24th Jan 2025. 10.46am

Weekly Briefing – Friday 24th January

Market Movement this week (%)*
FTSE 100 +0.38%
FTSE 250 -0.08%
FTSE All-Share +0.31%
AIM 100 +0.45%
AIM All-Share +0.10%

* Price movement from Monday's open at 8am

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Weekly Briefing – Friday 24th January

Market Overview

Dear Investor,

Donald Trump’s first week back in the White House has been a whirlwind of bold moves and headline-grabbing decisions. Putting the sweeping pardons and off-the-cuff politics to one side, there was plenty for investors to digest—from ambitious economic initiatives to renewed trade policies that could reshape the global landscape.

One of the standout announcements was the unveiling of the $500 billion Stargate Project. Positioned as a transformative push for US technological dominance, the initiative aims to build a cutting-edge AI infrastructure with backing from major players like OpenAI and Oracle. While the project has been met with enthusiasm by some, others have raised questions about its financial sustainability and execution. For UK investors, this development signals a potential acceleration in tech-driven opportunities, especially as the global AI race heats up.

Trump’s return has also reignited his focus on energy and trade. His decision to withdraw the US from the Paris Agreement once again, coupled with rolling back key climate regulations, introduces uncertainty into renewable energy markets. Meanwhile, the revival of aggressive tariff policies, targeting countries such as China and Canada, risks further destabilising global supply chains.

Closer to home, the UK finds itself in a complex position. British businesses with ties to American markets may benefit from Trump’s pro-business stance, but the potential for higher tariffs on European goods and friction over climate commitments adds a layer of uncertainty. The ongoing Musk-Starmer feud has also introduced another destabilising element for the UK, further complicating an already delicate landscape. Balancing these dynamics will be a critical task for UK policymakers as they navigate Trump’s second and final term as president.

Wishing you a fantastic weekend,

Tom

Thomas Light – Chartered FCSI
Director of Research

Market Movers

On the rise: Close Borthers (LSE:CBG) +23.4% on the week

Close Brothers’ share price climbed higher this week following a boost in sentiment across the motor finance sector. This surge came after Chancellor Rachel Reeves intervened in a high-profile court case concerning the potential mis-selling of car loans.

The Supreme Court is set to hear a crucial case in April, which will decide whether to uphold an October ruling on hidden commission arrangements in car finance deals. The outcome of this case could potentially expose lenders like Close Brothers and Lloyds to billions of pounds in compensation claims from affected consumers.

The Treasury has sought to intervene by submitting an application to the Supreme Court, arguing that the ruling could destabilise the car finance market and make loans more expensive or difficult to access. The government also expressed concerns that the case could generate a perception of regulatory uncertainty in the UK, which could have broader repercussions for the financial services sector. The submission stressed that any compensation awarded should be proportionate to the actual loss suffered by consumers, emphasising a balanced approach to the issue.

This intervention has been met with mixed reactions. While it has been welcomed by industry players like Close Brothers and Lloyds, whose share prices surged in response, it has drawn criticism from consumer rights groups. Lawyers representing consumers affected by the car finance scandal argue that the government’s efforts to shield lenders could undermine public trust in the financial sector. As the legal proceedings unfold, it remains to be seen whether the Treasury’s stance will influence the final judgment or if further regulatory scrutiny will shape the future of the motor finance market.

On the slide: QinetiQ (LSE:QQ.) -9.2% on the week

Shares in defence tech firm QinetiQ dropped this week following a disappointing trading update that highlighted slower-than-expected short-term order intake in the UK.

Despite maintaining full-year guidance for high single-digit organic revenue growth and stable underlying margins, the update revealed challenges in the domestic fiscal environment that have impacted the UK Intelligence business. In response, QinetiQ has taken steps to resize some of its capabilities within this division.

While the company reported strong performance in its UK Defence segment, supported by longer-duration contracts, and steady global order intake of £1.3 billion, market sentiment was dampened by the subdued short-term growth outlook. Adding to investor concerns, the trading environment in the US remains challenging, with headwinds in the contracting space.

On a brighter note, QinetiQ highlighted several strategic wins, including a new forward operating base in Huntsville, Alabama, to support a major US Army contract, and a partnership with the British Army for the rapid deployment of the Archer howitzer system. However, these achievements were overshadowed by the market’s focus on immediate UK challenges, which weighed on the stock this week.

Sector Snapshot

It’s been a strong week for Tech stocks, with Donald Trump’s plans for AI investment making an impact across the pond. Financials continue to perform well, and we’re beginning to see the first signs of positivity in consumer stocks after they underperformed in recent weeks.

On the downside, Energy stocks have started to give back some of the gains made during the New Year rally, while Real Estate has weakened despite talks of lower interest rates.

UK Sector Performance (YTD)

UK Sector Performance (YTD)

UK Price Action

In last week’s UK price action, we noted that a “weekly close above the highs would be a strong bullish signal, potentially marking the start of a new uptrend after a prolonged period of sideways consolidation.” The market closed above key resistance last week and has since spent this week consolidating those gains, trading within a tight range above the highs.

FTSE 100 Rolling Futures (Daily Candle Chart)

FTSE 100 Rolling Futures (Daily Candle Chart)

Disclaimer:

All content is provided for general information only and should not be construed as any form of advice or personal recommendation. The provision of this content is not regulated by the Financial Conduct Authority.