10th July 2025
AJ Bell market comment – 10 July 2025
“The FTSE 100 has hit a new intraday high of 8,955 as the UK stock market continues to flex its muscles and show strength. Investors lapped up shares in the mining, oil and pharmaceutical sectors, showing a risk-on mood,” says Dan Coatsworth, investment analyst at AJ Bell.
“European markets in general continue to shrug off Donald Trump’s daily tariff updates, perhaps seeing them as noise and not facts. Trump is throwing out numbers left, right and centre, and investors have begun to dismiss anything that isn’t set in stone.
“So many of Trump’s decisions have either been rolled back, forgotten about, or kicked down the road. For investors, that means a shift in focus back to economic data and corporate news flow as key drivers for markets.
“The latest minutes from the Federal Reserve’s monetary policy meeting confirmed what many people already thought. The central bank wants to see more data before making changes to interest rates.
“The Fed indicates the tariff regime could drive up inflation, albeit on a temporary basis. At the same time, the economy and jobs market have so far proven to be resilient, which means there isn’t a rush to cut rates. That said, markets remain convinced we’ll get a rate cut after summer ends. In fact, the market probability of a rate cut in September went up after the Fed meeting minutes were released, now standing at 67.2% versus 60.8%.
“Investors traditionally welcome rate cuts as it relieves financial pressure on companies and consumers and encourages greater spending. That can lead to higher corporate profits and increased economic activity.”
WPP
“Currently in the middle of an existential crisis, advertising agency WPP is still putting out the flames from yesterday’s profit warning as it announces a new chief executive. Cindy Rose clearly likes a challenge given she’s accepted the top job.
“Rose’s background at Microsoft and Disney means she is well versed with the fast-moving world of technology and consumer trends, something that is vital to make WPP a success. Clients rely on WPP to come up with the right ways to attract and retain customers, and the agency needs to shine in this regard if it still wants to exist in 10 years’ time.
“WPP faces a structural challenge in the form of AI being able to fulfil many client needs. It needs to excel in the areas where AI doesn’t shine, while also embracing the technology where possible to help run a more efficient business.
“Investors should be encouraged by WPP hiring an outsider. There was always the danger of not being able to find the right candidate brave enough to lead a turnaround; and having to promote from within just to have someone behind the wheel. Fresh thinking is of paramount importance and Rose needs to have a bag full of ideas as soon as she takes office as there is a massive recovery job at hand.”
PENNON / SEVERN TRENT / THAMES WATER
“The water utility sector’s name has been mud with just about every stakeholder going in recent times, thanks to a toxic mix of contributing to pollution in Britain’s rivers and seas, financial issues and poor market returns.
“The latest announcement regarding South West Water owner Pennon continues this trend as regulator Ofwat proposes a £24 million enforcement package for ‘failures in managing its wastewater treatment works and network’. The market has reacted with a modest measure of relief to this development, with Pennon bringing forward spending from the next regulatory investment phase to address some of the issues highlighted.
“Investors will be hoping this can draw a line under the problems and allow Pennon to execute on its long-term strategy and deliver sustainable returns to shareholders.
“Meanwhile, Severn Trent is continuing its own investment programme with a set of quarterly results that reveal progress on spill reduction.
“The biggest problem child in the industry – Thames Water – is reportedly weighing a potential rescue bid backed by a former Liberal Democrat peer, Lord Rupert Redesdale and a fairly obscure financial services firm. This rivals the only other proposal on the table from the unlisted company’s creditors after private equity firm KKR walked away last month.
“A resolution would bring an end to considerable drama. Having had rather too much of the wrong sort of excitement of late, the market will be hoping the sector returns to its former status of being a fairly dull and under-the-radar space which can deliver a reliable stream of income.”
VISTRY
“Vistry has had a horrific time over the past year with three profit warnings after understating build costs, various delays to projects, and dropping some deals with unattractive commercial terms. Investors were punished with a slump in the share price and the dividend halted.
“Two months ago, Vistry implied it was taking baby steps on the road to recovery as sales rates increased, albeit ongoing cost pressures were a concern. It has now struck a more optimistic tone, flagging ‘good momentum’ and a first-half performance in line with expectations.
“The mere absence of another profit warning was enough to trigger a small relief rally, with the shares temporarily jumping on the news before falling back. The shares remain 50% below last summer’s levels, which implies that Vistry will need to show considerable improvement in trading to win back the market’s favour.
“On a broader basis, quite a few housebuilders have been talking up prospects in recent months, but investors have remained cautious amid concerns about the slow pace of interest rate cuts, cost issues and mixed consumer confidence.”
JUPITER ASSET MANAGEMENT
“The latest in a long line of consolidation within the asset management industry sees CCLA being bought by Jupiter.
“This looks to be one of these deals that makes a lot of sense given the lack of crossover across the fund range, with CCLA having a clear specialism in the ethical investment and stewardship space.
“Jupiter has a history with this type of investing given its long-standing Ecology fund. However, its capability has always looked light in an area that will likely become mainstream over time despite the recent challenges that have come from responsible investment.
“The acquisition of CCLA also diversifies the client base of Jupiter given the heritage of the target with charity, local authority and Church of England investors, which makes the deal look sensible from a business perspective. Jupiter will need to convince these clients that it will continue to hold CCLA’s core principles at the heart of its investment approach.
“With little crossover of funds, Jupiter will be looking to see what cost savings can be made behind the scenes as it looks to increase scale to tackle the challenges that passive investing brings to those pursuing an active led approach. Jupiter is not alone in this regard and therefore it seems highly likely we see further M&A activity in the asset management sector.”
TSMC
“Trading at TSMC remains robust despite a mix of currency headwinds and tariff turmoil, showing just how powerful and resilient the AI theme is proving to be.
“Companies continue to spend heavily in trying to get ahead in artificial intelligence and this benefits businesses such as TSMC which provide the required infrastructure.”
DR MARTENS
“It feels like Dr Martens started life as a public company with its shoelaces tied together as it has taken one stumble after another.
“Having made some progress in stabilising the business, a trading update suggests its new strategy is gaining some traction.
“While sales are doing reasonably well in certain parts of the world, notably in the critical US market, struggles in the UK offer a reminder that it sells a discretionary item in what remains an uncertain economic backdrop.”