Weekly market update - the UK's hidden value

Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.

This week's headlines 

💥 UK growth boost – GDP rose by 0.3% in Q2, triple the expected 0.1%, as the economy looks to have held up better than expected under challenging conditions. 

📈 US inflation on the rise – core inflation - which excludes food and energy - rose 0.3% in July from the previous month. Price increases for many tariff-exposed goods were smaller than anticipated.

🛍️ Chinese retail sales slow – retail sales grew by only 3.7% year-on-year to July, it’s weakest growth this year. Slowdowns were led by weaker demand in grains, oil, food, and clothing. 

⏰ China tariffs postponed (again) – the US has once again delayed new tariffs on China for a further 90 days as the two economies continue to work on stabilising trade relations. 

✈️ Putin and Trump meeting in Alaska – the two leaders are set to meet in Alaska to discuss Russia’s ongoing war with Ukraine. The summit will be held without Ukraine’s President, Volodymyr Zelenskiy.

The UK has emerged as the G7’s growth leader in Q2, as the economy looks to have weathered recent tax rises and geopolitical tensions surprisingly well. A lot of this growth was fuelled by rises in government spending, with consumer spending still looking sluggish.

Despite a number of headwinds remaining - positive growth figures - combined with fewer job cuts than predicted - point to an improving picture of the economy. However, such indicators of strength could also mean a reduced likelihood of further interest rate cuts in the near term. 

Across the Atlantic however, US inflation figures do little to change the - already likely - chances of a US interest rate cut at the Federal Reserve's (Fed) September meeting.

Chart of the week - UK looking undervalued

Source: Liontrust; Canaccord Genuity Quest, 16.07.25. Intrinsic value = Quest default 40-year discounted cash flow (DCF) valuation

Liontrust’s latest valuation analysis of different regional equity markets compared to their intrinsic value, highlights that the UK market and small caps in particular looking very attractive. While US equities are trading at around 40% higher than what's deemed their intrinsic value, the UK market sits a full 12% lower - and UK small caps are at an amazing 35% discount.

Of course, such low relative valuations aren’t a guarantee of future success. But if markets did begin to revert back to their historic averages, UK smaller companies could be primed for a recovery and offer tremendous opportunities for growth.

In our own Parmenion solutions, we hold an overweight to the UK versus a global index, with a bias towards small and mid-sized companies.

UK markets flat

The FTSE 100 initially inched higher on US interest cut expectations, despite oil and gas falls and a pull-back in defence. While the more domestically focused FTSE 250 fell slightly over the week.

US moves with changing economic outlook

Despite lingering tariff and inflation concerns, US markets gained ground, helped by modest mega-tech gains and growing confidence in an interest rate cut next month.

Asia lifted by tech and trade

The Nikkei saw a tech-led rally and rose on expectations of expanding fiscal stimulus from the government. The Hang Seng also gained on further tariff delays and a slight easing of US export restrictions on AI chips.

Oil inches up, gold prices fall

Oil rose marginally as investors grew cautious of supply disruptions if US-Russian peace talks go poorly. Gold prices, however, fell on surging US inflation, bringing into question the speed of future US interest rate cuts – even if a September reduction still being predicted.

Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 14th August 2025.

Stay tuned for next week’s market insights

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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.