Dear reader,
The succession is almost done. Nominations to replace Keir Starmer opened on Thursday and close on 16 July, and with no serious challenger expected to reach the eighty-one names needed, Andy Burnham looks set to walk into Downing Street around 20 July. The one question the market actually cares about is still unanswered: who gets the Treasury. Wes Streeting has drifted to favourite, the market-friendly, centre-right pick who would reassure a bond market that has spent two years nervous about Labour’s fiscal arithmetic. Ed Miliband remains the frontrunner on paper but carries a pro-business question mark, not least the suggestion he might revisit the oil and gas levy as part of a drive to bring energy prices down. Shabana Mahmood and Yvette Cooper are the outside names. Burnham is also said to be lining up Lord O’Neill and Andy Haldane in reassurance roles, which tells you he knows exactly who he needs to keep calm [1].
For investors the read-through is the same as it was a fortnight ago. A Streeting appointment probably steadies gilts and sterling. A Miliband one invites fresh scrutiny of the fiscal rules and the energy levy, and the pound is the instrument that will register the verdict first. Position accordingly.
The other half of the macro picture was the Middle East, which refused to stay quiet. The ceasefire that had reopened the Strait of Hormuz collapsed mid-week, Iran attacked shipping in the strait, the United States replied with strikes on more than 80 targets, and President Trump declared the truce over. Brent spiked to around $78 a barrel before easing back toward $76 as Friday steadied [2]. I set out the full read-through to oil, inflation, rates and sterling in a separate piece this week, What Trump’s Iran Strikes Mean for UK Investors, so I will keep it brief here and turn to what was moving underneath the index.
The Week in Numbers
For all the noise, the FTSE 100 (INDEXFTSE:UKX) did what a mature, income-heavy index tends to do in a jumpy week. It absorbed the geopolitics, closed Friday up 0.23% at 10,497, and still finished the week down around 1.7%, snapping a two-week winning run [3]. The real action, as it usually is, sat in the spread between the winners and the losers rather than the direction of the index. Two forces did most of the sorting. The first was another burst of American money hunting UK assets, with easyJet (LON:EZJ) drawn into a private equity bidding war and Vodafone (LON:VOD) selling a large stake to a French billionaire. The second, quieter but more interesting, was artificial intelligence, which this week separated the companies selling into the buildout from the ones the buildout threatens. Beneath both, the precious metals miners and the defence names gave back ground as US rate expectations firmed and a long defence rally paused. The Bank of England base rate sits at 3.75%, UK CPI at 2.80%, and sterling recovered from a mid-week dip near $1.33 to about $1.34 by the close.
AI Sorts the Winners From the Losers
Two of the week’s sharpest moves happened for opposite reasons rooted in the same technology.
WPP (LON:WPP) rose 9.5% to 274.60p, and not because advertising has turned a corner. The move came as the group leaned harder into AI, expanding its transformation offering and putting Google’s Gemini Omni Flash model inside its core marketing platform, with Berenberg calling the shares undervalued after a brutal run [4]. For an agency written off for two years as the industry’s AI casualty, and fresh from losing the long-standing IBM account, being rewarded for the pivot rather than punished for the disruption is a real change of mood.
At the other end sat St James’s Place (LON:STJ), down 11.3% to 1,155.50p and the week’s heaviest blue-chip faller. The trigger was a report that Sovereign Wealth, a partner firm with roughly £3bn under management and more than fifty advisers, is in talks to defect to Söderberg & Partners. The Swedish group has been consolidating UK advice at pace, buying Schroders’ Benchmark Capital arm this month and picking off partner firms elsewhere, which goes straight to the retention problem that has dogged the group. Behind it sits a longer-running overhang: back in March, Barclays cut the stock to Equal Weight and lowered its target by around 23% to 1,300p, framing AI as a near-term threat to advice-led models. That remains a minority bear view, with the average Street target still well above the current price [6], but it set the frame, and when a stock already carries an “AI is coming for you” narrative a defection headline lands twice as hard. Results are due on 29 July.
The same fault line ran through the mid-caps, and it produced the biggest riser anywhere in the top 350. Keller Group (LON:KLR) jumped 26% to 3,456p after an unscheduled update said full-year revenue and operating profit would land materially ahead of the £3.15bn and £223m consensus, on a record £1.9bn order book. The driver was North America, some 60% of revenue, and within it a surge in infrastructure and data centre construction [5]. Keller does not build AI. It builds the ground the data centres sit on, and this week that was one of the better places to stand.
Contrast Hays (LON:HAS), up 25.7% to 43.08p but for a far more defensive reason. Profit is now guided to the top of the £37m to £46m range, yet net fees still fell 5% and permanent hiring, the higher-margin end, dropped 7% as employers dragged their feet [5]. Part of that is the cycle. Part of it is clients quietly letting automation absorb roles they would once have filled. A profit beat built on cost cuts rather than demand is a rally to hold at arm’s length.
Four of the week’s biggest movers, in both directions, sorted almost cleanly by their relationship to the same force. I would not build a thesis on a single week, but it was the clearest signal the tape gave.
Risers
Beyond Keller and Hays, the mid-cap risers had a transatlantic flavour. Playtech (LON:PTEC) climbed 22% to 385.60p after guiding full-year adjusted EBITDA to at least €270m against a €219m consensus, powered by the United States and Latin America and its Hard Rock Digital partnership in Florida. Management was candid that the second half will be softer as that revenue normalises and the group absorbs the UK Remote Gaming Duty rising from 21% to 40% [5]. Victrex (LON:VCT) added 15% to 677p and Telecom Plus (LON:TEP) 13% to 862p, the latter clawing back a little of a torrid year.
In the FTSE 100, easyJet rose 20% to 672.20p as it became the object of a private equity bidding war. The board backed a £7.15-per-share cash offer from Apollo, valuing the airline at about £5.7bn and an 80% premium to its late-May level, and dropped support for Castlelake’s earlier £6.90 approach [3]. The shares still trade below the offer, which tells you the market is not yet sure the deal clears EU aviation ownership rules before the 3 August Takeover Code deadline. Shell (LON:SHEL) added 5% to 3,040.50p on the firmer oil price, with Entain (LON:ENT) up to 550.80p and 3i Group (LON:III) to 2,704p. Friday itself belonged to Vodafone, up around 13% on the day after Xavier Niel’s Vega vehicle agreed to buy the Emirates telecoms group’s 16.2% stake and became the largest shareholder [3].
Fallers
The fallers split into a rates story and a deals story.
On rates, the precious metals miners kept sliding. Fresnillo (LON:FRES) fell 9.8% to 2,636p and Hochschild Mining (LON:HOC) 9.1% to 456.40p as gold and silver stayed under pressure, still unwinding the speculative surge that took silver to a January record and now squeezed by firmer expectations for US rates under the Warsh-led Fed [7]. Fresnillo remains a leveraged play on the silver price, and this week the leverage worked against it. The same higher-for-longer logic weighed on the quality compounders, with Halma (LON:HLMA) off 8.9% to 3,656p and Diploma (LON:DPLM) down 5.6% to 6,800p as money left richly rated bond-proxy industrials. BAE Systems (LON:BA.) slipped 6.6% to 1,851p, a pause after a long defence rally rather than any change to the spending story [7].
On deals, ITV (LON:ITV) fell 9.7% to 73.80p, a reminder that M&A is not automatically a tailwind. The confirmed sale of its Media and Entertainment arm to Sky for up to £1.6bn was meant to be a clean exit from a shrinking broadcast business, but JPMorgan cut the stock to neutral and its target from 104p to 85p, flagging roughly £150m of separation costs and around £30m of stranded Studios costs, with completion not expected until the second half of 2027 [7]. The market liked the strategy and disliked the terms.
Johnson Service Group (LON:JSG) was the steepest mid-cap fall, down 15.8% to 142.70p, after a first-half update showed HORECA organic revenue off about 2% on weak UK and Irish hospitality demand, even as workwear grew and full-year margin guidance held at 14% or better [5]. This has become an annual ritual around the group’s summer update, but the hospitality read-across is worth filing. Genus (LON:GNS) also featured, off 11.8% to 2,020p.
Results Round-Up
The fullest results of the week made a point the takeover headlines only hinted at. While easyJet is being taken private after a first-half pre-tax loss that widened to £552m, its closest low-cost rival did the opposite. Jet2 (LON:JET2) reported record revenue of £7.48bn and a record 20.83 million passengers for the year to 31 March. Operating profit slipped 2% to £439.6m after absorbing roughly £50m of industry cost headwinds, chiefly higher employer National Insurance and sustainable aviation fuel, plus £11m of start-up costs at its new Gatwick base. The group still sits on more than £2bn of net cash and launched a fresh £250m buyback, having returned £363m to shareholders over the year. The shares rose about 8% on the day [8]. One UK airline is being bought out of the public market at a premium after losses while the other compounds passengers, holds a 5.9% margin and hands cash back. Management leaned on strong summer booking momentum helped by “reduced geopolitical uncertainty,” a phrase that aged badly inside forty-eight hours, and Peel Hunt still models a sharp FY27 profit dip before a recovery.
Zigup (LON:ZIG), the vehicle rental and fleet group once known as Redde Northgate, grew underlying revenue 5.2% to £1.64bn and underlying EBITDA 8.2% to £503m, with the standout a steady-state cash figure that jumped £79m to £96m. Underlying pre-tax profit fell 4.1% to £160m as vehicle disposal profits normalised, and the dividend rose 2.3% to 27p, a fourteenth straight year of maintained or growing payouts. Spain is the engine, with rental revenue up 16% at a 19.3% margin. The shares eased a couple of percent, the market reading the softer headline profit over the cash inflection beneath it [8].
Further down the scale, a cluster of smaller names reported finals without troubling the index: legal-services consolidator Knights Group Holdings (LON:KGH), elective-healthcare provider One Health Group (LON:OHGR), IT managed-services firm SysGroup (LON:SYS), advertising-effectiveness specialist System1 Group (LON:SYS1) and BTG Consulting (LON:BTG), alongside the investment trusts Hansa Investment Company (LON:HAN), Oryx International Growth Fund (LON:OIG) and Schroder Real Estate Investment Trust (LON:SREI). None of it moved markets, though System1 reporting in the same week WPP was rewarded for its AI pivot is a fitting footnote: the question of what AI does to the advertising business is now being put at every size of company.
Global Signals
The clearest crosscurrent came from semiconductors. Chip stocks wobbled in US premarket trading ahead of SK Hynix’s Nasdaq debut, its receipts priced at $149, with Micron, Marvell and Lam Research softer on fears the listing pulls money from incumbent memory names [3]. Small on its own, but the memory chip chain now sits close enough to the AI capex story that London pays attention.
The heaviest single-day move belonged to AstraZeneca (LON:AZN), which fell more than 6% on Thursday after its gene-silencing therapy Wainua failed a late-stage heart trial [3]. For a stock that carries so much of the index on its own, a pipeline setback of that size is worth watching for read-across into the wider healthcare weighting rather than treating as a one-day event.
The bigger signal was the reminder that the market had grown complacent about the Middle East. The smooth-outcome trade had been priced a little too confidently, and investors may have to sit with more volatility while Hormuz stays unresolved [2]. Oil is the transmission mechanism: a sustained move back above $100 would revive UK inflation worries and push any Bank of England cut further out.
One to Watch: The New Chancellor
The most important event on the UK calendar is not a company at all. Nominations to succeed Starmer close on 16 July, Burnham is expected in Downing Street around 20 July, and the Treasury appointment that follows will set the tone for gilts, sterling and every rate-sensitive corner of the market. A Streeting Chancellor would most likely be read as reassurance. A Miliband one would invite questions on the fiscal rules and the energy levy. Watch the pound before the press releases. It tends to move on the answer well before the answer is confirmed.
The Week Ahead
A heavy diary. UK CPI and the British Retail Consortium’s retail sales monitor both land on Monday 14 July, and CPI in particular will colour every rate expectation from here. Thursday 16 July brings May GDP, trade, industrial production and manufacturing output, and closes the Labour nomination window. Earnings season proper gets going underneath all of it. With oil restless, the consumer data due and a new government forming, the top-down and the bottom-up could easily pull in opposite directions.
Thanks for reading,
Ollz
This article is for informational and educational purposes only and does not constitute financial advice. The author may hold positions in securities mentioned. Always do your own research and seek independent financial advice before making any investment decision. Capital is at risk.
Sources
[1] LBC, Burnham succession and the Chancellor contest. https://www.lbc.co.uk/article/andy-burnham-chancellor-choice-streeting-miliband-5HjdbxC_2/
[2] IG, the Iran ceasefire collapse and oil. https://www.ig.com/uk/trading-strategies/iran-ceasefire-collapse-oil-price-energy-stocks-portfolio-260709
[3] Yahoo Finance, FTSE 100 weekly wrap, easyJet, Vodafone, semiconductors and AstraZeneca. https://uk.finance.yahoo.com/news/uk-apos-ftse-100-closes-154819063.html
[4] TipRanks, WPP’s AI push. https://www.tipranks.com/news/catalyst/wpp-jumps-as-ai-bet-impresses-wall-street
[5] AskTraders, Keller, Hays, Playtech and Johnson Service Group trading updates. https://www.asktraders.com/analysis/keller-group-shares-surge-over-20-after-unscheduled-profit-upgrade/
[6] Investing.com, St James’s Place. https://www.investing.com/news/stock-market-news/why-is-st-jamess-place-stock-sliding-today-93CH-4785462
[7] Investing.com, ITV Sky deal and the precious-metals and defence fallers. https://www.investing.com/news/stock-market-news/itv-falls-6-as-jp-morgan-cuts-stock-on-disappointing-sky-deal-terms-4778485
[8] Jet2 final results via Investegate, and ZIGUP FY2026 results via Sharecast. https://www.investegate.co.uk/announcement/rns/jet2--jet2/final-results/9657191