- US tech troubles ease with chip giants making progress following Monday’s sharp losses
- Boeing flies higher in a relief rally as production woes ease.
- Future uncertain for UK clothing retailer Quiz, amid reports it could fall into administration.
- FTSE 100 hangs onto gains, in touching distance of intra-day high.
- Wickes and Foxtons updates buoy housebuilders on the FTSE 100.
- Halfords shares hang onto steep gains following uplift to profits guidance.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’There’s been an easing of tech troubles stateside with a tentative recovery for beleaguered chip stocks. It was a shaky start to trading for Nvidia and Taiwan Semiconductor Manufacturing Company as concerns continued to ricochet about the prospects for earnings ahead, given the shock progress made by the Chinese AI upstart DeepSeek. But both companies have gained back some ground and are firmly in the green. Given Monday’s steep falls, there’s a long way to go for Nvidia’s crown to shine brightly again but the rash of selling looks overdone. Steep reductions in development costs during nascent tech shifts have been commonplace in economic history and such reductions can lead to a larger addressable market. Future demand for computing power could outstrip current expectations, prospects which are likely to have encouraged investors to buy the dip. The current weakness could favour those willing to tolerate the added volatility and take the chance of a turbulent ride for longer-term gain. Nevertheless, when it comes to widespread adoption globally, it’s not going to be an open goal and the biggest players will still have to keep on their toes to stay dominant.
Boeing has flown higher in a relief rally as investors have breathed a sigh of relief that its production issues may be retreating. The embattled plane maker said it was making progress, delivering 33 of its 737 jets so far in January. With the company confident that it will get approval from eagle eyed regulators to raise the production cap imposed due to safety concerns, it’s forecasting production will ramp up later in the year. The upbeat sentiment has also lifted the share price of key customers like Ryanair which has seen capacity constrained, and growth curtailed due to Boeing’s woes. Some of the initial gains have retreated amid a recognition of just how much of a mountain of recovery the company still needs to climb.
The future of the UK fashion retailer Quiz is clouded in uncertainty amid reports it could fall into administration. Quiz delisted from the AIM market last week, as it looked to slash costs right across the business. Although clothing sales overall rebounded in December, according to the latest nationwide snapshot from the ONS, it’s been a super-tough period for the sector which has had to deal with months of sales declines. Quiz, like Boohoo and ASOS, is facing a fierce and powerful rival in the huge fast fashion behemoth Shein. Trying to flog dresses, tops, jumpsuits and accessories is a difficult business when an online only giant can compete so heavily on price. Maintaining a network of stores, and shop staff at the same time, while eyeing an increase in labour costs, is likely to have been a challenge too far for the Glasgow based firm.
The FTSE 100 has closed higher after being in touching distance of a fresh intra-day high, helped by its defensive characteristics, and tech-light attributes amid the AI uncertainty. The blue-chip index has also been buoyed by gains made by housebuilders with an interest rate cut eyed next week from the Bank of England and coming in of increased activity in the housing market from Foxtons. Upbeat results from home improvement chain Wickes has added to more positive sentiment, with signs of a turnaround for installations and evidence that homeowners and contractors are making more frequent smaller purchases.
Retailers have been on the front foot, helped by signs that consumers may be showing a little less caution, despite the uncertain economic backdrop in the UK. Halfords has been pedalling hard to win custom in a tough consumer environment and it has been rewarded for its efforts. Bike sales have powered sharply higher, testament to the appeal of carefully selected ranges for price-conscious customers. Although it’s not a return to the heady days of pandemic sales, the mix of quality, value and service offered clearly had appeal for Christmas shoppers. Given how tough the start of the year was for Halfords, the festive update was a welcome present for shareholders – particularly the uplift to profit expectations, which the company unwrapped of between £32 million to £37 million for 2025. Even the warning about post-Budget uncertainty couldn’t dispel the feel-good factor that these results have unleashed. Halfords had already shown signs of making good progress when it comes to efficiency savings, and there will be hopes that this trend will mitigate the increase in wage bills. The shift towards more reliable service-based revenue provides added strength to Halford’s business model, with growth of 10.3% in garages for maintenance and repair work. This will also provide resilience if economic headwinds knock consumer sentiment going forward. The Motoring Loyalty Club, which offers discounts on certain services, has also been attracting new joiners at an impressive pace over the past year, with subscribers also are more likely to be engaged, shopping more frequently and spending more per visit.’’
