- UK CPI broadly as expected, no rate cuts until April
- US markets jolt, but cooler heads prevail this morning
- Oil dips as demand outlook comes under trade pressure
- Netflix shares slide as guidance disappoints
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“UK markets kicked off the session broadly flat as investors weighed up the latest December inflation data. CPI came in at 3.4%, fractionally above the 3.3% expected, but a touch below the Bank of England’s forecast. From a market perspective, this doesn’t materially shift the narrative, with a February rate cut effectively off the table. The picture looks more encouraging in April when another cut is expected, as inflation could fall sharply towards the 2% target with regulated price increases coming in lower than last year.
US markets jolted lower last night in a brief panic sell‑off as trade war fears crept back into focus. The S&P 500 suffered its worst session since October, marking its fourth decline in the past five days. Cooler heads are emerging this morning, and dip buyers are back, with futures pointing to a positive open later today. Investors seem far less unsettled by President Trump’s well‑worn ‘Art of the Deal’ tactics than they were at the start of his term, and earnings season is ramping at a helpful moment to divert attention away from the political noise. S&P 500 earnings are currently tracking 8% higher this quarter, but that tends to improve as higher growth names report – double-digit growth is probably a better steer, and if delivered, could provide a much‑needed lift for markets.
Oil prices softened, with Brent crude slipping back towards $64 a barrel as the market gave up some of the previous session’s gains. Geopolitical noise is back in focus, from renewed tariff threats against Europe to tougher enforcement of Venezuelan sanctions, while expectations of rising US crude and gasoline inventories added further pressure. Temporary supply outages in Kazakhstan offered some offset, but with those disruptions likely short‑lived, the balance of risks for oil remains tilted to the downside for now.
Netflix shares are down about 5% in after‑hours trading, which might look harsh at first glance, given the quarter itself was solid. Revenues, margins and profits all beat expectations, but markets don’t dwell on the rear‑view mirror for long. The issue was guidance, and specifically margins, which are set to come under pressure in 2026 as costs ramp. Content spend is doing the damage, a timely reminder that even streaming’s gold standard can’t afford to take its foot off the creative gas.
Looking further out, price increases lined up for 2026 look like the right call as subscriber growth cools. The 325 million subscriber milestone is an eye‑catcher, but it was broadly expected and didn’t move the dial. While 2025 told a story of strong execution, 2026 is shaping up as a year of higher costs and tougher optics. Add in the lingering uncertainty around the Warner Bros. deal, not to mention the mammoth price tag, and shares may struggle to regain momentum in the near term.”
