The was broadly neutral at the open, with an even split of winners and losers preventing progress. Names with a larger proportion of US earnings such as GSK (LON:) and to a lesser extent Burberry (LON:) faltered, with the latter also reacting to a read across from some disappointing earnings from French luxury group LVMH.
More positively, the miners continued their stellar run on the back of further precious metal appreciation, with Endeavour Mining adding more than 3% and Fresnillo around 1.5%, despite reporting a decline in gold and silver production last year alongside similar outlook comments for the year ahead.
Any cautious comments have done nothing to arrest the stock’s spectacular ascent however, with a share price rise of 550% over the last year proof of the heightened levels of investor demand. The muted positive open added to what has been a promising start to the year for the FTSE 100, where a 2.9% gain has left the premier index in sight once more of its own record level.
Meanwhile, weakness continued to be a central theme, with comments from President Donald Trump suggesting that he is comfortable with a weaker greenback.
As the hit a 10-year high against the dollar and as the climbed over €1.20 for the first time since 2021, the possibility of intervention piled on renewed dollar selling, alongside the current concerns of geopolitics, a potential government shutdown and an enduring round of trade wars.
Not that it needed any encouragement, the price soared to new record levels given its inverse relationship to the US dollar.
Now, apparently on the way to $5300 per ounce, the precious metal has doubled since the beginning of last year. Some investors have also pointed out some evidence of national pension funds hedging their dollar exposure while maintaining their holdings in underlying US securities. This partially explains why markets have continued to prosper despite the currency weakness, and indeed the hit yet another record closing high yesterday.
For US investors, introspection is likely to be the watchword today as three of the “Magnificent Seven” report in the form of Microsoft (NASDAQ:), Meta Platforms (NASDAQ:) and Tesla (NASDAQ:), while the Federal Reserve announces its latest decision. For the latter, where a no-change decision has long been the consensus, there will be more than a passing interest in the Fed Chair’s response to the inevitable questions around the apparently threatened independence of the central bank.
Meanwhile, the AI trade will come under increased scrutiny on a number of fronts. Quite apart from the expected strength of the numbers, the themes of capital spending and early monetary returns will be high on the agenda. The punchy valuations that have accompanied the AI euphoria will at some stage need to repay investors’ faith by displaying a strong and profitable trajectory of growth. As such, the margin for error or indeed disappointment is fine.
For the moment, the main indices remain ahead in the first few weeks of trading this year. The has posted a gain of 2% and the 2.5%, while the 2% rise for the S&P 500 resulted in a new record high for the benchmark index.