Market Overview

Dear Investor,

US bank earnings dominated the financial newsflow this week, and for good reason. If you want an early read on the health of the global economy, there are few better places to look than the balance sheets of America’s largest lenders.

That doesn’t mean the all-clear has been sounded. Almost every management team struck the same note: current trading remains strong, but the world beyond the next few quarters is becoming harder to predict. Geopolitical tensions, elevated government borrowing and the possibility of inflation proving more persistent than hoped continue to sit in the background.

There’s an old saying that banks are where the money goes before anyone knows where the economy is heading. This week suggested that, for now at least, businesses are still investing, consumers are still spending and financial markets remain remarkably active. Whether that resilience survives the rest of the earnings season is the question investors will now be asking.

Wishing you a great weekend,

Tom

Market Movers

On the rise: Bridgepoint Group (LSE: BPT) +15.2% on the week

Bridgepoint extended its recent rally after reporting record first-half results, reinforcing investor confidence just weeks after announcing its transformational acquisition of Kayne Anderson Real Estate.

The results build on the positive momentum created by Bridgepoint’s $1.4 billion acquisition of Kayne Anderson Real Estate at the end of June. The deal expands the group’s assets under management to around $117 billion, adds a significant US real estate platform and broadens its exposure across private equity, infrastructure, credit and property. Together, the acquisition and today’s results suggest Bridgepoint is executing well against its strategy of becoming a more diversified global alternative asset manager.

Regency View: Bridgepoint’s earnings are increasingly being driven by recurring management fees rather than one-off performance income, making the business more predictable and resilient. With fundraising remaining strong and recent acquisitions broadening both its product offering and geographic reach, the long-term growth story continues to gather momentum.

On the slide: Plus500 (LSE: PLUS) -12.7% on the week

Plus500 remained under pressure despite reporting a record first-half performance, as investors looked beyond the headline revenue growth and focused on a more subdued profit outlook.

The disappointment came further down the income statement. EBITDA increased by just 1% as Plus500 stepped up spending on customer acquisition and its US expansion, reducing the EBITDA margin to 41%. Full-year guidance was also merely reiterated following several upgrades earlier in the year, leaving little additional upside for a market that had already priced in strong trading conditions. With the shares still up over the past year, the recent weakness appears to reflect a reset in expectations rather than a deterioration in the underlying business.

Regency View: Plus500 remains a highly profitable, cash-rich business with an impressive record of returning capital to shareholders. However, after a strong run, investors now want evidence that its increased spending can produce faster earnings growth rather than revenue growth alone.

Sector Snapshot

Telecoms were the standout performers this week, comfortably topping the leaderboard as investors returned to the sector in force. Energy also enjoyed a strong week, while Consumer Discretionary, Consumer Staples and Real Estate all posted healthy gains. Financials and Tech added to the positive tone, suggesting buying interest was spread across a broad range of sectors rather than concentrated in one theme.

At the weaker end, Healthcare was the clear laggard, continuing its recent run of underperformance. Materials also finished slightly lower, while Utilities were broadly unchanged. Overall, the picture points to a market that remains selective, with investors favouring sectors offering earnings resilience and improving sentiment, while continuing to move away from recent defensive leaders.

UK Price Action

It’s been a relatively quiet week for the FTSE, with the market continuing to consolidate in mildly bullish fashion above the 50-day moving average. Daily ranges have remained small and tightly clustered, suggesting neither buyers nor sellers are prepared to make a decisive move just yet. That isn’t necessarily a bad thing. Strong trends often pause to digest previous gains before attempting the next leg higher. For now, the technical picture remains constructive, but the next meaningful clue is likely to come from a break of this tightening range, with a move above recent highs keeping the pressure on resistance around 10,725.