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“It’s not too often that the FTSE 100’s lack of technology exposure is a virtue but it has been this week,” says AJ Bell Investment Analyst Dan Coatsworth.
“Amid selling in Europe and the US, the UK’s flagship index tested new highs above 9,300. Old world economy stocks like banks, energy companies and insurers have been to the fore – with their generous dividends in demand with investors.
“In the US overnight, tech names trimmed heavier losses seen earlier in the trading session.
“There were mixed signals from the retail sector as TJ Maxx owner TJX beat expectations but Target’s update was met with disappointment as it announced an insider appointment to replace current CEO Brian Cornell who is set to leave at the beginning of February. Investors often prefer an outsider to bring fresh ideas when a company appears to be stuck in a rut.
“The world’s largest retailer Walmart will be in focus later as it announces its own numbers before the bell on Wall Street.
“The Jackson Hole meeting is set to get underway later – with all the focus on Federal Reserve chair Jerome Powell and what he has to say about interest rates.
“While there have been signs of weakness in the US economy, inflation is proving to be relatively sticky and the Fed may feel the full impact of tariffs is not yet showing up in CPI readings.”
WH Smith
“The latest update from WHSmith is nothing short of a disaster. The North American business is crucial to the company’s growth ambitions and the loose thread of an accounting error in this part of the group will create concern about a potential greater unravelling to come.
“The business has identified an overstatement of profit linked to the accelerated recognition of supplier income. Uncertainty will dog the company until an independent review is concluded – with an update promised alongside full year results.
“Profit guidance for the American division has been cut by more than 50%, which will cause huge embarrassment to management. Investors will be sobbing into their cornflakes on the news.
“The sale of the structurally declining UK high street division was supposed to free WHSmith to concentrate on its airport, train, hospital and service station outlets. These benefit from a captive audience allowing the company to generate strong margins. However, the US news has tarnished what WHSmith would have hoped could be a fresh start for the business.
“It needs to get ahead of this situation as quickly as possible and make the necessary changes to rebuild credibility with the market.”
Nvidia
“The Trump administration might have thought it was doing China a favour by lifting export controls on Nvidia’s H20 chips to the country. However, the move has somewhat backfired amid reports that China has been angered by comments from US commerce secretary Howard Lutnick that implied America was only offering technology scraps to the Asian country, but enough to get them addicted.
“Reports suggest China is now encouraging its leading technology companies to stop buying the Nvidia chips and use domestic technology instead. This is a political spat that underlines the ongoing tensions between the US and China, and one which could have major ramifications for Nvidia and the global tech space.
“The more Chinese firms rely on their own technology, the greater the potential for the country’s leading tech names to invest more in R&D and develop challenger products to what’s already available in the US. In a worst-case scenario for Nvidia, this could lead to a big drop in sales not only to China but potentially in other parts of the world.
“China has already disrupted countless industries with cheaper alternatives to what was offered in the Western world, and the emergence of DeepSeek earlier this year shows the same could also apply to the tech space.”
Premier Foods
“Hot on the heels of inflation figures which showed a drop in demand for eating out, Premier Foods has cooked up a new plan to capitalise on the home dining trend.
“It is buying Merchant Gourmet, a big name in the premium, healthy ready meals industry. Merchant Gourmet’s bags of pulses and grains, and microwaveable rice, have become staples in households across the country as people seek healthier options. These items are also taking over the workplace as people shun sandwiches for their lunch and replace them with salads and protein-heavy meals.
“It's a smart acquisition and helps to diversify Premier Foods’ portfolio, adding a new flavour to its smorgasbord of goodies.”
Hays
“If a recruiter is cutting jobs, you know we’re not in a healthy jobs market. Hays is desperately trying to right-size the business to contend with the difficult backdrop as profit slumps and the permanent recruitment market struggles.
“A savage cut to the dividend is a sensible response in the circumstances. While it is not being received well by shareholders in the short term, the decision to prioritise cash flow and preserve the balance sheet looks a sensible one as the company looks to navigate its way through the current turbulence.”
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
