Investor Focus: FTSE 100 Outlook, Nvidia Earnings, UK Inflation Falls

In this week’s newsletter:

Fresh from double acquisition deals involving NatWest and Schroders last week, the FTSE 100 was back this week with yet another record high. At the time of writing, the index is well on its journey to 11,000 points. Will it hit this next milestone quicker than the 171 days it took to reach 10,000 points? Time will tell.

Either way, what a contrast this has been against the latest US technology-driven selloff, itself driven by a market repricing of artificial intelligence progress. For now, analysts and fund managers expect currency performance and global interest rate fluctuations to be major factors in the FTSE 100’s next steps—alongside the underlying performance of standout constituent companies like BAE Systems BA., itself up 23% year to date. BAE Systems is our latest Stock of the Week, so check out Morningstar equity analyst Loredana Muharremi’s assessment of this rallying defense and aerospace giant in this week’s video. Away from markets, there were two important UK economic developments this week. Unemployment data for the final quarter of 2025 showed the jobless rate hitting a postpandemic high of 5.2%, while inflation also fell back to 3%.

Apart from vindicating Bank of England Governor Andrew Bailey’s recent view that there would be a “significant” fall in UK inflation in the first quarter of 2026, the figures reinforce an assessment made already by most economists: The UK economy is slowing. Inevitably, the next question will be whether there will be a recession. As a result, some would say the Bank’s Monetary Policy Committee has a very easy decision to make when it next meets on March 19, but it’s not quite that simple. UK services inflation is still elevated at 4.4%, reason enough for even the biggest fans of rate cuts to be vigilant, even if FTSE 100 investors are celebrating.

Ollie Smith, Senior Editor