US and UK outlooks diverge

US and UK markets diverged slightly as investors digested central bank signals and macro data. In the US, the S&P 500 hit a fresh record high before easing back, buoyed by optimism around artificial-intelligence-(AI)-driven earnings and a Federal Reserve rate cut following weak labour data and cooling inflation. Meanwhile, the FTSE 100 was trading flat, with growth flatlining over the past month as UK GDP stalled and consumer confidence dipped. The FTSE’s defensive tilt - heavy in energy, financials and industrials – helped cushion volatility, but investor sentiment remains cautious ahead of the Autumn Budget and Bank of England’s next move. Overall, the week underscored a shift in global sentiment: the US is regaining momentum, while the UK is bracing for fiscal and economic headwinds. 

The FTSE 100 was -0.5% over the week by mid-session on Friday, with the more UK-focused FTSE 250 trading +0.3% ahead.

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Donald Trump

President Donald Trump has revived his proposal to abolish quarterly earnings reporting for US public companies, advocating instead for biannual disclosures. The idea, first floated during his first term, is now gaining traction amid broader efforts by his administration to cut regulatory red tape and boost business efficiency. Mr Trump argues that quarterly reporting forces companies to focus excessively on short-term performance, undermining long-term strategic planning. He claims the change would:

• Save money on compliance and reporting costs.
• Free up management to focus on operations rather than investor appeasement.
• Encourage more companies to go public, reversing a trend of declining listings.

The proposal aligns with a forthcoming petition from the Long-Term Stock Exchange (LTSE) (link: https://ltse.com/), which argues that less frequent reporting would promote sustainable growth and reduce market volatility. Critics warn that the move could:

• Reduce transparency, depriving investors of timely updates on company performance.
• Increase risk of insider trading, as executives would hold non-public information for longer periods.
• Make stocks appear riskier, potentially deterring institutional investors and increasing volatility. 

The Brookings Institution and academics from The Accounting Review have cautioned that less frequent reporting could distort stock prices and weaken market discipline. A Harvard Business Review study of the UK’s similar shift in 2014 found that, while it didn’t destroy transparency, it failed to eliminate short-termism. Other Deregulatory Proposals from the Trump administration include:

• Rolling back environmental, social and governance (ESG) disclosure requirements, arguing they burden businesses with politically motivated metrics.
• Streamlining SEC compliance rules, including proposals to simplify Form 10-K and reduce audit burdens for smaller firms.
• Revisiting Sarbanes-Oxley provisions, particularly Section 404(b), which mandates internal control audits for public companies.
• Expanding exemptions for private capital, allowing more companies to raise money without going public.

These moves are framed as part of a “pro-growth, pro-business” strategy, aimed at boosting competitiveness and reducing regulatory drag on innovation.

During President Trump’s second state visit to the UK, American companies pledged a record-breaking £150bn in investment, marking a major economic win for Prime Minister Keir Starmer. The investment package, expected to create 7,600 high-quality jobs, includes £90bn from Blackstone for data centres, £22bn from Microsoft for AI infrastructure, £5bn from Alphabet’s Google unit for research and development and data expansion, and £3.9bn from Prologis for life sciences and manufacturing. Palantir committed £1.5bn to defence-related AI, while Amentum and X-Energy announced nuclear energy investments. The centrepiece was the signing of a “Tech Prosperity Deal” focused on AI, quantum computing, and nuclear energy. Despite the fanfare, unresolved issues such as US steel tariffs and pharmaceutical sector setbacks tempered the mood. Nevertheless, the visit underscored deepening transatlantic ties and positioned Britain as a hub for next-generation technology and energy innovation. 

GSK unveiled a sweeping $30bn investment plan in the US over the next five years, targeting advanced manufacturing, AI-driven technologies, and expanded research and development infrastructure. The move, timed to coincide with Donald Trump’s state visit to the UK, includes a $1.2bn commitment to build a next-generation biologics “flex” factory in Pennsylvania and upgrade five existing US sites. While GSK maintains its UK base, the decision reflects a strategic pivot toward the US, driven by pressure from Washington to reshore pharmaceutical production and a more supportive regulatory and pricing environment. The implications are significant: it signals a deepening transatlantic life sciences alliance, raises questions about the UK’s competitiveness in pharmaceuticals and underscores the growing role of AI in drug development. For Britain, it’s a reminder that when it comes to attracting such investment, the special relationship may be more special on the other side of the Atlantic.   

Economics

The Federal Reserve reduced its benchmark interest rate by 0.25 percentage points to a range of 4.00%-4.25%, marking its first interest-rate cut of 2025. The move, approved by an 11-to-1 vote, reflects growing concern over a cooling labour market and persistent inflation. Central bank Chair Jerome Powell framed the decision as “risk management” aiming to balance the dual mandate of stable prices and full employment amid economic uncertainty. The Fed signalled two more cuts may follow this year in voting members “dot plot” charts. This suggested a shift toward a more accommodative stance, which will no doubt please President Donald Trump, whose effort to oust Fed Governor Lisa Cook ahead of this week’s interest rate decision was blocked by a federal appeals court, marking a significant setback in his campaign to reshape the central bank’s leadership. Trump moved to fire Cook in August, citing allegations of mortgage fraud – specifically, that she had falsely claimed two properties as her primary residence to secure better loan terms. Ms Cook has not been charged with any crime, and documents reviewed by her legal team reportedly show she listed one of the homes as a vacation property.

This week, the Bank of England held interest rates steady at 4%, with a 7–2 vote split among its Monetary Policy Committee. The decision reflects the Bank’s cautious stance amid persistent inflation – still at 3.8% - and a stagnating economy, with zero GDP growth recorded in July and signs of a cooling labour market. While two members pushed for a rate cut, the majority opted to wait, citing upside risks to medium-term inflation and the need for more evidence of sustained disinflation. When will the Bank of England reduce interest rates further?

Ahead of the interest-rate decision, data showed that UK inflation remained unchanged at 3.8% in August, reinforcing concerns about the “sticky” nature of price pressures and complicating the central bank’s path forward on interest rates. Here are some of the notable pieces of data:

• The Consumer Prices Index (CPI) stayed at 3.8% year-on-year, matching July’s figure.
• The broader CPIH, which includes owner-occupiers’ housing costs, edged down slightly to 4.1%, from 4.2% in July.
• Core inflation (excluding food, energy, alcohol and tobacco) fell to 3.6%, down from 3.8%.
• Services inflation, a key measure of domestic price pressure, dipped to 4.7% from 5.0%.
• Food prices rose 5.1%, marking the fifth consecutive monthly increase, driven by higher costs for cheese, fish, and vegetables. 

The inflation figures were nearly double the Bank’s 2% target, but the lack of acceleration gave policymakers room to hold interest rates steady at 4%. With wage growth cooling and unemployment at a four-year high of 4.7%, the Bank faces a delicate balancing act between curbing inflation and supporting a faltering economy. The inflation data arrives ahead of Reeves’ first Autumn Budget, where she is weighing £40bn in tax rises and spending cuts to manage rising debt servicing costs. The figures also intensify scrutiny of Labour’s economic strategy, with opposition voices warning that inflation is being stoked by policy missteps.

UK government borrowing surged to £83.8bn in the financial year to August 2025 – £16.2bn higher than the same period last year and well above forecasts. This spike, driven by rising debt interest payments and inflation-linked benefits, has dealt a political blow to Chancellor Rachel Reeves, who now faces a £20.7bn “black hole” and mounting pressure over her economic stewardship. Compounding the challenge, the Office for Budget Responsibility is poised to downgrade its productivity outlook, a move that could cost the Treasury up to £25bn annually and severely constrain Reeves’s room for manoeuvre in the upcoming Autumn Budget. The productivity downgrade underscores deeper structural issues in the UK economy and raises the prospect of tax hikes or spending cuts to meet fiscal rules. Why speculation that the pension tax-free lump sum is to be scrapped is wide of the mark.

Geopolitics

Beijing has banned Chinese technology giants such as Alibaba and ByteDance from purchasing Nvidia’s AI chips in a move that underscores escalating tensions with Washington and a broader push for technological self-reliance. The Cyberspace Administration of China (CAC) issued the directive amid concerns that US-made chips could pose national security risks, including potential remote access or surveillance capabilities – claims Nvidia denies. The ban also follows a Chinese investigation into Nvidia’s market practices, adding a layer of economic retaliation to the geopolitical standoff. In response, Beijing is accelerating efforts to build a domestic AI chip ecosystem, summoning companies such as Huawei and Cambricon to scale up production and reduce reliance on US technology. The move signals a deeper decoupling of global technology supply chains and a race for AI supremacy between the world’s two largest economies.

The European Commission has proposed a legally creative workaround to channel billions of euros in frozen Russian assets to Ukraine without directly seizing them – a move that could otherwise trigger legal and diplomatic backlash. Under the plan, Brussels would issue EU-backed zero-coupon bonds to replace the cash held from Russian assets, effectively using the funds to support Ukraine’s war effort and reconstruction while avoiding accusations of expropriation. With nearly €200bn in Russian assets frozen since the 2022 invasion, most held by Euroclear in Brussels, the EU aims to launch a “Reparations Loan” that Ukraine would only repay once Moscow pays war reparations. The proposal, floated behind closed doors to deputy finance ministers, has received cautious support but still faces hurdles, including unanimous approval from member states and legal concerns raised by Belgium and Euroclear. 

The Office for Budget Responsibility has delivered a major blow to Chancellor Rachel Reeves’s economic strategy by downgrading its forecast for UK productivity growth – a key driver of tax revenues and economic potential – just weeks before her first Autumn Budget. The revision threatens to create a multi-billion-pound hole in the Treasury’s long-term spending plans, undermining Reeves’s pledge to fund day-to-day expenditures through taxation while borrowing only for investment. With weaker productivity translating into lower growth and tax receipts, Reeves now faces a stark fiscal trilemma: raise taxes, cut spending, or breach her own debt rules – all politically fraught options that could force her to scale back Labour’s flagship “securonomics” agenda. 

Indeed, British consumers are become more cautious on the future. UK consumer confidence fell sharply in September 2025, with GfK’s index dropping two points to -19, reversing gains made in August and marking a fresh sign of economic anxiety. All five measures of sentiment declined, including expectations for the general economy, which plunged to -32 from -11 just 15 months ago. The British Retail Consortium also reported worsening outlooks for personal finances and savings, particularly among Millennials, who showed double-digit declines in optimism. High inflation, especially in food prices, and looming tax hikes in Chancellor Rachel Reeves’s November Budget, are fuelling public unease. Despite a recent interest rate cut, the mood remains subdued, with UK consumers wary of spending and increasingly pessimistic about the months ahead. 

Companies

Last week, six companies raised more than $100m each on Wall Street — the busiest IPO week since November 2021. With investor appetite roaring back, could some of that momentum spill over into London? Wall Street’s IPO boom: can London catch the wave?

Shares in Next moved lower after the retailer warned of a sharp slowdown in UK sales growth for the second half of the year, citing weakening employment prospects, rising taxes, and broader economic malaise. Despite posting a strong first-half performance – with profits up 13.8% and full-price sales rising nearly 11% - the company struck a cautious tone, forecasting UK growth to fall from 7.6% to just 1.9%. Investors were also disappointed by the absence of another profit upgrade, a move seen as a strategic reset after three upward revisions earlier this year. Chief executive Simon Wolfson pointed to a “less favourable” medium-term outlook, with job vacancies down 35% and consumer spending under pressure. 

M&C Saatchi issued a profit warning following a 36% plunge in first-half operating profits, driven largely by a 26.5% revenue collapse in its Australian business and a broader slowdown in client spending across the UK. The advertising group now expects full-year revenues to fall by mid-single digits, prompting job cuts and a restructuring of its global operations. Chief executive Zaid Al-Qassab blamed macroeconomic uncertainty and “client caution” for the downturn, though he insisted the company remains on track for long-term recovery thanks to £12m in cost savings and new client wins. 

Barratt Redrow reported a robust set of full-year results for the year ending 29 June 2025, marking its first financial disclosure since the £2.5bn merger of the UK’s two major housebuilders. Revenue surged 33.8% to £5.58bn, while pre-tax profits jumped 60.5% to £273.7m, buoyed by strong home completions and cost synergies from the merger. The group completed 16,565 homes, up 18.3% year-on-year, and declared a dividend of 17.6p per share. However, the results were tempered by a rise in provisions to £1.37bn due to newly discovered building defects, including reinforced concrete frame issues inherited from Redrow. Chief executive David Thomas hailed the integration as “transformative” but warned of limited growth in the current year amid a challenging housing market and called for urgent planning reform and support for first-time buyers.

Roche unveiled the $3.5bn acquisition of 89bio, a clinical-stage biotech firm developing pegozafermin, a promising treatment for metabolic dysfunction-associated steatohepatitis (MASH), a progressive liver disease linked to obesity and diabetes. The deal, which includes $14.50 a share in cash and up to $6.00 per share in milestone-based payments, gives Roche a strategic foothold in the fast-growing cardiometabolic space and bolsters its pipeline with a Phase 3 candidate showing best-in-disease potential. With MASH affecting up to 7% of the global adult population and no approved therapies yet, the acquisition positions Roche to lead in a market ripe for disruption. It also reflects a broader industry pivot toward targeted metabolic treatments. 

Kier Group delivered a strong set of interim results, with adjusted revenue rising 3% to £4.09bn and operating profit up 6% to £159.1m. The company’s operating margin edged up to 3.9%, moving closer to its long-term target of 4.5%, while its record £11bn order book now secures 91% of expected annual revenue. The results allowed outgoing chief executive Andrew Davies to bow out on a high note. His successor, Stuart Togwell, inherits a business transformed from its troubled past into a resilient infrastructure player with firm foundations and enviable visibility. With 90% of contracts tied to public sector and regulated clients, Kier is well-positioned to benefit from the UK’s long-term infrastructure strategy.

Ferguson Enterprises posted a robust set of full-year results, with fourth-quarter sales rising 6.9% to $8.5bn – beating analyst expectations and sending shares up nearly 10%. The plumbing distributor benefited from strong non-residential demand in the US, which offset flat residential performance, and completed nine acquisitions during the year to bolster growth. Full-year revenue hit $30.8bn, up 3.8%. Ferguson also announced a shift to a calendar-year reporting cycle and reaffirmed its dividend, easing investor concerns about cross-border cash flow. Chief executive Kevin Murphy credited the company’s resilience and strategic execution in a “challenging market” with continued investment in infrastructure and talent. 

Renishaw delivered record full-year results, with revenue rising 3.1% to £713m. The precision engineering company saw strong growth in its manufacturing technologies segment, particularly in position encoders and 5-axis measurement systems, while demand for additive manufacturing and spectroscopy systems lagged. Despite global economic headwinds, Renishaw maintained its adjusted operating margin at 15.7%, aided by a £20m payroll reduction and site rationalisation.