Market Overview

Dear Investor,

While the conflict in Iran continues to dominate the headlines, the real story building across equity markets is the resurgence of AI.

Importantly, this strength is now clearly visible within the UK market. Over the past month, semiconductors have surged nearly 100%, tech hardware is up more than 70%, and communications stocks have gained over 30%, with broader tech also delivering strong double-digit returns. This is theme is tailwind for our FTSE Investor and AIM Investor portfolios in which we hold some of the UK markets most exciting AI stocks.

The takeaway is that while the headlines remain focused on geopolitics, capital is being drawn towards structural growth, and that trend is now showing up closer to home. For UK investors, that leaves the market in a stronger position than it might first appear, with momentum building beneath the surface rather than being driven purely by global flows.

CLICK HERE to see the UK-listed AI and tech names we’re backing right now.

Wishing you a great weekend,

Tom

Market Movers

On the rise: Serica Energy (AIM:SQZ) +11.8% on the week

Serica Energy moved higher this week as renewed focus on energy security following the conflict in Iran supported sentiment across the sector. With concerns around supply disruption pushing oil prices higher, UK-listed producers have come back into favour, and Serica has been a clear beneficiary of that shift.

The update also highlighted a more proactive approach to capital allocation, with the company exploring the potential issuance of a new five-year senior unsecured bond as it looks to optimise its capital structure. While this introduces greater financial flexibility, the market reaction has been driven primarily by the combination of improving production and a more favourable energy backdrop.

Regency View: Serica remains a core holding within our AIM Investor portfolio, with momentum firmly to the upside as the shares continue to trend higher. With supportive energy prices and improving sentiment across the sector, the stock remains well positioned if the current backdrop continues to hold.

On the slide: Rolls-Royce (LSE:RR.) -11.7% on the week

Rolls-Royce (RR.) moved lower this week, falling alongside the wider aerospace and defence sector as heightened uncertainty around US-Iran negotiations weighed on market sentiment. The sector, which had previously benefited from rising geopolitical tensions, saw a sharp reversal, with European aerospace and defence stocks posting their steepest one-day decline in over a year.

Adding to the pressure, broker sentiment also softened slightly, with Jefferies trimming its price target on the shares. While this was not a major downgrade, it reinforced the sense that after a strong run, expectations across the sector may have moved ahead of near-term fundamentals, leaving the shares more sensitive to any shift in sentiment.

Regency View: This looks more like a reset in momentum rather than a change in the underlying story, with the shares reacting to positioning and macro headlines rather than company-specific weakness. With momentum easing after a strong run and the shares still trading on around 30x forward earnings, the market may need to see the next leg of earnings delivery before buyers step back in with conviction.

Sector Snapshot

Tech led the way this week, with Materials and Consumer Discretionary also managing modest gains. Telecoms and Utilities were little changed, suggesting a fairly muted tone where only a handful of sectors were able to push higher with any conviction.

At the weaker end, Industrials saw the sharpest pullback, followed by Healthcare and Energy. Financials and Consumer Staples also drifted lower, while Real Estate edged back, pointing to a market that remains selective with limited appetite beyond a few pockets of strength.

UK Price Action

The FTSE has started to print some more interesting and slightly more cautionary price action. What initially looked like a clean breakout from a small bull flag has failed, with the market rolling back over and slipping below the flag structure, the short term ascending trendline, and the 50 day moving average.

That shift matters. Failed breakouts often act as a warning sign that momentum is beginning to fade, and the speed of this move lower suggests buyers have stepped back, at least in the short term. The focus now turns to whether this is simply another shakeout within a broader uptrend or the early stages of a deeper pullback, with price now testing whether demand can re-emerge at lower levels or if sellers start to press their advantage.