Matt Britzman, senior equity analyst, Hargreaves Lansdown: “The FTSE 100 is expected to open slightly lower this morning as fresh trade uncertainty filters through from across the Atlantic. The UK had seemingly done its homework, securing a 10% trade deal with the US, but the White House's new 15% blanket tariff rather takes the shine off that achievement, dragging the UK back into fresh trade uncertainty. The new tariff uses a different legal authority, but it is a far blunter instrument than the flexible, targeted tools the administration had been relying on. While the White House insists that all existing trade deals remain intact, the EU is already making noises about pausing negotiations until the new landscape becomes clearer.
Wall Street ended last week on a high after the Supreme Court struck down the Trump administration's use of its preferred tariff powers, with investors quickly repricing the outlook for lower effective tariff rates. That optimism is fading somewhat this morning, however, with US futures pointing lower as the dust settles and investors strap back in for another wave of tariff uncertainty.
Taking a step back, though, there’s an argument that this is a positive development for investors. The Supreme Court ruling was largely expected and sends an unambiguous signal that there are limits to the executive's power over trade and tariffs. Tariff headlines will no doubt continue to dominate the news cycle, but the goalposts have shifted – the near-unlimited use of tariffs under the old powers has come to an end, and for markets that have spent months toying with worst-case scenarios, that's a small silver lining.
Oil prices are pulling back from a recent six-month high as the prospect of a US–Iran nuclear deal gathered pace, with further negotiations expected later this week. Iran's foreign minister struck an optimistic tone, suggesting a diplomatic solution is within reach, while reports that any potential US military action would be limited in scope eased fears of broader supply disruptions. Tariff changes are adding further pressure, with traders wary of what a fresh drag on global growth could mean for oil demand.
Away from the trade drama, this is a major week for corporate results, with some heavyweight names set to update investors. It's a timely reminder that underneath the macro headlines, company fundamentals still matter - and there's plenty to get stuck into this week.
Nvidia continues to defy the law of large numbers, with fourth-quarter revenue growth expected to accelerate to nearly 70% at the top end of guidance - a figure the company looks well-placed to beat. The AI buildout shows no signs of slowing, a new chip architecture is launching this year, and mega-cap customers are planning heavy investment in AI infrastructure, all of which point to another strong year ahead. Key things to watch include updates on the order backlog, early production progress on the new Rubin platform, and how margins are expected to track. China will inevitably grab some attention given the ongoing difficulties getting orders through customs, but it's unlikely to be a major dial mover either way.
Rolls-Royce looks set to fly past profit expectations, with strong demand in Civil Aerospace remaining the key theme. Large Engine Flying Hours, a key revenue driver, grew 8% over the first ten months of the year, reaching 109% of pre-pandemic levels, while a healthy flow of large engine orders provides good near-term visibility. Add in impressive growth from data centre demand in the Power Systems division, and full-year guidance of £3.1–3.2 billion in underlying operating profits could well prove conservative given the company's growing track record of overdelivering.
IAG rounds out the week with demand holding up well across its airlines, particularly at British Airways, where a dominant share of Heathrow's capacity-constrained slots continues to put upward pressure on ticket prices. Easing fuel costs provide a further tailwind, pushing market expectations for full-year operating profits to around £5.0 billion - reflecting growth of roughly 13%. All eyes will be on the size of a new share buyback programme, expected to be around €1.8 billion, as the group seeks to balance fleet expansion and digital investment with returning cash to shareholders.”
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