw the sharpest pullback, while Tech and Financials also edged lower after recent gains. Real Estate and Consumer sectors were largely flat, suggesting that investors were taking a more selective approach and favouring reliability over risk.

UK Price Action

At the time of writing, the FTSE has completely erased its gains for the week. After breaking to new trend highs on Monday and extending those gains on Tuesday, prices have fallen sharply through Thursday and Friday, unwinding the early optimism.

Should the market close within the lower half of today’s range, it would confirm a bearish reversal week, signalling that short-term momentum has shifted and that a deeper pullback may be underway. The 9,580 level, which acted as previous resistance, will now be watched closely to see if it can hold as support in the days ahead.