Daily market update: NatWest, Puma, Rightmove, Marshalls

“The FTSE 100 lost some ground as investors took stock after another breathless week for the markets,” says AJ Bell Investment Director Russ Mould.

“There was positive economic news from the UK as retail sales bounced back in June helped by warm weather – although beyond the headline there were several signs that consumer confidence remains fragile.

“The next big focus for the market is whether a deal can be struck between the EU and Trump administration on trade – which would remove one of the biggest remaining uncertainties ahead of next week’s tariff deadline.

“Tariffs are having a devastating impact on the automotive industry, as per Volkswagen’s latest numbers. The carmaker announced a major hit relating to US trade policy and materially lowered its return on sales target for 2025. Second-quarter operating profit was down 30% but was a smidge ahead of forecasts – giving investors one crumb of comfort.

“Spirits outfit Remy Cointreau left shareholders toasting its first quarter of sales growth in more than two years. The company also raised profit guidance as the threat posed to its business by Chinese, rather than US, tariffs receded.

“After a difficult period in recent years as demand in key markets like North America and China has come under pressure, today’s announcement implies management have stabilised the business.” 

NatWest

“Unlike its peer Lloyds, which beat expectations but failed to lift guidance, NatWest has ticked both these boxes while announcing second-quarter numbers.

“A significant increase in the dividend and a further £750 million buyback gave shareholders further reason for cheer.

“Having returned to full private ownership the stabilisers are off for the group and management may now push hard on the pedals, with further acquisitions potentially on the horizon after the recent capture of Sainsbury’s Bank – which has delivered a meaningful bump in customer numbers.

“The market will be wary of NatWest becoming too aggressive on this front given its history and the danger of unpicking progress in returning the bank into a profitable and cash generative operation.

“NatWest has focused on growing parts of the business less dependent on interest rates, including its wealth management arm, and to simplify the company’s structure. It has also benefited from the Bank of England cutting rates more slowly than anticipated.

“The strong returns could come under scrutiny; with speculation the government is considering a raid on the banking sector to bolster strained public finances.”

Puma

“Trump’s tariffs have put the boot into the sportswear market, with Puma following in Nike’s and Lululemon’s footsteps to warn about the negative impact of levies.

“A lot of sports clothing and footwear is made in Asia and subject to tariffs upon entry into the US. It looks like wholesalers loaded up on stock before new tariffs came into force, creating a situation where inventory levels are now significantly greater than demand.

“Puma has warned of elevated stock levels and a sharp decline in North American sales, triggering a major profit warning. It’s everything investors feared, putting further pressure on what’s already a depressed share price.

“There is a negative read-across to JD Sports whose shares fell in sympathy. JD has large exposure to the US market and runs the risk of being swept up in a whirlwind of discounting. Excessive stockpiles of Asian-sourced goods in the US could encourage retailers to slash prices to get products moving. In this situation, sportswear sellers like JD will need to decide if they take part and stomach lower profit margins or stand firm to protect margins but risk shoppers going elsewhere.”

Rightmove

“Rightmove is being more cautious with second-half guidance, despite the market pricing in further interest rate cuts from the Bank of England which should improve mortgage affordability.

“Having achieved 10% sales growth in the first half, forward guidance is for 8% to 10% growth. That explains the share price decline on the interim results.

“Lower interest rates should, in theory, encourage more activity on the property market. Estate agents who use Rightmove’s platform should feel more confident in spending extra money to promote their listings, in the hope that transaction volumes improve and they scoop up a tidy commission.

“Rightmove’s more cautious stance could simply be clever expectations management. It is better to under-promise and over-deliver than do the opposite.”

Marshalls

“Marshalls has laid bare a multitude of problems that add up to a gloomier profit outlook. Falling prices and cost inflation have crimped margins for landscaping products and put a crack in Marshalls’ earnings.

“The company is now working hard to take costs out of the business and position itself for a profit recovery next year. Marshalls’ shares slumped on the news, hitting their lowest level intraday since October 2023.”