Market Pulse
Friday, August 22, 2025
Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.
Today, we’re looking at issues at the ONS, the US government’s potential Intel deal, and how Ukraine peace talks are impacting European defence stocks.
But first, our number of the week…
That was the UK’s budget deficit in July, falling to a three-year low on higher than expected tax receipts. In comparison, the UK’s deficit was £3.4 billion this time last year.
Sidekick Takeaway: A shrinking deficit will be a welcome reprieve for Chancellor Reeves, especially following a string of disappointing data. Nonetheless, it takes more than one month to make a trend, and economists still expect tax rises come autumn.
Only have a minute to read? Here’s the TL;DR:
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
As the country’s main statistics agency, the Office for National Statistics (ONS) is tasked with collecting up-to-date economic data for the UK.
But in recent months, these data releases have become less timely – and less accurate.
This week, the ONS announced its decision to delay the release of July retail sales data, citing quality concerns. The release was initially scheduled for Friday.
That follows reports indicating that the ONS significantly misjudged the size of Britain’s economy post-Covid. In 2023, UK economic growth was 0.3 points higher than previously estimated.
As the Bank of England weighs its next rate decisions, these missteps have raised concerns that the bank could be relying on questionable data.
BoE could be relying on faulty ONS data
The ONS’ decision to delay its latest retail sales release is not entirely surprising.
Andrew Goodwin, economist at Oxford Economics, noted that retail sales figures have looked ‘frankly unbelievable’ for some time.
But these faulty figures can have huge ramifications on global financial markets. The BoE relies on ONS data to determine interest rate policy:
Even if the ONS wanted to make significant improvements to its systems, the office may struggle to find the resources to do so. Budget cuts this year have left little room for upgrades.
Sidekick Takeaway: While much criticism of the ONS is justified, some factors driving reduced data quality are outside the office’s control. Survey response rates, for instance, have declined across many developed countries. Still, the importance of accurate economic data cannot be overstated, and it’s increasingly clear that the ONS needs an overhaul.
For months, Intel has been searching for a strategic partner to execute a meaningful turnaround.
Now, the chipmaker could be set to make a deal with the biggest partner of all – the US government.
Reporting indicates that the Trump administration is in negotiations to take up to a 10% stake in Intel. The deal could make the American government the company’s largest shareholder.
These talks follow a $2 billion capital injection from Japanese firm SoftBank this week, led by CEO Masayoshi Son.
Both Trump and Son envision a turnaround at Intel. But the two men may have very different views of what that turnaround will look like.
Intel could be split between political, economic factors
On a purely economic basis, investors have long argued that Intel should consider spinning off its manufacturing business.
The company’s ‘foundry’ has struggled to compete with firms like TSMC. Last year, Intel inched toward a formal spin-off by restructuring the firm.
But as the only major US chip manufacturer, it’s unlikely that the Trump administration would allow Intel to spin off the firm’s foundry.
In fact, the proposed deal could see Intel dramatically expand its manufacturing capacity, in line with Trump’s America First agenda.
In response to the potential Trump deal, Intel shares jumped sharply. But if political factors weigh on business decisions, it’s not clear that investors will benefit.
Sidekick Takeaway: Given the limited details on the terms of the Trump deal, it’s hard to predict what the ultimate impact on investors will be. Nonetheless, expanding an uncompetitive foundry for political purposes may struggle to be a profitable economic endeavour.
For defence contractors, war can mean big business.
And as the Ukraine war has dragged on, European defence firms have seen their shares climb.
The STOXX Europe Total Market Aerospace & Defense index has gained over 70% this year. That performance has been bolstered by increased defence commitments across the continent.
But this week, European defence firms faltered as Ukraine peace talks gained ground.
On Tuesday, the index closed down over 3% as Trump and Putin met in Alaska.
Nonetheless, this decline could prove to be a false dawn.
Alaska summit results in little progress toward a peace deal
While hopes were high for the Trump-Putin meeting, a deal to end the war still seems some way off:
Nonetheless, any deal would require Putin’s assent. Even Trump acknowledged that Putin may have little interest in actually ending the war.
Sidekick Takeaway: This isn’t to say that European defence firms will necessarily recover all losses – their share prices depend on myriad factors. But it’s clear that the initial market reaction may have been overly optimistic on the prospects for a lasting peace.
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𝘗𝘭𝘦𝘢𝘴𝘦 𝘳𝘦𝘮𝘦𝘮𝘣𝘦𝘳, 𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘴𝘩𝘰𝘶𝘭𝘥 𝘣𝘦 𝘷𝘪𝘦𝘸𝘦𝘥 𝘢𝘴 𝘭𝘰𝘯𝘨𝘦𝘳 𝘵𝘦𝘳𝘮. 𝘠𝘰𝘶𝘳 𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘪𝘴 𝘢𝘵 𝘳𝘪𝘴𝘬 - 𝘵𝘩𝘦 𝘷𝘢𝘭𝘶𝘦 𝘰𝘧 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘤𝘢𝘯 𝘨𝘰 𝘶𝘱 𝘢𝘯𝘥 𝘥𝘰𝘸𝘯, 𝘢𝘯𝘥 𝘺𝘰𝘶 𝘮𝘢𝘺 𝘨𝘦𝘵 𝘣𝘢𝘤𝘬 𝘭𝘦𝘴𝘴 𝘵𝘩𝘢𝘯 𝘺𝘰𝘶 𝘱𝘶𝘵 𝘪𝘯.
