Nvidia provides AI relief

Global markets were choppy this week as investors digested hawkish signals from Federal Reserve officials, which reduced the odds of a December interest rate cut by the US central bank significantly. US equities swung sharply, with tech stocks under pressure ahead of Nvidia’s earnings, but the artificial-intelligence-chip behemoth issued a good third-quarter report providing relief for artificial intelligence bulls.

The FTSE 100 was 2.3% lower over the week by mid-session on Friday, with the more UK-focused FTSE 250 was down2.4%.

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Autumn Budget

Rachel Reeves’ Autumn Budget on 26 November is expected to deliver a mix of targeted tax rises and spending restraint as she seeks to plug a £20bn-£50bn fiscal gap without breaking Labour’s pledge on headline income tax, value added tax or National Insurance. Likely measures include freezing income tax thresholds to boost revenue through fiscal drag, capping tax-free pension salary sacrifice at £2,000 a year, and tightening rules for LLPs to reduce advantages for high earners. New levies such as a “tourism tax” on hotel stays and extending the sugar tax to milk-based drinks are also on the table, alongside possible property tax reforms. Reeves has signalled a focus on “fair choices” to cut debt and fund priorities like the NHS, while markets expect her to create a bigger buffer under strict fiscal rules. Business groups are lobbying for small-business support and R&D incentives, warning that excessive tax hikes could stifle growth. 

Rachel Reeves refuses to rule out tax rises in the Budget – what might change?

For British companies, a December interest-rate cut from the Bank of England is likely to achieve more than anything contained in Rachel Reeves’ Autumn Budget. Interest rates matter more than the Autumn Budget.

***How to follow the Autumn Budget***

Budget season can be noisy – we’re here to help you stay informed and make sense of the changes announced.

Stay ahead of the curve by visiting our Budget Insights page for the latest updates and expert analysis. You can also follow our X account (@_CharlesStanley) for live updates on 26 November.

Visit our Budget insights page

Donald Trump

Donald Trump proposed giving most Americans a $2,000 payment funded by revenue from import tariffs starting around mid-2026, pitched as a patriotic rebate and a stimulus measure. The idea, floated in recent Oval Office remarks and social media posts, would target low- and middle-income households while excluding high earners, with any leftover funds earmarked for reducing the national debt. Trump claims tariffs have generated hundreds of billions of dollars, but analysts note current collections fall far short of the estimated $300bn needed for such payouts, meaning the scheme would rely on future tariff revenue and congressional approval. Critics warn the plan could fuel inflation and amount to inefficient redistribution, while legal challenges over Trump’s tariff authority add further uncertainty. 

Economics

The latest Federal Reserve minutes from the October meeting reveal deep divisions among policymakers over the path of interest rates, casting doubt on a widely expected cut in December. While the Fed lowered its benchmark rate by 25 basis points to 3.75%-4% at the meeting – its second cut this year – officials expressed “strongly differing views” on whether further easing is warranted. Several members said another reduction could be appropriate if economic conditions evolve as expected, but many argued rates should stay unchanged for the rest of the year amid persistent inflation and limited fresh data following a prolonged government shutdown. The minutes underscore the Fed’s balancing act between tackling stubborn price pressures and supporting a cooling labour market, with markets now pricing in roughly a one-in-three chance of a December cut, down sharply from near certainty a month ago. 

UK inflation cooled in October, with the Consumer Prices Index falling to 3.6% from 3.8% in September, its first decline in seven months and the lowest level since July. The figure was in line with market expectations. Core inflation also eased to 3.4%, down from 3.5%, as lower gas and electricity costs and cheaper hotel prices offset rising food bills. The slowdown strengthens expectations that the Bank of England could cut interest rates in December, though policymakers remain cautious amid persistent wage growth and structural price pressures. CPIH, which includes housing costs, dropped to 3.8%, while producer price inflation showed only modest movements, signalling a broader easing in cost pressures across the economy. 

The latest British Retail Consortium-Opinium Consumer Sentiment Monitor shows confidence among UK shoppers remains fragile, with expectations for the economy over the next three months stuck deep in negative territory at -36, reflecting persistent cost-of-living pressures and inflation concerns. Views on personal finances also weakened slightly, while saving intentions fell to zero, suggesting households are prioritising essential spending over building reserves. Despite this, retail spending expectations edged up, hinting at resilience in discretionary categories ahead of the festive season. Generational divides were stark, with Millennials showing the sharpest drop in confidence, while Gen Z remained comparatively upbeat. Food inflation remains a key worry, projected to rise to around 5.7% by year-end, underscoring the challenge for retailers as consumers juggle tighter budgets. 

Geopolitics

Reports this week revealed that the US and Russia have been engaged in secret talks to end the Ukraine war, centred on a 28-point peace plan inspired by the Gaza ceasefire model. The plan, discussed by US envoy Steve Witkoff and Russian envoy Kirill Dmitriev in Miami last month, aims to secure a ceasefire, provide security guarantees for Ukraine and Europe, and redefine future US-Russia relations. Moscow claims its position is “really being heard”, though details remain unclear on contentious issues such as territorial control and Ukraine’s NATO aspirations. The White House has begun briefing Kyiv and European allies, but Mr Witkoff’s planned meeting with President Volodymyr Zelensky in Turkey was postponed, fuelling concerns that Ukraine could be sidelined. Both sides hope to finalise a draft before a future Trump-Putin meeting, though no summit is scheduled. 

The EU is moving to create a centralised authority to purchase and stockpile critical minerals as part of a strategy to safeguard industrial supply chains and reduce dependence on China and other single sources. The plan, outlined in the Commission’s 2026 work programme, will establish a Critical Raw Materials Centre to coordinate joint buying, maintain reserves and monitor vulnerabilities, amid rising geopolitical tensions and recent Chinese export controls on rare-earth magnets. Brussels aims to sign supply deals with countries such as Brazil and South Africa and is considering price floors and financial de-risking tools to attract investment in processing and recycling. The initiative builds on the Critical Raw Materials Act, which sets targets for domestic extraction, processing and recycling by 2030, and reflects Europe’s push for “industrial sovereignty” in sectors from defence to green technologies. The EU considers the following minerals strategic under its Critical Raw Materials Act because they are essential for key industries and face high supply risk due to growing demand and reliance on imports:

• Lithium, cobalt, nickel, manganese, graphite – Crucial for batteries used in electric vehicles and energy storage systems, supporting the green transition and e-mobility.
• Rare earth elements – Vital for permanent magnets in wind turbines, electric motors, and defence technologies.
• Gallium and germanium – Used in semiconductors and high-tech electronics, critical for digital and aerospace sectors.
• Magnesium and tungsten – Important for lightweight alloys in automotive and aerospace, and for defence applications.

Washington is also pouring billions into mining and alliances to break China’s dominance in vital metals used in cutting-edge technologies. America’s fight for rare-earth security.

COP30

COP30, the United Nations’ (UN) climate-change conference, in Belém has been marked by drama and urgency this week, with negotiations disrupted by a fire at the main venue that injured 21 people and delayed talks on climate finance and fossil fuel phase-out. Despite the setback, Brazil circulated a draft deal calling for tripling adaptation finance by 2030, though it stopped short of outlining a roadmap to end fossil fuel use – a sticking point dividing rich nations, oil producers and vulnerable states. Progress included a surge in updated national climate pledges for 2035, the launch of Brazil’s Tropical Forest Forever Facility to protect one billion hectares of rainforest, and endorsements for the Belém Health Action Plan backed by $300m in pledges. Civil society and Indigenous groups staged high-profile protests demanding stronger action, while UN chief António Guterres urged countries to move beyond “performative diplomacy” and deliver concrete commitments. With finance gaps unresolved and fossil fuel rifts widening, the summit enters its final stretch under intense pressure to turn ambition into implementation. COP30 and the absence of the USA.

Companies

Nvidia smashed Wall Street expectations in its third quarter results, posting record revenue of $57bn – up 62% year-on-year – and adjusted earnings per share (EPS) of $1.30, beating forecasts. Data centre sales surged 66% to $51.2bn, driven by explosive demand for its Blackwell artificial intelligence (AI) chips, which chief executive Jensen Huang described as “off the charts”. Gross margins held firm at 73.6%, easing fears of pricing pressure amid rising competition. The company lifted guidance for the current quarter to $65bn in revenue, signalling that the AI spending boom shows no sign of slowing. The shares jumped more than 4% in after-hours trading as Nvidia reinforced its position at the heart of the global AI infrastructure build-out.

On Wednesday, Nvidia was the last of the so-called ‘Magnificent Seven’ to post its earnings for the July-September quarter. Here’s a round-up of how they all fared.

Palo Alto Networks delivered a strong third-quarter performance, with revenue climbing 16% year-on-year to $2.47bn, beating the top end of guidance, and adjusted EPS of $0.93, above consensus. The cybersecurity group reported operating margins above 30% for the second consecutive quarter and free cash flow of $1.7bn, underscoring robust profitability. Management lifted full-year revenue guidance to $10.52bn and raised EPS targets, while highlighting momentum in platformisation and AI-driven security offerings. (Platformisation is the use of a single software platform to orchestrate and operate a company's operations and activities). The shares dipped in after-hours trading despite the beat, as investors weighed the cost of acquisitions and competitive pressures in the cloud security market. 

Imperial Brands posted resilient full-year results, with adjusted operating profit up 4.6% and tobacco and next-generation product (NGP) net revenue rising 4.1%, driven by strong pricing and double-digit NGP growth of 13.7%. Reported revenue dipped 0.7% to £32.2bn and reported operating profit fell 1.8%, while adjusted EPS climbed 9.1%, despite a 16.5% drop in reported EPS. The dividend was upped? by 4.5% a £1.45bn buy-back programme?? has been launched for the current year. New chief executive Lukas Paravicini said the group will focus on scaling NGP and sustaining value in combustibles as part of its next strategic phase. 

British Land delivered a solid first-half performance, with underlying profit up 8% to £155m and underlying EPS edging 1% higher to 15.4p. Like-for-like net rental income grew 4%, driven by strong leasing activity across prime London office campuses and retail parks, where deals were signed ahead of estimated rental values. Portfolio occupancy stood at 95%, while valuations rose 1.2% and its estimated rental value (ERV) increased 2.4%. An interim dividend of 12.32p per share was declared, up 1%, and management reiterated guidance for current year like-for-like rental growth of about 5% and EPS of at least 28.5p. 

Great Portland Estates delivered a strong first-half performance, with pretax profit surging 91% to £57.2m and revenue up 22% to £54.6m, driven by robust leasing activity and rising property values. The London-focused landlord signed 43 new leases and renewals, generating £37.6m in annual rent at a 7.1% premium to estimated rental values, while its fully managed office offering more than doubled income to £10.3m. Its portfolio valuation rose 1.5% on a like-for-like basis to £3.1bn, although net debt climbed to £978.8m from £817m. Management reiterated rental growth guidance of 4%-7% for the full year and declared an interim dividend of 2.9p per share.

Management at JD Sports Fashion warned of weaker consumer indicators ahead of the key holiday period and trimmed full-year profit guidance to the lower end of expectations. In its third-quarter trading update. Group like-for-like sales were down 1.7% amid continued pressure on footwear and UK demand. North America delivered an improved trend at -1.7%, Europe slipped 1.1%, and the UK fell 3.3%, while Asia-Pacific grew 3.9%. Apparel outperformed, offsetting softness in footwear, and gross margin declined by 30 basis points year-on-year due to controlled online pricing. 

It appears the US consumer is to become more cautious. US retail behemoth Home Depot posted mixed third-quarter results, with sales rising 2.8% year-on-year to $41.4bn, boosted by its recent GMS acquisition, while comparable sales edged up just 0.2%. Net earnings were flat at $3.6bn, but adjusted EPS slipped to $3.74, missing analyst forecasts, as weak storm activity, consumer uncertainty and housing market pressures weighed on demand. The retailer cut its full-year profit outlook, now expecting adjusted EPS to fall about 5% and diluted EPS by 6%, despite projecting roughly 3% sales growth and $2bn in incremental revenue from GMS. Management highlighted ongoing market share gains but warned of continued headwinds into the fourth quarter.

Peer Target reported third-quarter net sales of $25.3bn, down 1.5% year on year, as discretionary spending remained weak despite gains in food, beverage and hardlines. Comparable sales fell 2.7%, with store comps down 3.8% and digital up 2.4%, driven by more than 35% growth in same-day delivery. Non-merchandise revenue jumped nearly 18% on strong advertising, membership and marketplace contributions. Incoming chief executive Michael Fiddelke reaffirmed holiday readiness and outlined plans to boost capital spending by 25% to $5bn next year to refresh stores and accelerate tech upgrades. Full-year adjusted EPS guidance was narrowed to $7–$8, with fourth-quarter sales expected to decline by a low single-digit percentage. 

Klarna reported a strong third quarter in its first earnings update since listing on the New York Stock Exchange, with revenue up 26% year-on-year to $903m, beating analyst forecasts. Growth was driven by a 51% surge in US revenue and a 43% jump in gross merchandise volume, which reached $32.7bn, helped by rapid adoption of the Klarna Card and fair financing products. Active customers climbed 32% to 114 million, but the Swedish fintech posted a net loss of $95m compared with a $12m profit a year earlier, citing accounting changes tied to its US listing. Despite the loss, Klarna expects revenue to top $1bn in the current quarter and is targeting further gains from its expanding product suite and “AI-driven efficiencies”. 

Babcock International posted a strong first-half performance, with revenue up 5% to £2.54bn and statutory operating profit jumping 27% to £234m. Growth was driven by robust Nuclear and Marine activity, offsetting softer Land volumes, and the contract backlog stood at £9.9bn. Management reaffirmed full-year guidance and said it remains on track to hit its current-year margin target of 8%, citing progress on major defence programmes including Type 31 frigates and submarine maintenance. 

Smiths Group reported first-quarter trading in line with expectations, with organic revenue from continuing operations up 3.5% for the three months to 31 October, against a tough comparator of 12.9% growth a year earlier. The engineering group reaffirmed full-year guidance for 4%-6% organic growth and margin expansion, supported by a strong order book and its Acceleration Plan. John Crane saw a marginal revenue decline, while Flex-Tek was flat due to weakness in US residential construction, but Smiths Detection delivered double-digit growth. Following the £1.3bn sale of Smiths Interconnect, the board approved a new £1bn share buyback to start after the current £500m programme concludes in December, aiming for completion by end-2026. 

Halma delivered record interim results, with revenue up 15% to £1.24bn and adjusted profit before tax rising 29% to £270.5m, driven by strong organic growth across all sectors and premium gains in photonics. The group maintained high returns on invested capital at 16.2% and continued to invest heavily, completing two acquisitions worth £129m and boosting R&D spend to £59.1m. Management upgraded full-year guidance, citing confidence in its sustainable growth model despite economic uncertainty.

Johnson Matthey posted mixed interim results, with underlying operating profit up 34% to £142m and pretax profit rising 33% to £110m, while reported pretax profit slumped to £86m from £506m due to prior-year disposal gains. Revenue was broadly flat at £5.35bn. Clean Air margins improved by 200 basis points to 12.4%, and the group reaffirmed guidance for full-year underlying operating profit growth at the higher end of a mid-single-digit range. The £1.8bn sale of Catalyst Technologies remains on track for completion in early 2026, with £1.4bn of proceeds earmarked for shareholder returns. The interim dividend was held at 22p per share, and management highlighted plans to commission a new PGM refinery in 2027 as part of its strategic transformation. 

Jet2 reported another record half-year performance, with revenue up 5% to £5.34bn and operating profit rising 2% to £715.2m, while pre-tax profit edged 1% higher to £800.3m. Passenger numbers jumped by 750,000 to 14.09m, 40% above pre-pandemic levels, as late booking trends persisted. The group highlighted strong demand for flight-only services and resilient package holiday bookings, alongside investment in fleet expansion and new bases, including a planned launch at London Gatwick in March 2026. Full-year expectations remain unchanged despite inflationary cost pressures, with Jet2 citing its flexible model and customer loyalty as key drivers of growth. However, consumers are leaving it until the last minute to make holiday bookings, giving little visibility of earnings and there is a risk that Air Passenger Duty (APD) will be increased in next week’s Autumn Budget. 

Sage delivered another strong year, with underlying revenue up 10% to £2.51bn and annualised recurring revenue climbing 11% to £2.57bn, underscoring the resilience of its subscription model. Underlying operating profit rose 17% to £600m, lifting margins by 150 basis points to 23.9%, while underlying EPS jumped 18% to 43.2p. The Newcastle-based software group announced a £300m share buyback and guided to organic revenue growth of at least 9% for the current year, citing continued investment in AI-enabled services such as Sage Copilot and new intelligent agents to drive productivity gains for small and mid-sized businesses. 

Severn Trent posted a strong first-half performance to 30 September, with revenue up 18% to £1.44bn and profit before interest and tax jumping 56.5% to £466.2m, while adjusted EPS surged 74% to 101p. The water group invested a record £769m in the period as it frontloaded spending under its largest-ever capital programme, aiming to grow its regulatory asset base by 13% to £15.4bn by year-end. Interim dividend rose 3.5% to 50.4p, and guidance for performance incentives was upgraded to at least £40m from £25m, reflecting strong progress on leakage reduction and environmental targets. The company reaffirmed its ambition to double adjusted EPS by 2028 and expand its Infrastructure Services arm, as chief executive Liv Garfield announced plans to step down after 11 years, with James Jesic named as successor. 

Close Brothers reported a solid start to its 2026 financial year, with underlying profitability in its banking arm supported by a strong net interest margin of 7.1% and a stable bad debt ratio of 1%. The group reiterated its focus on cost-cutting, targeting £20m in annualised savings this year and similar reductions in the following two years through outsourcing and tech simplification. Provisions for motor finance commission redress rose by £135m to £300m amid ongoing regulatory consultation. Management reaffirmed full-year guidance and said the group is well positioned for recovery despite economic uncertainty.