HL LIVE
HL commentary as it happens
Monday 26th January
Japanese yen intervention jolts equity markets as investors reassess currency risk
The yen has strengthened sharply after renewed speculation of Japanese and US intervention in currency markets, rising from around 159 against the US dollar at the end of last week to as strong as roughly 153.8 in early trading on Monday, its strongest level in around two months.
The move followed reports that US authorities had contacted market participants to assess trading conditions in the dollar–yen pair, a step often viewed as a precursor to direct intervention, alongside increasingly firm language from Japanese officials. Together, these signals reinforced expectations that any action to support the yen could be coordinated between Japan and the US.
The immediate impact has been felt in Japanese equities, with the Nikkei 225 falling around 1.7% as the stronger yen weighed on exporter-heavy sectors. A rising currency reduces the value of overseas earnings when translated back into yen, and sharp currency moves typically trigger a knee-jerk sell-off in areas such as autos, technology and industrials.
Beyond the initial reaction, the implications for equity markets are more complex. If yen strength proves persistent, it could increase volatility by encouraging an unwind of long-established carry trades, where investors have borrowed cheaply in yen to invest in higher-returning assets elsewhere. Any meaningful repatriation of capital back into Japan would represent a shift in global capital flows and could create short-term pressure in overseas equity markets, including the US.
However, a stronger yen is not necessarily negative for Japanese equities over the longer term. Greater currency stability improved domestic confidence and a reduced reliance on exchange-rate weakness to support profits could ultimately underpin more sustainable earnings growth. In the near term, equity markets are likely to remain sensitive to further signals from policymakers in Japan and the US, with currency volatility adding an extra layer of uncertainty for investors.
Oil flat after 2% gain on Friday
Oil prices are broadly flat this morning, with Brent trading just below $66 a barrel as geopolitics returns to the forefront. A fresh US military buildup in the Middle East has revived fears of supply disruption, while President Trump dusting off the tariff hammer - this time aimed squarely at Canada - is keeping broader trade nerves simmering.
Gold breaches $5,000
Gold is doing what it does best when the world feels messy, jumping more than 1% to above $5,070 amid rising trade tensions, geopolitical flare-ups, political uncertainty in the US, and a growing dollar-debasement narrative. Fresh friction between the US, Canada and China, unease around Europe and the Middle East, and even shutdown risks in Washington have all added fuel to gold’s appeal, while markets expect the Fed to sit tight on rates this week. After a strong 2025 and a 17% gain already this year, this rally is a reminder that gold bull runs often last longer and climb higher than anyone expects - and so far, this one is sticking firmly to the script.
US futures point to soft open after 3-day streak
US stocks look set for a tepid start to the week, with futures broadly flat after Wall Street closed higher for a third straight session on Friday. Even so, those gains weren’t enough to stop the market from chalking up a second consecutive weekly decline, a reminder that momentum has cooled a little as investors weigh Trump drama against what should be a strong earnings season.
UK markets open higher as investors strap in for a busy week
UK stocks have started the day on the front foot, with the FTSE 100 edging higher as investors look at gold breaking above $5,000 an ounce for the first time. A stronger pound, now at its highest level against the dollar since September, and a pivotal week ahead for US tech earnings are also setting the tone, as global cues continue to drive sentiment in London.
Friday 23rd January
Oil tiptoes higher
Oil prices ticked higher, with Brent nudging back towards $65 a barrel as geopolitics returned to the spotlight. Fresh warnings from President Trump towards Iran revived concerns around supply risks in a key OPEC producer, helping prices recover some lost ground. That move was reinforced by Saudi Aramco pushing back against fears of a global oil glut, pointing to strong demand.
US markets back in their sweet spot
US markets closed firmly higher yesterday as investors leaned back into risk, encouraged by easing geopolitical tensions and a reassuring run of economic data. A blockbuster upside surprise in Q3 GDP, steady inflation readings and falling jobless claims painted a picture of an economy that’s still growing without overheating. Futures are pointing higher again this morning, suggesting the positive mood may carry through into today’s session as markets put political turbulence in the review mirror, for now at least.
FTSE soft as investors digest UK consumer datapoints
UK markets look cautious this morning, with the FTSE100 set to open flat as investors work through a mixed but improving picture for the UK consumer. The latest GfK survey showed confidence edging up again in January, with households feeling noticeably better about their own finances even as views on the wider economy remain gloomy. That “less bad” trend is feeding through to spending, with December retail sales beating expectations despite the usual seasonal noise. Taken together, the backdrop points to steady, rather than spectacular, consumer growth ahead, underpinned by rising real wages, a more active housing market and gradually falling interest rates.
Thursday 22nd January
Brent crude oil prices fall below $65
The release of geopolitical pressure hasn’t been enough to provide a further boost to oil prices, with Brent Crude falling back to under $65 per barrel. The International Energy Agency provided a timely reminder of its expectations for oversupply this year, which was also mirrored by a 3 million barrel increase in last week’s US crude inventories.
US jobs and inflation to take centre stage today
US futures are pointing to a positive start, too, after Wall Street clawed back some of the week’s earlier losses following Donald Trump’s online activity. Today, the market will have some firmer data points to digest. Initial jobless claims, updated estimates for third-quarter GDP and core PCE inflation are all on the table, with PCE and its implications for interest expectations usually carrying the greatest sensitivity for markets. However, the delay to this readout from last year’s government shutdown means we’re less likely than usual to see a shock. Forecasts are for an annual increase of 2.8% for the year to November 2025, still above the 2% target and unlikely to raise hopes of a further rate cut before the summer.
UK Government borrowing comes in below expectations
Rachel Reeves' policy of fiscal tightening looks to be having the desired effect on the public purse as December’s public borrowing came in below market forecasts of £13 billion at £11.6 billion, the lowest December drawdown since 2019. However, it’s unlikely to signal a spending spree with borrowing for the year still above Treasury forecasts. That said, it's likely to be taken as a positive signal for government borrowing costs and interest rate expectations, adding to the positivity on London markets, which are close to record highs.
FTSE 100 rebounds towards record levels
The FTSE has followed global markets upwards this morning after Donald Trump backed off on threats to tariff key European trading partners in February over opposition to his plans to acquire Greenland. He’s also ruled out the use of force and claimed that a framework for a deal on Greenland was being discussed with NATO. The relatively light sell-off that came with the initial announcement on tariffs suggests investors were already sceptical about the prospects for economic or military escalation, and so far, the unified response by Denmark’s European allies looks to have had the desired effect. But the hectic nature of today’s geopolitical theatre means further market shocks can’t be ruled out, and the President’s Davos speech could move markets in either direction.
Wednesday 21st January
UK CPI broadly as expected, markets open broadly flat
UK markets kicked off the session broadly flat as investors weighed up the latest December inflation data. CPI came in at 3.4%, fractionally above the 3.3% expected, but a touch below the Bank of England's forecast. From a market perspective, this doesn’t materially shift the narrative, with a February rate cut effectively off the table. The picture looks more encouraging in April when another cut is expected, as inflation could fall sharply towards the 2% target with regulated price increases coming in lower than last year.
US markets jolt, but cooler heads prevail this morning
US markets jolted lower last night in a brief panic sell‑off as trade war fears crept back into focus. The S&P 500 suffered its worst session since October, marking its fourth decline in the past five days. Cooler heads are emerging this morning, and dip buyers are back, with futures pointing to a positive open later today. Investors seem far less unsettled by President Trump’s well‑worn ‘Art of the Deal’ tactics than they were at the start of his term, and earnings season is ramping at a helpful moment to divert attention away from the political noise. S&P 500 earnings are currently tracking 8% higher this quarter, but that tends to improve as higher growth names report – double-digit growth is probably a better steer, and if delivered, could provide a much‑needed lift for markets.
Oil dips as demand outlook comes under trade pressure
Oil prices softened, with Brent crude slipping back towards $64 a barrel as the market gave up some of the previous session’s gains. Geopolitical noise is back in focus, from renewed tariff threats against Europe to tougher enforcement of Venezuelan sanctions, while expectations of rising US crude and gasoline inventories added further pressure. Temporary supply outages in Kazakhstan offered some offset, but with those disruptions likely short‑lived, the balance of risks for oil remains tilted to the downside for now.
What the latest inflation figures mean for savers
There has been a lot of water under the bridge since these figures were collected in December. Global political news has been unsettling, and I expect that will affect base rate forecasts in the short term.
The market isn’t expecting any movement on rates until April, which should open a window of opportunity for those who want to take advantage, and lock in a great fixed deal, before the Bank starts to cut rates. Many fixed-term savings products continue to offer returns of over 4%, providing an opportunity to secure above-inflation and above-base-rate returns while they last.
Core CPI (excluding energy, food, alcohol and tobacco) was 3.2% (unchanged from November) and services inflation was 4.5% (up from 4.4%).
Alcohol and tobacco prices helped push inflation up, but much of that was purely down to timing. Tobacco duty increased at the end of November 2025 – pushing prices up in December, whereas in 2024 it all happened a month earlier. It means that in December, prices were rising faster than they were at the same time a year earlier – which automatically boosts inflation.
Another big mover was transport. Petrol and diesel price rises had very little impact at all. Instead, it was air fares flying high. This owes a lot to timing differences, particularly the fact that this time in 2024 the flight prices being measured were Christmas Eve and New Year’s Eve – whereas in 2025 it was 23 and 30 December. Prices are naturally lower on celebration days, and higher as people flock to get away in time for Christmas.
Food prices tend to rise in the run-up to Christmas as the supermarkets cash in on the golden quarter for sales, so there’s nothing unusual in the rise in December, when food inflation rebounded to 4.5%. Striking annual rises included beef and veal, whole milk and butter. Cattle farmers are still feeling the financial impacts of a poor grass harvest – as well as increased labour costs throughout the production and sales process. Poor harvests further afield mean higher prices for chocolate and sweets too. This will have meant shoppers pocketed less change after filling festive stockings with sweet treats.
CPI inflation rose to 3.4% in December – from 3.2% in November.
Like the best kind of seasonal weight gain, the bump in inflation in December is likely to be a short-lived phenomenon, and it’s expected to drop again in January. It means these figures are unlikely to have much impact on the Bank of England’s rate cutting decisions.
In more normal times, the seasonal inflationary blip, would be unlikely to steer the Bank from a rate-cutting path. Likewise, the easing of wage inflation revealed yesterday would typically add fuel to the fire for a cut – alongside sluggish GDP growth. However, these are far from normal times. There’s the risk of interruptions to global supply chains and increased trade tariffs, which could add more inflationary pressure in the coming months. It means the market isn’t expecting a cut until April.
Tuesday 20th January
Expect further volatility today – and tomorrow as Trump takes the stage at the annual World Economic Forum in Davos
Tomorrow, Trump takes the stage at the annual World Economic Forum in Davos, which we expect to cause additional market turmoil, given the current political stance. Navigating these choppy waters is difficult for investors – as we outlined in our 2026 market outlook, uncertainty and geopolitical domination over markets will be a mainstay of the next 12 months, and beyond.
Rhetoric has escalated overnight, with Trump attacking the UK’s foreign policy over Chagos Islands
The European Union has dusted off its playbook from last year’s tariff negotiations and threatened to retaliate on a suspected $108bn of US goods. The US stock market was closed for Martin Luther King national holiday, but futures are down. Should the EU enact these tit-for-tat tariffs, it would be energy, chemicals, agriculture, food and pharmaceutical stocks that would be worst hit. Both the S&P 500 and the NASDAQ are expected to fall on open this afternoon UK time. Markets – and investors – will be balancing the likelihood of tariff rhetoric being a negotiating tactic from which Trump will climb down, or the real deal. The so-called Trump always chickens out trade (with the acronym TACO) was popular last year with global investors playing market volatility to their advantage, but the Trump of 2026 seems to act more decisively – take the military action in Venezuela as evidence of the President saying exactly what he then implemented. Gold and silver rose to fresh highs yesterday as investors loaded up on perceived safety. Investors should expect further volatility today, particularly given the escalation in rhetoric overnight, with Trump attacking the UK’s foreign policy over Chagos Islands and publishing what look like private messages from European leaders inviting conversation.
European markets fell yesterday following weekend threats from US President, Donald Trump, to implement Greenland-related tariffs
It is difficult to comprehend that we are still in January – news flow and market reaction has made this one long year-to-date, averaging weekly market rotations. Yesterday, European markets universally fell, reacting to the news over the weekend that US President, Donald Trump, intended to implement 10% additional import tariffs by 1st February on the eight countries that had – in his eyes – defied him by sending military support to Greenland. In the event a deal was not reached with these countries by 1st June, the US President indicated this rate would rise to 25%. Across Europe, sectors which export the most to the US saw big stock hits.
Jobs market weakness and pay growth set to fall
Unemployment has been climbing fairly steadily for the past three years and has hit 5.1%. It’s a substantial rise since the most recent low of 3.6% in summer 2022 and only just shy of the pandemic peak of 5.3%. And while pay growth looks robust for those still in work, things aren’t quite as strong as they seem.
On the face of it, it’s not all bad news: employment is up over the year, jobs vacancies have risen very slightly over the month, and wages are up 4.7% in a year. However, look a bit closer and real weakness emerges. Vacancies are down 8.6% in a year, while unemployment and redundancies are rising. As a result, there were 2.5 unemployed people per vacancy – up from 2.4 in the previous quarter and 1.9 a year ago. Meanwhile, wages are up just 1.1% after inflation – and this is likely to fall.
There’s a huge difference between wage inflation in the public sector – at 7.9% and the private sector – at 3.6%. This owes much to the fact that some public sector pay rises were paid earlier in 2025 than a year earlier, which will even out in the next few months, automatically bringing the rate down. Once that’s worked its way out of the figures, wage rises will look decidedly less robust. Given they’re currently only 1.1% after inflation, this will be one to watch.