Market report: FTSE 100 rises to new records, gold gains and crude falls
Susannah Streeter, head of money and markets, Hargreaves Lansdown: ‘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.
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.
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.
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
JD Wetherspoon’s bar takings defied the gloom settling over the hospitality sector, but its hotels rooms were a much tougher sell in the run up to Christmas, with sales falling 6.5%. ONS data had already indicated that December was lacking in cheer for the hotel industry with prices falling. Travellers have been tightening budgets and chains have had to work harder to lure people in and that’s showing up in the Spoons update. With more here’ s my colleague Derren Nathan, head of equity research: “JD Wetherspoon’s trading has taken a couple of steps forward, but costs are about to take one step back. First half like-for-like sales growth of 5.1% is not to be sniffed at, although that rate of growth has slowed in the second quarter to 4.6%. The group’s consistently robust trading is testament to its operational excellence and broadening appeal of its value offering.
There’s no more vociferous campaigner for landlord rights than Chairman Tim Martin who has pointed out that volumes of pub’s biggest product line, beer, have collapsed by 52% between 2000 and 2023. Average on-trade prices are now at £4.98 per pint and far more sensitive to labour cost increases than supermarket equivalents, where you can pick up 568 ml of refreshment for an average price of £1.20.
Forthcoming labour cost increases are set to hit Wetherspoon’s costs by around £60mn. That’s nearly half of last year’s underlying profits, where margins have still not fully recovered to pre-pandemic levels. This is an unwelcome challenge, but the group is better placed than most in the industry to ride out these headwinds. The lower performing tail of the estate has been trimmed, and the group’s targeted selection of site openings with a captive passing trade, such as stations and holiday parks, seems a shrewd move to profitably drive-up market share.”
Netflix is held onto its crown as the undisputed streaming champion. It’s intending to stay the King of content by increasing prices in some markets to ensure it can plough even more money into the rights to screen big sporting events and create new original shows. With more here’sMatt Britzman, senior equity analyst, Hargreaves Lansdown:
“Streaming giant Netflix delivers another knockout blow, with live events like the Tyson/Paul fight and blockbuster content proving it’s the heavyweight champion of entertainment. Netflix keeps us hooked with fresh content slates, drawing millions of new viewers while keeping existing customers happy at the same time. This is the last quarter Netflix will report net subscriber growth, and it’s blown expectations out of the water.
While rivals hike prices and wrestle with losses, Netflix is raking in cash and striking deals like WWE and NFL to strengthen its lineup. Competitors selling their best shows to Netflix only make its library stronger, keeping us watching – and, crucially, paying.
Looking ahead, Netflix could score big by expanding live sports and one-off events, building a moat that keeps subscribers loyal. Growing ad revenue is also a key goal for 2025 as Netflix scales its ad-supported tier. Monetizing ads isn’t easy, but with a goldmine of user data, there’s plenty to feel optimistic about.”
