The week that was …
Economic round-up
Tariffs set to hit UK exporters, BCC warns
The latest round of US tariffs could impact thousands of British exporters, according to the British Chambers of Commerce. The organisation warned US president Donald Trump’s ‘Plan B’ would be worse for UK businesses and urged that the two countries engage in further dialogue. Read more from the Times here
Gilts sales expected to fall
UK government debt sales are expected to drop for the first time in four years, with the Chancellor’s adherence to the fiscal rules easing pressure on the gilt market. The major investment banks now expect £247bn of gilt sales for the year to March 2027 – down from £304bn in the current fiscal year. Read more from the FT here
Rising unemployment knocks UK consumer confidence
UK consumer confidence weakened in February amid rising unemployment, after two months of gains. The GfK consumer confidence index dropped by three points in February to -19. Economists polled by Reuters had expected it to edge up to -15. Read more from the FT here
UK car industry weakness
The number of vehicles built in the UK fell by 13.6% in January as car exports weakened. The Society of Motor Manufacturers and Traders said 65,249 cars and 2,166 commercial vehicles left factories in January, down 8.2% on the previous month and 68.6% year on year. Read more from the Times here
US inflation jumps
US producer prices accelerated in January, with the cost of non-food and energy goods increasing by the most in more than three and a half years. Price rises were driven by businesses passing on import tariffs. The news reinforced economists’ expectations the US Federal Reserve would not resume cutting interest rates before its June meeting. Read more from Reuters here
US mortgage rates dip below 6%
The benchmark US mortgage rate has dropped below 6% for the first time in more than three years, according to government-backed housing entity Freddie Mac. This ought to offer some reprieve to borrowers and help ease US affordability concerns. Read more from the FT here
US consumer confidence bounce
US consumer confidence rebounded more than expected in February. This was tempered, however, by rising concerns over employment, with the share of consumers viewing jobs as ‘hard to get’ increasing to a five-year high. Read more from Reuters here
Markets round-up
Oil price jumps on Iran strikes
Brent crude oil prices jumped 10% to $80 (£60) a barrel in the wake of US and Israeli strikes on Iran, oil traders said. Analysts have predicted that prices could now climb as high as $100 a barrel as the Strait of Hormuz seized up. Read more from Reuters here
Financial and tech stocks down
US stocks suffered their largest monthly percentage declines in a year, with financials and technology stocks hit particularly hard. The blue-chip Dow logged its biggest weekly drop since mid-November, as investors continued to fret about the outlook for artificial intelligence. Read more from Reuters here
Nvidia reports buoyant results
Nvidia reported fourth-quarter earnings ahead of analysts’ expectations, with adjusted earnings per share of $1.62 versus consensus forecasts of $1.53. Revenue reached $68.13bn (£50.5bn) – above estimates of $66.21 bn. The AI bellwether’s data-centre business also delivered 75% revenue growth though its share price remained muted. Read more in ‘In focus below’ and from Interactive Investor here
HSBC results beat expectations
HSBC reported pre-tax profits of $29.9bn for 2025. This was 2.4% lower than the previous year, but above consensus expectations of $28.9bn. Annual revenue rose by 4% to $68.3bn – once again, ahead of estimates of $67.4bn. Read more from Interactive Investor here
Rolls-Royce profits surge
Rolls-Royce saw its profits surge by £1bn over 2025. The engineering group also posted an upgraded financial outlook for 2026, noting substantial military aircraft orders and burgeoning demand for powering data-centres had helped its progress. Read more from the Independent here
Paramount set to win battle for Warner Bros
Paramount Skydance looks set to win a months-long battle for control of Warner Brothers as Netflix backed away. Warner Brothers said Paramount’s latest bid was “superior” to the one from Netflix, which in turn refused to raise its offer, suggesting the business was no longer financially attractive. Read more from the BBC here
“Think of a HALO-style business as the opposite of one that lives and dies by the next feature update.
Selected equity and bond markets: 20/02/26 to 27/02/26
| Market | 20/02/26 (Close) |
27/02/26 (Close) |
Gain/loss |
|---|---|---|---|
| FTSE All-Share | 5712 | 5851 | +1.9% |
| S&P500 | 6871 | 6879 | -0.4% |
| MSCI World | 4578 | 4557 | -0.5% |
| CNBC Magnificent Seven | 400 | 395 | -1.8% |
| US 10-year treasury (yield) | 4.1% | 3.95% | |
| UK 10-year gilt (yield) | 4.36% | 4.23% |
Investment round-up
Victory Capital enters fray for Janus Henderson
Victory Capital has made an $8.6bn (£6.4bn) offer for Janus Henderson – significantly ahead of the $7.4bn buyout deal agreed with Nelson Peltz’s Trian and General Catalyst. Victory offered $30 in cash and 0.350 of its shares for each share of Janus, resulting in a total valuation of $57.04 per share.
Lower-cost multi-asset funds outpace rivals
Lower-cost multi-asset funds maintain a performance advantage over their competitors, with the cheapest products dominating net flows over the last five years, according to Morningstar report, Multi-Asset Trends in UK and Europe 2026. UK multi-asset investors exhibited “a high sensitivity to fees”, the report observed.
Pridham Report shows RLAM on top in Q4
The latest instalment of the Pridham Report showed Royal London Asset Management on top for net sales in the last three months of 2025, while BlackRock led the gross sales charts. Total retail onshore gross sales increased by more than £10bn, or 5%, year-on-year in 2025.
Jupiter sees net inflows for first time in eight years
Jupiter Fund Management generated its first year of net inflows since 2017, growing its underlying profits by 42% to £138m in 2025. It announced a special dividend of 5.7p a share and a new share buyback programme of up to £30m. Net inflows were £1.3bn in 2025 compared with outflows of £10.3bn the year before.
Man Group grows assets 35%
Man Group saw an increase in assets of 35% last year, including net inflows of $28.7bn. At the end of 2025, the firm’s AUM were $227.6bn – up from $168.6bn a year earlier. There were, however, drops in core performance fees, core net revenues and pre-tax profits across the board – down 9%, 4% and 14%, respectively.
Global dividends hit new record
Global dividends reached $2.09tn in 2025, up 7.0% year-on-year on a topline basis and a new high, according to Capital Group’s Global Equity Study. Core dividend growth was 6.0% after adjusting for exchange rates, one-off payments and calendar factors. At $428bn, fourth-quarter payouts were particularly strong.
… and the week that will be
UK Spring Statement
After a dramatic Autumn Budget, the UK Spring Statement on Tuesday (3 March) is expected to hold relatively few surprises with major policy announcements considered unlikely. Investors have been clear that market stability matters more than fresh reforms. Read more from the Guardian here
Digesting AI
Investors continue to search for more insight into how AI will reverberate through the economy. There should be fresh clues in the monthly US jobs report, and from results from semiconductor group Broadcom. The past few weeks have seen shares in industries such as software, wealth management and real estate services hit by concerns around business upheaval from AI. Read more from Reuters here
The week in numbers
Eurozone inflation: Consensus expectations for the flash February reading of Eurozone inflation are for prices to be up 1.7% year on year, in line with January, and 0.4% month on month, compared with a 0.6% drop in January. Core CPI inflation is expected to hold steady at 2.2% year on year.
UK construction: Consensus forecasts have the purchasing manufacturers index (PMI) for the UK construction sector rising to 47 in February, up from 46.4 the month before.
US business sentiment: Consensus expectations for the February reading of the US ISM manufacturing PMI is for a fall to 51.3 from 52.6, while the services equivalent is expected to fall to 53, from 53.8, indicating slowing activity.
US retail sales: US retail sales figures for January are expected to show a month-on-month rise of 0.1%.
US employment data: US non-farm payrolls are expected to be 70,000 in February – down from 130,000 a month earlier. The unemployment rate is expected to hold steady at 4.3% while average hourly earnings are forecast to rise 0.3% month on month and 3.6% year on year – down from 0.4% and 3.7% respectively.
China business sentiment: Consensus expectations are that China’s NBS manufacturing PMI will rise to 49.9 in February, from 49.7 the month before, while the non-manufacturing equivalent will rise to 50 from 49.4.
In focus: HALO’s effect
Markets appear to be done with all things artificial intelligence – at least for now – as investors reject the segment’s winners for their profligate spending and its losers on worries over disruption. In the meantime, the non-AI elements of global stockmarkets continue to glide higher, with one area prompting particular interest – the so-called ‘HALO’ companies.
‘HALO’ here stands for ‘heavy asset, low obsolescence’. “A HALO-style business relies on assets or networks that are expensive to replace, and the product does not go out-of-date every time a new tool launches,” explains Saxo Bank investment strategist Ruben Dalfovo. “Think of it as the opposite of a business that lives and dies by the next feature update.”
These are, in other words, real-asset businesses, largely immune to potential disruption from AI. Saxo’s HALO checklist focuses on five main areas: assets – particularly those that are hard to copy or replace; reliable demand – these are ‘necessity’ businesses; plus some standard defensive qualities such as pricing power, a strong balance sheet and lower valuations.
As such, the definition takes in companies such as insurance, energy infrastructure and commodity groups. “There are also the ‘you still need this on Monday morning’ businesses,” adds Dalfovo. “Waste collection, water services and regulated power networks.”
The HALO trade has been evident in the type of markets that have done well of late – the UK, Europe and Japan – indeed, there is some suggestion Japan is the ‘ultimate HALO trade’. Writing in the Financial Times, Leo Lewis points out Japan is full of asset-heavy companies that investors have disdained in recent decades.
“A great many of Japan’s asset-heavy companies are also engaged in low-obsolescence businesses: niche stuff, where they own unique equipment, are deeply entrenched or have dominated areas too finicky or historically low yielding for Chinese and South Koreans to bother competing,” he adds.
It is an important reminder that rotation and dispersion are an inevitability and not to be too sensitive to a single market theme.”
It is also evident in a shift in flows. James Klempster, deputy head of multi-asset investment at Liontrust, points to a discernible rotation for the year to date, adding: “$62bn [£46bn] of assets have flowed into US equity funds that are not investing in the AI sector. That is larger than the $50bn that went in over the entire course of 2025.
“People are voting with their feet and capital is flowing into areas that, even a few months ago, were not viewed as positively as they are today. It is an important reminder that rotation and dispersion are an inevitability and not to be too sensitive to a single market theme. Diversification is really coming through in market themes.”
There are signs too that fund managers are leaning into this trade. “There is lots of policy volatility,” notes Alexander Chartres, investment manager at the Ruffer Investment Company. “Markets are at or near all-time highs – there is a lot of good news in the price. There is also real-world volatility – Greenland, Venezuela, Iran. The world is more shock-prone and there are lots of new growth areas after half a generation when US tech was the only game in town.”
As a result, the trust is overweight real assets. “Commodities are still cheap relative to the S&P,” continues Chartres. “We think that as massive investment picks up, real-world assets will become a more important part of investors’ portfolios versus the financialised claims, with massive terminal values, that we are seeing lots of question marks about.”
There are lots of “different flavours” of real assets in the Ruffer portfolio, he adds, arguing the real-asset story will play out over years because supply is constrained across so many commodity areas, while ‘resource nationalism’ is picking up. Among the holdings in the portfolio are gold miners – particularly small and midcap stocks – plus chemical companies.
There is some debate as to whether consumer staples should also be included in the HALO trade. Certainly, such businesses have been a beneficiary of the move away from the technology sector – the S&P World Consumer Staples index is up 16% since early January – and James Harries, manager of the STS Global Income & Growth Trust, includes consumer goods in his portfolio of “reliable, high-quality companies” that offer substantial value.
It is entirely possible HALO is simply another way to define defensive assets, at a time when the wider outlook is unpredictable.”
For his part, Ian Rees, head of the multi-asset team at Premier Miton, likes the insurance sector as a defensive option. “Sectors that are more regulated in their return profile can be defensive,” he reasons. “Global insurance businesses have quite a reliable outlook because they are so heavily regulated so you can get comfortable with their revenues. They generally perform very well when the market is moving around. Core infrastructure is also interesting because it has more of a regulatory return as well.”
For Harries, it is less about a single trade than simply where the best opportunities lie in the market. “We seek well-financed businesses that do not need a lot of money to run,” he explains. “Such companies typically have attractive margins, high returns on capital and sufficient funds to maintain operations, protect competitive advantages, support brand health and, importantly, pay dividends.”
Mike Wilson, Morgan Stanley’s chief US equity strategist, argues the recent outperformance in HALO-type stocks is not merely a response to weakness in the AI segment, with areas such as materials and metals having started to perform well since the middle of 2025. The technology sector has been so dominant these areas now offer the best value.
Wilson identifies three factors that could drive these HALO areas further – one being cyclical, with April 2025 kicking off a new business and earnings cycle. The second is structural, with these companies the natural beneficiaries of AI infrastructure development, without the associated risks on whether it works or not. Finally, he points to policy, with incentives for capital expenditure in the One Big Beautiful Bill Act and attempts by the Trump administration to rebalance away from consumption and towards investment.
It is entirely possible HALO is simply another way to define defensive assets, at a time when the wider outlook is unpredictable. Certainly, these assets may also be a beneficiary of investors’ reappraisal of previously defensive areas such as US treasuries or the dollar. As things stand, they may prove to be the best place to hide until investors decide what the AI revolution is likely to mean in practice.
Read more on this from Morningstar here and from Saxo Bank here
In focus: AI questions
Another strong set of results from Nvidia was greeted with another shrug from the markets, as investors continue to vacillate on the AI trade. It means the Nvidia share price is down 6.2% over the year to date and, in effect, has gone nowhere for almost six months. The AI bellwether stock joins the rest of the Magnificent Seven in being underwater for 2026.
Perversely, Nvidia’s results were on the face of it fantastic. Revenues for the three months to January climbed 73% to $68.13bn, for example – well ahead of consensus analyst estimates of $66.21bn. Adjusted earnings per share meanwhile came in at $1.62 compared with the expected $1.53. The group also issued strong guidance for the year ahead as the AI infrastructure build-out continues.
Nvidia has a slightly different profile to the rest of the technology giants. From its point of view, the key is that the infrastructure build-out merely continues, rather than that AI delivers on its promises. Its data-centre business is the main driver of total sales and saw 75% revenue growth in the final quarter of the year.
It is also worth noting that Nvidia’s valuation has come down significantly – albeit that it is still expensive. Its price-to-earnings ratio is currently 44x – having been at 51x in July last year – and, according to Refinitiv, there is still a consensus ‘Buy’ recommendation on the stock from the major banks.
“Nvidia’s latest earnings arrive as investor enthusiasm for AI begins to cool,” notes Kenneth Lamont, principal at Morningstar. “After years of buoyant optimism, markets are increasingly scrutinising the scale and return assumptions underpinning the vast AI capex commitments being made by the world’s largest companies, with early casualties of the technology already emerging – most recently software firms.”
Suggesting Nvidia has proved more resilient than the other hyperscalers, underlining its central role in the AI ecosystem, he adds: “As the dominant supplier of AI computing power, it continues to benefit from unprecedented infrastructure spending. That status has also made Nvidia a bellwether for the entire AI trade: any earnings disappointment would risk undermining confidence and could trigger broader sell-offs across AI-linked stocks.”
Lamont says inflows into AI and robotics themed funds remain strong year-to-date, but are running below last year’s peaks, and concludes: “It is a signal that investor appetite is moderating, even as conviction in the long-term AI story endures.” There has been huge momentum in the AI trade but the big question now is whether this will work in reverse as markets start to worry about the assumptions on which it is based.
