Market Overview

Dear Investor,

With earnings season in full swing and a new Prime Minister settling into Number 10, it would be easy to overlook geopolitics. Yet, as Brent crude pushes back towards $100 a barrel, the oil market is once again demanding investors’ attention.

For investors, the implications stretch well beyond the energy sector. A sustained rise in oil prices would complicate the inflation outlook just as central banks were hoping price pressures were easing. As earnings season gathers pace, commentary around input costs and pricing power may become just as important as the headline profit figures.

Wishing you a great weekend,

Tom

Market Movers

On the rise: Renishaw (LSE: RSW) +11.8% on the week

Renishaw moved higher after revealing record fourth-quarter revenue and confirming full-year profits will comfortably exceed market expectations, capping off a year of steadily accelerating growth.

Those end markets continue to provide powerful long-term tailwinds. Semiconductor manufacturers are investing heavily in next-generation production capacity, while defence and aerospace spending remains elevated across many developed economies. Renishaw’s highly specialised measurement and manufacturing technologies leave it well placed to benefit from both trends, helping explain why growth accelerated rather than slowed as the year progressed.

Regency View: Renishaw has long been regarded as one of the UK’s engineering success stories, but this update suggests growth is accelerating rather than simply continuing. The shares already command a premium valuation, yet record revenues and a 31% increase in profits show the business is continuing to earn it.

On the slide: Marston’s (LSE: MARS) -9.7% on the week

Marston’s shares slipped after investors focused on weaker underlying trading, overshadowing another confident update from the pub operator.

Despite the softer headline sales figures, management reiterated full-year profit expectations and said its target for more than 200 basis points of EBITDA margin expansion would be achieved ahead of schedule. The company also expects leverage to fall sufficiently to allow shareholder returns, potentially through share buybacks, to resume next year. However, after a strong recovery in the shares over the past 12 months, investors appeared to focus on the slowdown in underlying trading rather than the improving operational backdrop.

Regency View: This felt more like a disappointment against heightened expectations than a deterioration in the investment case. Trading remains mixed, but improving margins, lower debt and the prospect of shareholder returns suggest the longer-term turnaround is still moving in the right direction.

Sector Snapshot

Energy led the UK market this week, extending its recent recovery as strength in oil prices continued to support the sector. Materials also performed well, while Real Estate maintained its improving momentum to finish among the week’s strongest performers.

At the other end of the leaderboard, Consumer Discretionary was the weakest sector as retailers and other consumer-facing businesses came under pressure. Consumer Staples also slipped despite recent resilience, while Telecoms and Healthcare both finished the week in negative territory.

UK Price Action

It’s been another quietly bullish week for the FTSE, although the market once again found resistance around the 10,700 level first established by the April swing highs. While the series of higher swing lows continues to suggest buyers are gradually gaining the upper hand, the market is yet to show it can sustain a move above resistance. Something will eventually have to give. A decisive break above 10,700 would leave the March highs firmly back in focus, while another rejection would suggest the FTSE still has more time to spend within this broad trading range.