Market Overview

Dear Investor,

This week has been dominated by excitement around an opening and an offering. The opening is the World Cup, which is about to consume evenings, pubs and sleep patterns in equal measure. The offering is SpaceX’s record-breaking IPO, a flotation so large that millions of investors will end up owning a small piece of Elon Musk’s empire whether they actively choose to or not.

Yet while the World Cup lasts just a few weeks, SpaceX represents a much longer-term bet. The company arrives on the market with a valuation approaching $1.8 trillion despite remaining lossmaking and carrying a governance structure that has already raised eyebrows among some institutional investors. Supporters see a unique combination of space technology, AI infrastructure and satellite communications. Critics see a valuation that already assumes extraordinary success.

Whether discussing football or stock markets, expectations have a habit of running ahead of reality. The coming weeks will reveal whether England can live up to the hype. Investors may need a little longer to discover whether SpaceX can do the same.

Wishing you a great weekend,

Tom

Market Movers

On the rise: Fevertree (AIM:FEVR) +14.4% on the week

Fevertree moved higher this week after reassuring investors that trading remains on track and announcing a further £30 million extension to its share buyback programme.

Elsewhere, Fevertree continues to broaden its appeal beyond traditional mixers. New marketing campaigns and product launches have helped support growth in premium soft drinks, while management highlighted further market share gains across the UK, Europe and the US. The company also moved to strengthen its cost protection strategy, extending energy and commodity hedging into 2027 and beyond.

Regency View: Investors appear to be responding less to current earnings and more to growing confidence that Fevertree’s turnaround is gaining traction. The shares are not cheap, but with a debt-free balance sheet, expanding US distribution and management actively returning cash through buybacks, the market seems increasingly willing to look beyond the challenges of recent years.

On the slide: WH Smith (LSE:SMWH) -13.9% on the week

WH Smith endured a difficult week after cutting profit guidance, announcing a sizeable capital raise and warning that weaker travel demand is beginning to weigh on performance across parts of the business.

Investors were also unsettled by the company’s decision to launch a capital raise equivalent to around 20% of its share capital. Management argues the move will strengthen the balance sheet, reduce reliance on debt and provide greater flexibility to continue its transformation programme. However, equity raises are rarely welcomed by existing shareholders, particularly when they arrive alongside a profit downgrade and a significant impairment charge of up to £150m.

Regency View: WH Smith’s investment case has become increasingly tied to international travel, and recent events have exposed just how sensitive that strategy can be when passenger numbers come under pressure. The long-term growth story may still be intact, but investors are being asked to swallow a profit warning and a dilution event at the same time, which is rarely a recipe for short-term enthusiasm.

Sector Snapshot

Consumer Staples dominated this week, standing well clear of the rest of the market as investors sought the safety of predictable earnings and resilient demand. Telecoms, Real Estate and Healthcare also moved higher, while Energy posted modest gains. The leadership group has a distinctly defensive flavour, suggesting investors were more focused on capital preservation than chasing growth.

At the other end of the table, Tech suffered a sharp sell-off and was by far the weakest sector. Materials also came under significant pressure, while Financials and Industrials drifted lower. The contrast between the strongest and weakest sectors points to a clear shift in sentiment, with investors rotating away from growth and cyclical exposure and back towards more defensive areas of the market.

UK Price Action

The FTSE held support once again this week, marking the sixth test of the 10,171 area in less than two months. The more times a level is tested, the more attention it attracts, and for now buyers continue to defend it. Thursday’s sharp reversal from support was particularly encouraging, with the market rejecting lower prices and pushing back towards the middle of its recent trading range.

The bigger picture remains one of consolidation rather than trend. Despite repeated attempts, sellers have been unable to force a meaningful break lower, while buyers have so far lacked the conviction to reclaim the series of lower highs that has developed since March. Something will eventually have to give, but for now the FTSE remains trapped between well-defined support and resistance. As long as 10,171 continues to hold, the balance of risk appears to favour another attempt higher.