HL LIVE
HL commentary as it happens
Wednesday 22nd January
Brent Crude dips to below $79 a barrel
Gains are being held back for UK-listed energy stocks as prices of Brent Crude shift lower. The oil benchmark has been trading around $79 a barrel falling for the fourth session in a row. It comes amid renewed concerns about demand for energy in China, the world’s second largest economy given the threat of tariffs from the Trump administration. The pledge to boost US oil production increasing supplies also appears to be having an impact on prices, although producers are likely to be cautious in ramping up operations to ensure prices stay profitable.
Bitcoin remains volatile as speculators await more action on crypto
The lack of immediate executive action from the US administration targeting the crypto market has led to renewed volatility in the price of Bitcoin. But it’s still trading above $105,000 dollars, up 54% since President Trump won the election amid hopes that he will soon start laying out plans for a Bitcoin reserve fund and other targeted support.
The President and First Lady have capitalised on the FOMO effect by launching their own meme coins, which rose in stratospheric fashion but saw a sharp retreat before making a few creeping gains again. It appears that the $Trump price will be tied to Trump’s popularity while in office, and this will be a wager on his performance, particularly when it comes to his support of crypto, a demonstration of just how risky such speculative assets are.
Better-than-expected corporate earnings push Wall Street higher
Wall Street rose on a relief wave as corporate earnings have snapped higher than expected, calming niggles of concern about the potential impact of tariffs on interest rates. Trump’s mega plan to invest in AI infrastructure by pouring an initial $100 billion into a joint venture with OpenAI, Oracle and SoftBank is lifting tech sector prospects which are so closely tied to the trajectory of artificial intelligence. Stargate will build out data centres crucial to handle the wells of information for models, and invest in the electricity generation needed to power the energy-hungry hubs. The first wave of funding could multiply five-fold over the project’s lifespan.
FTSE 100 rises to new records
London’s blue-chip index has found another spring in its step, rising to fresh record levels. It climbed to 8,565 before slipping back slightly. Investors are batting away concerns about the impact of President Trump’s policies on the global economy.
The make up of the FTSE 100 also offers resilience in an uncertain world, with pharma, consumer staples, and utility stocks offering the prospect of stable returns whatever the economic weather. Although Chinese stocks fell back after POTUS pledged to hit China with an extra 10% tariff on goods imported into the US, there are hopes a tit-for-tat retaliation won’t materialise.
Speaking in Davos, China’s Vice Premier Ding Xuexiang cautioned that there were no winners in a trade war, so there are hopes that repercussions may be more limited. The delay in imposing blanket tariffs on Day 1 of the new administration has led to hopes that there is room for negotiations. Nevertheless, more investors appear to be sheltering in the perceived safe haven of gold. The precious metal has climbed higher to levels not seen since November, amid uncertainty hanging over the global outlook.
Tuesday 21st January
Oil prices steady, awaiting Trump action
Brent crude oil prices steadied around $79 a barrel, as markets reacted to President Trump’s string of executive orders. Tariffs are on the cards, but there wasn’t any specific mention of China, the world’s top oil importer. Even so, traders remain on edge, awaiting further details on both tariffs and potential sanctions targeting major oil exporters like Russia, Iran, and Venezuela.
Banks receive a helping hand in the motor finance debacle
The UK government’s backing in the motor finance case is a clear positive for Lloyds, the bank most exposed to the issue, with shares popping 5% as a result. By urging the Supreme Court to adopt a fair and measured approach, the Treasury is helping to ease fears of hefty penalties, potentially softening the financial blow for lenders. While Barclays has less exposure and NatWest none, the government’s bank-friendly stance should help lift confidence across the sector.
UK pay growth at its highest level in six months
Wage growth in the UK has hit a six-month high, driven by strong private sector pay growth, creating a solid foundation for consumer spending in 2025. Real wages, up 2.5% after inflation (excluding bonuses), are boosting household spending power - a positive for retailers and the broader economy. While rising wages reignite inflation concerns, softening unemployment figures and expectations of a downward trend in pay from here suggest the Bank of England is still on track to cut rates in February.
UK markets open flat, while US futures point to a positive open
UK markets are feeling their way tentatively through the first day of a Trump Presidency, with the FTSE 100 opening flat, taking cues from across Europe. US markets were closed yesterday, but futures suggest investors had a positive reaction to Trump’s inauguration speech and his string of day-one executive orders.
Friday 17th January
FTSE 100 surges to record levels
The FTSE 100 has caught that Friday feeling, surfing upwards on a wave of enthusiasm, powered by expectations of lower interest rates and a weaker pound. The index jumped in early trade by 1%, cresting past its previous record in May last year.
The blue-chip index is stuffed with global giants, like miners, which benefit from cheaper sterling, and were among the biggest gainers of the morning. The pound fell to $1.21 after a disappointing snapshot of retail sales showing a contraction for the so-called ‘golden quarter’, adding to the picture of stagnation for the UK economy. But it’s provided a tailwind to multinationals and hopes of interest rate cuts from the Bank of England have buoyed investor sentiment.
The FTSE 100 has been a laggard compared to US indices. They surged higher in 2024, with the S&P 500 gaining more than 23%, helped by big gains among the mighty tech stocks, fuelled by AI optimism. But appetite for UK market is being revived, as investors are attracted by its defensive characteristics in an era of global uncertainty. Sectors like healthcare, utilities, consumer staples and telecoms companies can offer stable returns. The impressive dividend-paying potential is a key attraction to the UK stock market. There are plenty of mature companies boasting strong dividend cover and the potential for income to grow over the long term.
Other sectors like energy are also benefitting from economic trends, with Brent Crude rising in early trade, heading for a fourth weekly gain in a row. After years of trying, and failing, to play catch up, the FTSE 100 appears to have finally caught the ball of investor enthusiasm. Although fresh volatility is expected on global markets after President Trump returns to the White House, there may be more appetite to shelter in the resilience of the UK market, and benefit from stocks which have seen depressed valuations in recent years.
Brent crude flat at around $81.8 per barrel
Brent crude is closing in on the $82 level. The prospect of a ceasefire between Israel and terror group Hamas has done little to quell supply concerns, and inventory in the US remains tight. All eyes turn to Donald Trump’s arrival in the White House next week and what that might mean both for sanctions on Russia and drilling activity in the shale basins and offshore.
UK December retail sales decline 0.3% vs consensus of 0.4% growth
The data adds to the picture of a stagnating UK economy, adding to concerns it may have gone into reverse in the final quarter of the year. Poor weather won’t have helped persuade shoppers out to spend, but there are also inclement economic winds blowing, with shoppers clearly becoming more cautious. Given how reliant the economy is on consumer spending to propel growth, the contraction of 0.8% for the sector, in what is meant to be the ‘golden quarter’ for retail bodes ill for growth.
European markets broadly in positive territory, FTSE opens up 0.9%
European stock markets have added a touch to yesterday's gains as investors digested the latest dishes that earnings season on the continent had to offer. The FTSE 100 has followed suit, despite weaker-than-expected retail sales figures, for the vital month of December. Analysts had been hoping for growth of 0.4%, but a stagnant economy is resulting in a tightening of Joe Public’s purse strings. Food sales had the worst of it, with volume declining 1.9%, but there was a strong rebound for clothing retailers, which saw the largest growth of any category, up 4.4% compared to a 3.5% decline in November.