Brent crude pushing above $100 a barrel has had a psychological effect on the market, pushing a hypothetical inflation worry gauge to ‘serious’ status and dragging down financial assets.
The oil price has now jumped by 28% since early August. This type of ascent could leave businesses and consumers feeling sick at the thought of sharp cost increases and potentially higher borrowing costs if central banks choose to fight inflation with interest rate hikes.
Shares in airlines including IAG, Ryanair and Wizz Air fell on oil going through $100 and as UK airports warned of further disruption following Tuesday’s air traffic control software failure that grounded more than 1,000 flights. Flights have resumed operating, but there are likely to be delays as planes and crew get to where they need to be. The disruption is yet another headache for the airline industry which has already been tested by the Iran war knocking passenger confidence in flying and a sharp increase in fuel costs.
The FTSE 100 managed to hold firm despite the market worries around inflation and interest rates. Utilities were in demand as investors sought to add something stodgy to their portfolio in case of a market correction. BP and Shell also propped up the UK market as they stand to benefit from the higher energy price.
Bond yields moved higher in reaction to oil’s ongoing ascent and what that could mean for interest rates. The 10-year gilt briefly hit 5.129% while the 30-year gilt topped 5.824% before easing back slightly. The longer this trend remains in motion, the smaller the Budget headroom for new chancellor John Healey. Rising borrowing costs will put more pressure on the government to consider tax rises, spending cuts or both.
Inditex
Everything appears to be going swimmingly for Zara-owner Inditex. A solid set of half-year results was helped by improved gross margins, well-received spring and summer collections, and further geographical expansion.
It’s impressive that Inditex wasn’t scorched by the summer heatwave in many of its key operating locations. Temperatures have been uncomfortably high which would normally deter people from going to the shops on a frequent basis.
The group has a reputation for quality and runs a tight ship, enabling it to get products to online customers fast as well as having a decent range in its physical stores. Its key brands including Zara and Pull & Bear remain front of mind for shoppers when they’re looking for something stylish yet affordable.
The Bershka brand last month made its US debut by dipping its toe into the Miami area, testing the water to see if the retail chain resonates with a young adult and teen target market.
The US is notoriously difficult for European companies to crack, and Inditex is pushing Bershka at a time when consumers are showing caution with their spending in the States. The group must be confident of winning to have launched the brand in the US in the first place, and it is well versed in geographical expansion across its brand portfolio.
Goodwin
For most of its time on the stock market, family-owned engineer Goodwin has kept its head down but in the past year its defence capabilities have seen it garner a lot more attention – both positive and negative.
After a stellar run the Stoke-on-Trent business hit a major bump in the road when it revealed in March it had lost two significant contracts and had been hit by order hold-ups linked to the Middle East crisis.
The latest bout of volatility follows a strategic review of its defence arm, with private equity firm Cerberus plotting a bid. When a £1 billion price tag was reported yesterday afternoon the shares slumped as investors were left disappointed, with confirmation of discussions around a £1.1 billion deal doing little to inspire either.
Goodwin may now feel some pressure to push for a higher price tag to get shareholders on board, although given the Goodwin family hold a 50%-plus stake, ultimately any decision is likely to rest with them.
Gym Group
Gym Group has flexed its muscles with memberships, revenue and profit all up in the first-half period, and full-year earnings seen at the top end of forecasts.
The company is seeing the benefits of doing some heavy lifting on its sites, with upgraded gym formats resulting in improved performance at both new and refurbished locations.
This investment is fuelled by strong free cash flow, and it continues to roll out new sites while still having cash on hand to fund share buybacks.
Investors will be alive to the risks of the gym industry becoming oversaturated after significant site expansion across the UK in recent years.
While there has been a lifestyle shift with younger age groups prioritising their health and fitness over pub trips and other areas of discretionary spend, this may have a limit.
For now, the expansion in Gym Group’s memberships is reassuring, with growth in this area modestly higher in the first half of 2026 than it was for 2025 as a whole.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
