Investment - Articles - Soft UK GDP and choppy US markets

Matt Britzman, senior equity analyst, Hargreaves Lansdown: “UK markets are set to open higher, brushing off a lacklustre GDP report that showed the economy barely moving at the end of last year. Growth in Q4 was muted and narrowly driven by services and government spending, a reminder that private-sector momentum remains thin despite hopes that Q1 will look a little brighter. That leaves the bigger picture unchanged: a fragile growth outlook, softer inflation ahead, and a Bank of England that should have room to cut rates over 2026.

US markets looked flat on the surface, but beneath the calm, it was a volatile session, with solid breadth in the S&P 500 masking weakness in the tech-heavy Nasdaq. This is 2026 in a nutshell: blink, and you’re punished, as perceived AI disruption continues to separate winners from losers. Shopify fell close to 7% in a wild swing from +11% pre-market as investors continued to fret about its place in the AI pecking order. Financials stayed under pressure, but capital goods shone, with Caterpillar and Deere pushing fresh highs on a strong jobs report that pushed rate-cut hopes further out.

Oil prices pushed higher again, with Brent hovering around $70 a barrel, as geopolitical nerves around US-Iran tensions continued to do the heavy lifting. Talk of diplomacy has done little to calm traders, who remain focused on the risk of supply disruption, even as OPEC stuck to its demand forecasts and signalled no change in its supply stance. That said, the rally is running into resistance, with US inventories jumping sharply and the IEA likely to remind markets that a global surplus is still lurking in the background later today.”