Walker Crips' Market Commentary

In the first week of February, the Bank of England held rates at 3.75% in a split 5-4 vote, with Governor, Andrew Bailey, stating a March cut was a “50-50 call”. Data shows actual business activity is healthy: the Services sector (54.0) and Manufacturing (51.8) are both well above the 50.0 neutral mark, indicating solid growth. The job market is also stabilising as hiring downturns ease. However, future confidence is low as surveys show CEOs prioritising "resilience over investment" due to political uncertainty, with 80% of firms pausing capital plans to weather the storm. The political instability is partly a consequence of the Peter Mandelson appointment controversy, which has put Prime Minister Keir Starmer's position in peril. Starmer ousted Chief of Staff Morgan McSweeney over the weekend to suppress opposition, yet Cabinet ministers are reportedly urging him to stand aside as Angela Rayner and Wes Streeting are preparing leadership challenges. This volatility is forcing a repricing of UK assets, pushing 10-year gilt yields to 4.54% and weighing on sterling. To stimulate growth, Chancellor Rachel Reeves is shifting policy toward stronger EU economic relations...Stocks featured:GSK, Imperial Brands and RELXTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344) and is a member of the London Stock Exchange.

Last week, the Bank of England's (“BoE”) weekly short-term repo allotment hit a record high of over £100 billion, marking the shift to a repo-led system, while the BoE considers tokenised assets as eligible collateral. The UK labour market softening continued, with Adzuna reporting that December job vacancies fell 15% year-on-year to a 2020 low, as rising payroll costs slowed hiring. This supports the majority view of a March rate cut, despite BoE Governor Andrew Bailey stressing the need to boost market resilience. Globally, Prime Minister Keir Starmer and President Xi agreed on a "strategic partnership," resetting UK-China relations with progress on whiskey tariffs and visa waivers, alongside cooperation on equipment used for restricting small boat crossings. Chatham House noted Beijing views the UK as a stable partner amidst US policy "disruption," with low current investment, 0.7% of UK foreign direct investment, offering significant growth potential...Stocks featured:3i Group, Fresnillo and Lloyds Banking GroupTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344) and is a member of the London Stock Exchange.

Last week, UK economic data revealed a mix of rising price pressures and surprising resilience in activity. Inflation surprised on the upside in December with the headline Consumer Price Index (“CPI”) rising to 3.4%, driven by higher airfares and tobacco duty, a development likely to instil policy caution at the Bank of England (“BoE”) next month. However, economic activity accelerated, as the January Purchasing Managers Index (“PMI”) recorded its strongest upturn since April 2024, hitting a 21-month high of 53.9, which S&P Global noted is indicative of a 0.4% quarterly growth rate. Retail sales also beat expectations with a 0.4% expansion in December, though a quarterly decline in goods purchased suggests underlying household consumption remains weak. In financial markets, gilts headed for their worst weekly performance since November amid political risk, while Vanguard announced plans to offload approximately £1.9 billion of UK shares to reduce "home bias" in its funds...Stocks featured:Admiral Group, Endeavour Mining and Rentokil InitialTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344) and is a member of the London Stock Exchange.

Last week the Bank of England ("BoE") released data showing unexpected resilience in November’s gross domestic product ("GDP"), which expanded by 0.3%, surpassing the 0.1% forecast and ending a two-month decline. The growth was driven by a rebound in both services and manufacturing, aided by Jaguar Land Rover’s recovery following a cyberattack, despite ongoing structural risks. At the same time, BoE Governor Andrew Bailey defended the importance of economic institutions and open trade, urging resistance to populist attacks and warning that undermining bodies such as the International Monetary Fund ("IMF") weakens their ability to highlight economic risks. Meanwhile, the Office for National Statistics ("ONS") may delay its new labour market survey by six months, potentially until May 2027, due to technical difficulties. Adding to concerns, the Institute for Public Policy Research ("IPPR") highlighted vulnerabilities in the UK economy, noting that supply chain disruptions linked to China could cost £1.5 billion annually for solar projects and jeopardise 90,000 electric vehicle jobs unless the government implements a 'securonomics' framework...Stocks featured:Pearson, Schroders and WhitbreadTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344) and is a member of the London Stock Exchange.

Last week UK markets rallied as investors flocked to gilts, putting them on track for their best week since October, with benchmark yields falling more than 0.1% to nearly 4.4%. This fixed income resurgence was underpinned by a government pivot away from long-term borrowing and intensifying bets on an April rate cut from the Bank of England (“BoE”). Economic data supported the dovish outlook as the labour market showed signs of significant strain; potential redundancies surged to over 33,000 in late 2025, the highest level in nearly three years, prompting strategists to forecast that deteriorating macro conditions will force policymakers to ease rates sooner than previously expected...Stocks featured:Associated British Foods, BAE Systems and Marks & SpencerTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344) and is a member of the London Stock Exchange.

UK markets endured a cautious week as fresh data reinforced concerns about a softening economic backdrop and limited policy headroom. Surveys of economists pointed to a deteriorating labour market outlook, with unemployment expected to rise toward 5–5.5% by the end of 2026 amid weak growth and slowing wage momentum. Business sentiment also weakened, with a British Chambers of Commerce survey showing fewer firms expecting turnover growth and rising concern around tax and inflation pressures. Consumer behaviour remained subdued with KPMG and Barclaycard data highlighting reluctance to spend heading into 2026, with the first annual decline in card spending in five years. Manufacturing data offered some relief, with the Purchasing Managers’ Index (“PMI”) revised slightly lower but still at a 15-month-high, though growth remained skewed toward larger firms and exports continued to contract...Stocks featured:Endeavour Mining, Melrose Industries and Rolls-Royce HoldingsTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344) and is a member of the London Stock Exchange.

Last week the Bank of England (“BoE”) cut interest rates by 25 basis points to 3.75%, with Governor Andrew Bailey signalling optimism for hitting the inflation target by late spring and suggesting openness to further easing. This dovish shift, which also noted artificial intelligence-driven job displacement risks, contrasts with other policymakers' hawkish concern over "hot" wage growth. Analysts believe further cuts beyond 3.5% will require stronger evidence of cooling pay pressures. UK retail sales unexpectedly fell by 0.1% in November, driven by drops in food and online sales. However, the GfK Consumer Confidence index surprisingly rose to -17 in December on increased major purchase intentions, indicating moderating caution despite a subdued economic outlook...Stocks featured:Bunzl, Endeavour Mining and FresnilloTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344) and is a member of the London Stock Exchange.

The past week revealed unexpected weakness in the UK economy, with Gross Domestic Product (“GDP”) contracting by 0.1% in October against expectations for modest expansion. The decline was driven by falls in both services and construction, alongside a steep 17.7% drop in motor vehicle production, as pre-Budget fiscal anxiety weighed heavily on output. Despite this immediate slowdown, the Confederation of British Industry (“CBI”) upgraded its growth outlook, raising its 2026 GDP forecast to 1.3% and 2025 to 1.4%, citing a temporary boost from government spending while warning that deep-rooted structural problems remain. Meanwhile, the latest Bank of England (“BoE”) & Ipsos survey signalled a gradual easing in public inflation expectations for the year ahead to 3.5%, though hawkish policymakers continue to warn of persistent upward risks...Stocks featured:Informa, Unilever and WPPTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344) and is a member of the London Stock Exchange.