HL commentary as it happens

Oil steadies after two-day decline

Oil steadied after its recent wobble, with Brent edging back toward the low‑$70s as geopolitics crept back into focus. Rhetoric around US‑Iran nuclear talks, and the ever‑sensitive Strait of Hormuz, reminded markets how quickly supply risk can re‑enter the frame, even as diplomacy remains the stated preference. That said, concerns over global demand, not least from fresh US trade measures, continue to cap enthusiasm and keep the move measured rather than dramatic.

US markets react to a slightly milder AI narrative

US markets found their footing yesterday, with the S&P 500 and Nasdaq climbing as investors warmed (if only just a touch) to a more nuanced AI narrative. Anthropic’s enterprise demo was the cocktail-party chatter, but the key takeaway wasn’t disruption for disruption’s sake - it was partnership, with AI framed as a layer that enhances existing software rather than blowing it up. That subtle shift matters, and while the software rally barely raised an eyebrow in the wake of the recent selloff, it could prove to be the first baby step toward restoring confidence in a bruised sector. Still, one well-received demo doesn’t make a trend, and markets are perfectly capable of staying irrational far longer than logic would suggest.

UK markets open higher

UK markets opened on firmer footing this morning, tracking gains across global equities as the apocalyptic AI narrative takes a small step back.

Brent Crude heads for $72 per barrel

Brent Crude prices have risen to nearly $72 per barrel as diplomatic efforts between Washington and Tehran send mixed signals about the likelihood of military escalation. The temporary closure of the Strait of Hormuz earlier this month has left traders increasingly sensitive to developments in the region. Reported Ukrainian drone strikes on Russian infrastructure have added to the tension. Add in expectations of an oil surplus this year and the ever-shifting trade landscape, and further volatility looks to be the only certainty.

Tariffs weigh on US banks and industrials

Industrial stocks and US financials also had a tough start to the week with tariff uncertainty hanging thick in the air as America’s trading partners weigh up their responses to Washington’s blanket levies and Donald Trump’s sabre-rattling.

Gold dips as 15% baseline tariff fails to materialise, copper up again

Despite an unprecedented 65% rise over the last year, gold continues to attract safe-haven monies as investors try to assess what the new normal for global trade looks like following last week’s Supreme Court ruling against Donald Trump’s Liberation Day Tariffs and his subsequent threat of a 15% baseline tariff. However, it now looks like the new levy will come in at a more benign 10%, and gold prices have pulled back around 1% after four straight days of gains. Copper prices have been moving on up, benefitting from hopes that the court order will result in lower import levies on Chinese goods, thereby providing a boost to manufacturing activity.

That was also reflected in Chinese equities after markets reopened following the pause to welcome the lunar Year of the Fire Horse. The major exception was Hong Kong’s tech-dominated Hang Seng, which lost over 2% as the AI fear trade spread eastwards.

Oil prices pull back from six-month high

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.

Supreme Court ruling could be positive in the long run

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.

UK markets lower as tariff agreement comes into question

The FTSE 100 opened 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.

Gold edges higher, despite resilient US jobs data.

Gold prices have edged higher to around $5,010 on Friday as rising geopolitical tensions, particularly around Iran, were enough to offset tempering expectations for rate cuts by the Fed following stronger-than-expected economic data. US jobless claims fell to 206,000 (225,000 expected), highlighting resilience in the labour market. Some policymakers are even considering rate hikes in the near future if inflation remains elevated.

Brent crude prices rise to a six-month high over US-Iran fears.

Brent Crude prices rose to just over $72 per barrel this morning, hitting a six-month high and marking a weekly gain of more than 5%. The higher prices are being driven by fears over potential future supply disruptions as President Trump set a deadline for Iran to reach a nuclear agreement. Negotiations have no more than 10-15 days left to advance, and to put pressure on Iran, the US has deployed its largest military buildup in the Middle East since its 2003 invasion of Iraq.

Significant reduction in UK public borrowing and a surge in January retail sales

The FTSE 100 has opened higher this morning, supported by news of a significant reduction in public borrowing and a surge in January retail sales. For context, the UK government almost always runs a budget surplus in January, but this year’s £30.4bn was the largest on record, well ahead of market expectations and more than double the prior year’s level of £14.5bn. The 1.8% month-on-month uplift in retail sales volumes was also well ahead of forecasts for 0.2% growth, driven by gains across all major categories except department stores. That leaves sales volumes at their highest level since August 2022. But with employment growth flagging and wage growth slowing, households likely won’t be able to maintain this level of spending for long.