Matt Britzman, senior equity analyst, Hargreaves Lansdown: “UK stocks opened on the front foot this morning, buoyed by softer US economic data that reinforced expectations of a December rate cut across the Atlantic. But the calm may be short-lived. All eyes turn to Rachel Reeves this afternoon, as she unveils a Budget expected to deliver tens of billions in new taxes - a move that could ripple through markets and consumer confidence alike.
Despite being squarely in the crosshairs, UK banks look set to escape the most severe blows. If tax changes materialise, the most probable lever is a hike in the banking surcharge. Based on our modelling, that would translate into a low to mid-single-digit hit to profits for the big five. The pain, however, won’t be evenly distributed. UK-centric lenders like Lloyds and NatWest would bear the brunt, with nearly all their earnings exposed to domestic taxes. Global giants such as HSBC and Standard Chartered, by contrast, enjoy a natural hedge thanks to their diversified international footprints.
Wall Street is heading into the holiday season with more than turkey on the table. US equities notched another positive close last night and look poised to open higher again this afternoon, setting the stage for a festive mood before tomorrow’s Thanksgiving break.
The real feast, however, has been in rate expectations. The interest-rate yo-yo is back in full swing, with markets now pricing in close to an 80% chance of a December cut. For all the finger pointing towards AI, it’s hard to ignore that the dramatic shifts in rate cut hopes have been the dominant market driver in recent weeks. Still, whichever force you believe is steering the ship, brace for turbulence: the Fed’s internal debate remains far from settled, and mixed signals rarely make for smooth sailing.
Dell’s results are the latest in a string of companies reporting strong AI demand. For all the talk of bubbles, the results we’ve seen over the past few weeks suggest anything but. Sure, there are companies where sentiment has got a little carried away, and a healthy pullback was on the cards. But with the narratives flying around in the past week or so, one would assume the AI story is running on fumes – that’s simply not what the numbers are showing.
Sentiment, of course, is a fickle beast. Earlier this year, Alphabet was cast as an AI laggard; fast-forward to today, and headlines are touting its custom chips as a challenge to Nvidia’s dominance. Credit where it’s due, Alphabet has sharpened its story, but let’s keep perspective. Custom chips have been around for over a decade, and they’re a narrow tool compared to Nvidia’s expansive product suite. This latest buzz feels more like a DeepSeek-style overreaction than a structural shift. For long-term investors, that could be the perfect setup: Nvidia looks primed for another blockbuster year in 2026, and noisy headlines have presented an attractive entry point.
Oil prices slipped close to their lowest level in five weeks, as optimism over a potential Ukrainian peace deal pressured prices. Progress in negotiations has fuelled speculation that sanctions on Russian crude could be lifted, unlocking supply from one of the world’s largest producers. With global output already outpacing demand, any additional barrels risk deepening the glut, keeping prices under pressure.”
|
