- Inflation has fallen to a 10-month low thanks to falling fuel and food prices
- Following yesterday’s weaker jobs data March rate cut now looks certain
- Meta and Nvidia announce a multi-year partnership
- BAE Systems – revenue and profits march higher
Emma Wall, Chief Investment Strategist, Hargreaves Lansdown
“UK inflation has fallen to 3% for the month of January, down from 3.4% the previous month, according to the Office of National Statistics. Lower fuel and airfares helped ease pricing pressures, as did slower inflation for food and non-alcoholic drinks. Core inflation, which excludes the often-volatile prices of food, energy and alcohol also fell on the previous month, as did services inflation, which has been sticky on the last year. These measures moving in tandem suggests that the outlook from here will be lower inflation, and the Bank of England expects inflation to fall to the target of 2% this year. The welcome news comes following yesterday’s weaker jobs data, meaning a March rate cut now looks certain.
Last time the Monetary Policy Committee met, the vote was split 5-4 to hold rates vs cut them, so the market trajectory is not a surprise – what will be key is the cadence and velocity from here. We expect that the MPC will cut twice this year, having favoured a cautious approach. Markets looking for forward guidance will no doubt place emphasis on the rhetoric from Bank of England Governor, Andrew Bailey, in the press conference following next month’s decision.
Gilt yields have fallen over recent days, with the 10-year dropping below 4.4% having been above 4.5% at the end of last week. As well as supportive UK data, there is also some contagion from the US, where the 10-year Treasury yield has fallen by nearly 20 basis points since the start of last week.
What does this mean for savers and investors?
Short-dated Gilt yields are certainly lower than they were a year ago – and should inflation continue to ease, this is supportive of lower rates, which presents opportunities for active traders, or indeed investors who want to lock in higher rates of income now. Lower yields and lower inflation are also broadly supportive for equities, as pricing pressures – particularly energy costs – have weighted on corporates. However, jobs data and economic growth will be key here; any signs of economic weakness could spook markets and cause businesses to put the brakes on expansion, whether that means hiring or spending.
Savers who can should lock in higher rates of interest now, as fixed term products are likely to quickly reflect the market trajectory. Using a savings platform will help consumers ensure they are getting the best rates on the market from a range of providers.”
Meta & Nvidia: a perfect partnership?
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Meta just handed Nvidia a massive vote of confidence, expanding their partnership to include millions of chips, processors, networking gear, and security technology across its data centres – this is about as close to a full endorsement as it gets in the AI arms race. The deal is multi-year and multi-generational, stretching from today’s Blackwell GPUs through to next-gen systems, with Meta also becoming the first major company to deploy Nvidia’s CPUs as standalone server chips at scale. No dollar figure was given, and the real benefits will likely pull through in 2027 and beyond. But with Meta’s AI capex budget at up to $135 billion this year alone, this multi-year commitment is likely worth tens, potentially hundreds, of billions of dollars.
That doesn’t mean Meta is putting all its eggs in one basket – they’ll still use AMD, develop custom in-house chips, and have been eyeing Google’s hardware – but the sheer breadth of this commitment, spanning GPUs, CPUs, networking and even privacy computing for WhatsApp, makes it clear who the preferred partner is. For anyone questioning Nvidia’s staying power at the top of the AI food chain, this deal is a pretty emphatic answer – and a timely reminder of why it features on our Five Shares to Watch list for 2026.”
BAE Systems – revenue and profits march higher
Aarin Chiekrie, equity analyst, Hargreaves Lansdown:
“BAE Systems continues to outperform, with all divisions contributing to top-line growth and profits landing ahead of expectations. The UK’s largest defence company manufactures heavy-duty military equipment like fighter jets, aircraft and submarines. Its diversified portfolio has enabled it to win contracts around the world, with nearly 45% of its £30.7 billion sales coming from the US last year. US military spending trumps any other country in the world, so having large exposure to this market is proving very beneficial. And with budgets in both the US and Europe set to continue rising in the coming years, BAE Systems looks to be sitting in a goldilocks position to benefit from both sides of the Atlantic.”
