Derren Nathan, head of equity research, Hargreaves Lansdown: “The FTSE 100 has taken a pause this morning after reaching a record close of 10,184.35 points on Wednesday. The mining sector has had a large part to play in the strong start to the year, with metal prices on the march, and the potential for a Rio Tinto tie-up with Glencore fuelling consolidation fever. Improving economic news is also adding to the positive mood.
UK GDP grew 0.3% in November compared to forecasts of just 0.1% with services doing much of the heavy lifting. Add yesterday’s comments from the Bank of England’s Alan Taylor that inflation is on track to reach target levels of 2% by the middle of the year, and the case for a soft landing would look to be holding the high ground. But it’s not all good news with today’s economic output figures revealing broadly flat production numbers and a 1.1% fall in construction activity.
US futures are showing little direction today after a weak Wednesday on Wall Street. Mixed numbers for the US banks dragged on financials and the question of tech trade with China dragged on semiconductor names. However, today’s record earnings from Taiwanese chip builder TSMC showed that demand from elsewhere looks strong enough to keep the AI boom alive.
Delayed shutdown figures for November’s Producer Prices Index came in a little more benign than expected, but an annual rise of 3.3% still showed that wholesale prices are growing faster than those that consumers are paying. Until inflation is firmly under control, market volatility is likely to remain elevated, particularly as question marks circulate over the Federal Reserve Bank’s independence.
Brent crude oil prices are down over 3% to about $64.4 per barrel after five consecutive rises. Traders are paying close attention to the unfolding drama on the streets of Tehran. Donald Trump appears to have pulled back from the brink of military intervention. With expectations of an oil surplus this year remaining high, speculation-driven gains can be quickly reversed. But with events moving so quickly, oil traders should prepare for more volatility.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “The world’s largest chipmaker just sent a clear message: the AI boom is nowhere near done. TSMC delivered a record quarter, but the real story lies in its outlook. Management sees AI demand growing at an eye-popping 55–59% annually through 2029, and cloud giants are already knocking on its door to offer any help they can to secure future capacity. That confidence is backed by action - TSMC is pulling forward fab build-outs in Taiwan and the US, accelerating its Arizona expansion, and buying extra land for advanced packaging.
This is a clear signal. TSMC is typically cautious on capacity given the chip industry’s boom-and-bust cycles, so this aggressive build-out suggests they see a durable runway for AI demand stretching well into the next decade.
This matters far beyond TSMC. The 32% growth in capex planned for 2026, along with a signal of more to come, is a green light for the entire AI infrastructure trade. Chipmakers like Nvidia and AMD remain at the forefront, but the read-across is even stronger for semiconductor equipment names. ASML (which makes advanced equipment to kit out TSMC’s chip fabs) looks set to be the earliest and potentially biggest winner from a multi-year capex surge. In short, these results aren’t just good for TSMC - they’re a roadmap for where the next leg of AI investment is headed.”
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