Market Overview

Dear Investor,

After a turbulent start to the year, the S&P 500 has staged a comeback that’s caught more than a few seasoned investors off guard. Momentum has built steadily in recent weeks, with the index reclaiming its 200-day moving average, one of those quietly important technical levels that tends to draw in both traders and long-term money once it’s back in play.

But it’s not just about short-term flows. Beneath the surface, there’s a broader narrative forming. Yes, the US economy is slowing, but not as abruptly as many had feared. And that nuance matters. Bond markets had started to price in a more severe downturn, but recent data, while not booming, has come in less bleak than expected. That’s been enough to drag long-dated yields higher again, unravelling the recession trades and nudging investors back towards equities.

There’s also been a noticeable shift in who’s doing the buying. Retail investors, often quicker to take the plunge when markets are shaky, were active buyers throughout April. But now institutional money is catching up. When both are swimming in the same direction and the charts are lining up with the macro, it tends to reinforce the move. Whether you follow technicals religiously or not, the 200-day moving average has a way of drawing attention. It’s not magic, but it can be self-fulfilling.

Wishing you a fantastic weekend,

Tom

Market Movers

On the rise: Burberry (LSE:BRBY) +26.6% on the week

Burberry’s share price has jumped higher this week following the release of its full-year results on Wednesday, which signalled early signs of progress in the group’s turnaround strategy despite a sharp drop in profits.

The group also surprised with a positive free cash inflow of £65 million and announced further cost savings initiatives, including a new £60 million programme expected to take total annualised savings to £100 million by FY27. Although this includes significant restructuring, with potential job reductions affecting up to 1,700 roles globally, the market viewed these steps as evidence of management’s determination to restore profitability and sharpen focus on core strengths like outerwear and scarves.

CEO Joshua Schulman struck an upbeat tone, pointing to improved customer engagement and the company’s renewed identity as a Timeless British Luxury brand. With a runway show at Tate Britain and a clearer product strategy now in place, the market seems willing to look beyond the tough comparatives and weak current-year earnings in anticipation of a stronger FY26 performance.

REGENCY VIEW:

Burberry’s luxury brand appeal isn’t enough to hide the cracks. Profits have collapsed, margins are underwater, and the balance sheet is looking stretched with rising debt and falling book value. The recent bounce off the lows is promising short-term, but with no dividend and minimal earnings visibility, long-term conviction remains low until the turnaround shows signs of life.

On the slide: Imperial Brands (LSE:IMB) -11.3% on the week

Imperial Brands’ share price has pulled back from recent highs despite solid half-year results due to a mix of factors.

Investors might also be cautious about the longer-term growth prospects given the gradual volume declines in combustible tobacco and the need to invest heavily in NGP to build a sustainable business. Despite strong cash flow and generous shareholder returns – including a £1.25 billion share buyback and a 78.5% interim dividend increase – the mix of slower top-line growth, currency headwinds, and ongoing investment costs could be weighing on the share price.

In short, the share price retreat likely reflects a “wait and see” stance from the market, balancing Imperial’s robust cash generation and capital returns against uncertain revenue growth, currency pressures, and the evolving tobacco market dynamics.

REGENCY VIEW:

Imperial Brands offers high free cash flow and a forecast dividend yield of over 6%, underpinned by robust profitability all at a forward P/E of just 8x. While recent price momentum has faded, the stock still screens well for value and income, with scope for rerating if earnings growth continues.

Sector Snapshot

Materials and Energy topped the leaderboard as commodity-linked names caught a fresh bid, while Financials and Industrials also gained ground on signs of improving macro sentiment.

At the other end, Telecoms and Consumer Staples came under pressure, with Utilities slipping modestly too. Despite the headline index treading water, the underlying sector rotation continues to build momentum, pointing to a market increasingly willing to bet on growth and pricing power.

UK Price Action

We’ve seen a second week of sideways consolidation for the FTSE with volatility contracting. We can you the mini-range that is developing to time short-term positions on the index. For long-term investors this consolidation near recent highs signals underlying strength.