UK markets consolidate as sterling pulls back and FTSE 100 lags European peers

​​​Sterling retreats but holds above $1.33

Sterling has given back some ground after recording its strongest daily gain since April, though it remains comfortably above $1.33. The pound's retreat comes as traders continue to digest shifting expectations around interest rates and the budget.

​The FTSE 100 has edged higher but finds itself trailing continental European markets, where tech, industrials and banks have provided the main thrust. Gilts have weakened slightly, keeping pace with movements in other bond markets.

​The divergence between UK and European equities has become more pronounced in recent sessions. While the FTSE has managed modest gains, the momentum clearly lies with continental bourses.

​This performance gap highlights ongoing concerns about the UK economic outlook. Investors continue to weigh the impact of fiscal policy changes against the backdrop of sticky inflation and uncertain rate expectations.

​SSP surges on earnings upgrade and cost savings

​SSP Group has emerged as the standout performer, jumping as much as 15% to record its best day since mid-2024. The company guided towards the top end of earnings expectations and highlighted £30 million in cost savings.

​The market reaction reflects relief that the travel food specialist can still extract efficiencies from its operations. Such moves remain relatively rare in the current environment, where cost pressures continue to bite across the retail and hospitality sectors.

​SSP's performance demonstrates that well-executed operational improvements can still drive significant share price gains. The company's guidance suggests management confidence in maintaining momentum through the current financial year.

​The cost savings programme appears to have resonated with investors looking for evidence of margin protection. In a sector facing numerous headwinds, this kind of execution stands out.

​Frasers holds steady as retail pressures persist

​Frasers Group has taken a more cautious line, reiterating its full-year profit guidance of £550-600 million while acknowledging difficult conditions for retailers more broadly. The company pointed to improving margins at Sports Direct and Flannels as bright spots.

​The retailer stopped short of upgrading expectations despite the margin improvements. The ability to maintain guidance in this climate is noteworthy, even if it doesn't necessarily signal a broader improvement in consumer spending.

​Frasers' commentary suggests the retail environment remains challenging, with consumers continuing to feel the pinch. The company's focus on margin management rather than volume growth reflects the realities facing the sector.

​Sports Direct and Flannels have shown resilience, but the group clearly sees little reason to become more bullish. This cautious stance contrasts with the more upbeat tone from SSP, highlighting how differently various consumer-facing businesses are performing.

​Vodafone expands African footprint through Safaricom deal

​Vodafone has strengthened its position in Africa, with Vodacom acquiring a 20% stake in Safaricom for €1.81 billion. This takes Vodacom's total holding to 55%, cementing its presence in a region that continues to offer growth opportunities.

​The deal underlines the ongoing appeal of African mobile markets for operators looking to offset sluggish growth at home. Vodafone clearly sees value in doubling down on markets where subscriber growth and mobile money services offer genuine expansion potential.

​Africa remains one of the few regions where telecoms operators can still achieve meaningful organic growth. The Safaricom deal gives Vodafone greater control over one of the continent's most successful mobile operators.

​This strategic move contrasts with the group's struggles in more mature European markets. African operations increasingly represent a key pillar of Vodafone's long-term growth strategy.

​Ofgem investment to add over £100 to household bills

​Ofgem has approved £28 billion of network investment, a decision that will add an estimated £108 to household bills by 2031. The regulator argues this spending is necessary to accommodate wind farms and data centres.

​The impact on consumers is significant, particularly given existing pressures on household finances. Whether this proves value for money will depend on how effectively the infrastructure upgrades are delivered.

​The approval highlights the costs associated with the energy transition and the expansion of digital infrastructure. These investments may be necessary, but they come at a time when consumers are already feeling stretched.

​Ofgem faces a difficult balancing act between enabling investment in new infrastructure and protecting consumers from excessive bill increases. The £108 addition represents a material jump in costs over the next six years.

​WPP exits FTSE 100 after 27-year run

​WPP is exiting the FTSE 100 after 27 years following a 65% slump in its share price. British Land will take its place in the reshuffle, marking the end of an era for the advertising giant.

​The departure reflects the challenges facing traditional media businesses in an increasingly digital world. WPP's struggles have been well-documented, with clients cutting marketing budgets and shifting spend towards newer platforms.

​After nearly three decades in the index, WPP's exit represents a symbolic moment for the UK's creative industries. The company once stood as a global leader in advertising, but has found it increasingly difficult to adapt to changing client demands.

​British Land's promotion suggests investors see more value in commercial property than in legacy advertising businesses. The reshuffle underscores how quickly fortunes can change in the equity markets.

​Mining sector focuses on copper amid supply concerns

Copper remains front and centre in the mining sector, with Rio Tinto outlining cost cuts and asset reviews as the industry races to increase exposure to the metal. Demand expectations continue to drive strategic decisions, particularly around the energy transition.

​The focus on copper has become something of an industry obsession, with miners keen to position themselves ahead of what they expect to be a prolonged period of tight supply. Electrification themes dominate strategic planning across the sector.

​Rio's asset review suggests the company is prepared to divest non-core operations to fund copper expansion. This reflects the premium the market places on exposure to metals seen as critical for the energy transition.

​The copper rally may have paused, but miners clearly believe the long-term fundamentals remain intact. Strategic decisions made now will shape the industry for years to come.

​European stocks extend rally on rate cut expectations

​European stocks have gained for a third consecutive day, with the STOXX 600 lifted by industrials and banks. Expectations of US rate cuts continue to provide support, though how long this sentiment can sustain further gains remains to be seen.

​Market breadth has improved, with a broader range of sectors participating in the advance. This development tends to point towards more durable rallies rather than narrow, momentum-driven moves.

​The three-day winning streak suggests investors are becoming more comfortable with the outlook for European equities. Rate cut expectations have provided a tailwind, though economic data remains mixed across the continent.

​Whether this rally has legs will depend on how economic conditions evolve and whether central banks deliver the rate cuts markets are pricing in. For now, the path of least resistance appears to be higher.