Daily market update: Market relief rally, Legal & General, Gym Group, Porsche

The relief rally which took hold after comments from Donald Trump that the Iran war was close to ending has proved as short-lived as a mayfly’s lifespan.

While investors have not returned to the panic mode seen at the start of the week, with extraordinary swings in the oil price and plunging market values, there is genuine trepidation.

Reports Iran may be laying mines in the Strait of Hormuz create fear of a worst-case scenario which could see disruption to the key shipping route extend even beyond the conflict itself. Messaging from the US administration has also muddied the waters on initial claims the fighting is almost over.

Oil has ticked up again, the dollar is higher which has helped put gold back under pressure, and stocks are back in retreat.

The FTSE 100 has not given back all of yesterday’s gains but it’s clear there is appetite for some certainty on how and when the situation in the Middle East might be resolved.

The release of strategic oil reserves being mooted by G7 countries could help in the short term but ultimately an end to the conflict or at least a clear path to de-escalation is what’s needed to fully address the market’s concern.

Legal & General

Legal & General failed to hit market forecasts for profit growth in 2025, causing the shares to weaken and seeing £750 million wiped off its market value.

Core operating profit of £1.62 billion was marginally below the £1.65 billion forecast, which overshadowed the launch of its largest ever share buyback. The earnings miss is unfortunate but not catastrophic. Most investors own this story for the juicy dividends and they’re still flowing like fine wine on a summer’s day.

Gym Group

Healthy equals wealthy, according to Gym Group’s rule book. It is riding the fitness boom with explosive profit growth, generating fistfuls of cash to fund even more gyms. While it may seem as if the gym market is already well-served, price points vary massively and that leaves room for multiple brands to thrive.

Gym Group used to be the Travelodge of the fitness sector – functional yet a bit shabby. Now it has upgraded to be Premier Inn-like – affordable and decent quality. Total flexibility around memberships appeals to large swathes of the public who want to dip their toe into the fitness water but not be locked into a contract.

A lot of attention goes into improving returns from existing stores, so they don’t go stale. The group is also tapping into sources of customers including a partnership with a corporate wellness scheme.

Offering free or discounted gym membership as part of someone’s remuneration scheme is an easy win – the employee could become healthier, and the workplace perk is seen as a valuable part of their overall package. The more Gym Group can muscle in on these schemes, the richer the potential flow of extra customers.

Rheinmetall

German arms manufacturer Rheinmetall is now worth more than 16 times what it was before Russia’s invasion of Ukraine in 2022.

The geopolitical backdrop and the shift in US defence policy which has led European countries to spend more on their own military capacity is evident in Rheinmetall’s financial performance.

This has enabled a huge increase in the company’s dividend – the €11.50 per share declared for 2025 compares with a payout of just €2 in 2021.

Rheinmetall is looking to diversify with moves into shipbuilding and space technology, but its traditional expertise in weaponry remains in heavy demand and a record order book suggests that demand is not going anywhere.

However, the astonishing run for Rheinmetall’s shares means there is no margin for error. A slightly lower-than-anticipated outlook for sales growth – albeit revenue is still expected to grow at an impressive lick – led to an underpowered share price response.

Porsche

Everyone knew Porsche was in the garage for repairs so an update which reads like a particularly ugly MOT wasn’t cause for any great surprise.

New chief executive Michael Leiters has only been behind the wheel since January but is wasting no time in trying to fix the company’s problems with a strategy to focus on the premium end of the market, one of the emerging strands of a nascent turnaround plan. Porsche is also going into reverse on its previous push into electric vehicles.

Forecasts are being set conservatively, to put it mildly, although they do not factor in any impact from conflict in the Middle East, so there’s still a chance things could get worse from here.