Emma Wall, Chief Investment Strategist, Hargreaves Lansdown: “Some data on the magnitude of yesterday’s dollar slump; the worst day for the greenback since Liberation Day, falling to levels not seen since 2022, and off the back of 2025 being the worst year since 2017. Yesterday’s drama was self-inflicted. Recent weakness was exacerbated by US President Donald Trump commenting that the decline was “great” triggering, well, more of a decline. This is an about turn from Trump’s previous stance that a weak dollar indicated a weak nation, which is not on brand for the King of Maga. The 180 may be partly about saving face, but Trump has also identified a weak local currency is good for “business” – which was widely interpreted as meaning US exports. Devaluing your currency to boost exports is something Trump has accused other nations of in the past.
Yesterday was just the latest negative day in a long line. Sentiment towards the dollar has been waning for some time – prior to Trump taking office in January 2025, though his combative nature with the Federal Reserve Chair, Jerome Powell, erratic foreign diplomacy and trade tariff by tweet has not helped. Global central banks have instead favoured gold as their reserve currency of choice, which they believe insulates them from US policy dependence. Certain nations no doubt watched the threat of Russia having its assets seized by global players supportive of Ukraine has made the metal a more attractive neutral reserve.
Expect some relief rally today due to the severity of yesterday’s fall, but we are not optimistic about the medium-term outlook for the dollar given Trump’s leadership style. Dollar weakness can create investment opportunities for investors here in the UK – it is good for US-based firms with global revenues, and good for emerging markets – an area we think looks unloved going into 2026.
This sell-the-dollar-buy-bullion shift saw gold spike yet again yesterday to new record highs, reaching more than $5,200 an ounce. Goldman Sachs estimates that central banks will target around 20% of reserves in the precious metal, and China is currently at around 8%, which alongside continued geopolitical uncertainty should prop up the gold price, though we do not that this level of outperformance is sustainable.
Watching Big Tech
It’s a big day for Big Tech as the market awaits earnings from Meta, Microsoft and Tesla later today – and Apple reporting tomorrow. These are the companies which can move not just their own share price but that of the whole market, and in particular the eagle eared will be listening to Elon Musk’s commentary on the earnings call where more detail is often provided on financial forecasts and long-term strategy for the business. HL senior equity analyst, Matt Britzman, says: “Tesla is expected to post a small year-on-year revenue decline in the fourth quarter following softer delivery numbers. Strong growth in the Energy Storage segment helps, but it isn’t enough to offset weaker vehicle sales driven by the loss of US tax credits. The new “affordable” Model 3 and Y trims haven’t bridged that gap, and China remains fiercely competitive despite Tesla’s enduring brand pull. That all points toward a steeper drop in profits as lower volumes collide with heavy investment in the next-generation product roadmap.” He believes that the market will look past these short-term numbers and instead focus on the product pipeline – such as the robotaxi and self-driving vehicles.
Semi-conductor machinery supplier, ASML, has certainly got the day off to a strong start, just delivered a “thumping set of numbers, with new orders blowing past expectations and pointing to a market gearing up for the next leg of growth” according to Britzman. “Memory makers in particular are rushing to buy ASML’s machines, and the strength of service revenues shows that fabs are running their kit harder again. With 2026 guidance nudging ahead of forecasts, this is the kind of update that should put the shares firmly in the green.”
More broadly, data from JPMorgan suggests that companies are upping their forward guidance, in laypersons terms, US c-suite are feeling more optimistic about 2026 than they were previously and big tech dominance is broadening out.
And if that wasn’t enough excitement, it is Fed decision day, widely expected that the bank will hold rates at 3.75%, but Chair Powell’s statement may trigger volatility. Powell has been vocal in recent weeks about the President’s plot to oust him and some market twitchers expect further comment today – potentially even regarding Powell’s intentions to stay on the Committee after his term as Chair ends this year. Technically he can stay on the Committee until January 2028, which the market will interpret as higher for longer, for even longer, interest rates”
Derren Nathan, head of equity research, unpacks the impact of the Defra consultation on CVS Group: "Shareholders in 2024's 'stock to watch' vet group, CVS Group, may have inhaled deeply at news of a further consultation into reforms for healthcare providers to our furry friends. However, DEFRA's review of the Veterinary Surgeons Act builds on the provisional suggestion by the Competition and Markets Authority, with the focus being on price and ownership transparency rather than a cap on treatment costs or acquisition activity. The proposal to regulate business owners as well as professionals may actually benefit larger groups who are better equipped to handle the burdens that come with regulation. Its been a tough period for CVS Group, but trading in the UK has been improving, and its expansion in Australia is progressing well. Confirmation of modest growth expectations for this year should provide some reassurance for investors as the Group prepares for its move from AIM to the Main Market of the London Stock Exchange.”
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