Category: 3. Business

Lloyds Banking Group (LSE:LLOY) stock has seen some movement recently, drawing interest from investors as they weigh the company’s latest returns and prospects. Let’s take a closer look at what is behind the shifts in performance.

See our latest analysis for Lloyds Banking Group.

Despite a dip over the past week, Lloyds Banking Group’s share price is still up significantly for the year, with impressive momentum driving a 58.3% year-to-date price return and a remarkable 68.1% one-year total shareholder return. This surge suggests growing confidence in the stock’s outlook, even as the pace of gains has moderated recently.

If Lloyds’ strong run has you watching for the next potential outperformer, now is the perfect time to discover fast growing stocks with high insider ownership

But is this surge just catching up to Lloyds’ fair value, or does the bank’s recent climb signal that future growth is already priced in? Could there still be a compelling buying opportunity, or is the market ahead of itself?

Lloyds Banking Group’s narrative fair value estimate stands above the last close, suggesting upside potential if analysts’ long-range projections play out. The latest market enthusiasm aligns with expectations of stronger growth and returns.

Lloyds’ significant progress in digital transformation, including expanding mobile-first services for 21 million users, rolling out a new digital remortgage journey, and leveraging AI innovation, continues to drive operating cost reductions and enhances efficiency. This positions the company to support sustained long-term margin expansion and higher earnings.

Read the complete narrative.

Want to know the drivers behind this valuation? The narrative hinges on a bold pivot in earnings quality, technology leadership, and rising profit margins. What happens next could reshape the story for shareholders. Curious about the financial leaps and market expectations behind this verdict? See the full narrative for the key assumptions that underpin the fair value calculation.

Result: Fair Value of $0.94 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, risks remain, including Lloyds’ heavy reliance on the UK economy and intensifying digital competition. Either of these factors could challenge the bank’s growth path.

Find out about the key risks to this Lloyds Banking Group narrative.

Looking beyond fair value estimates, Lloyds trades at a price-to-earnings ratio of 14.8x. This is notably higher than both its UK bank peers at 10.6x and the broader European banks average of 9.8x. Compared to a fair ratio of 9.7x, Lloyds also appears more expensive. This raises questions about whether expectations have run too far ahead. Will the market eventually demand stronger growth to justify this premium?

See what the numbers say about this price — find out in our valuation breakdown.

If you want to take the story in your own direction, you can dive into the numbers and craft a new Lloyds narrative in just a few minutes. Start now: Do it your way

A great starting point for your Lloyds Banking Group research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Don’t stop with Lloyds when you could be gaining an edge with fresh stock ideas others might miss. Power up your research now with these hand-picked opportunities:

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include LLOY.L.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

• Wondering if GSK could be a hidden value opportunity or just another stock riding pharma’s global upswing? You are in the right place for a deep dive into what the numbers really say.

• GSK’s shares have climbed 31.3% so far this year and are up nearly 40% over the past 12 months. This puts a bright spotlight on its growth and changing risk profile.

• The buzz around GSK this year has been fueled by positive developments in its pipeline, strategic partnerships, and growing optimism about regulatory milestones. Headlines highlighting advances in its vaccine division and expansion into new markets have amplified investor excitement far beyond the usual quarterly news cycle.

• Our latest check gives GSK a valuation score of 5 out of 6, which means it screens as undervalued on nearly every metric. In this article, we will walk through exactly how that number is calculated using the most common valuation methods. Stay tuned for a fresh approach to valuation at the end that is changing how savvy investors decide what is truly worth owning.

GSK delivered 39.1% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

The Discounted Cash Flow (DCF) model estimates the value of a company by projecting its future cash flows and then discounting them back to today’s value. This approach aims to determine what those future pounds are worth in present terms.

GSK’s current Free Cash Flow stands at £5.13 billion. Analyst estimates forecast this figure growing steadily, with Simply Wall St projections indicating Free Cash Flow will reach nearly £7.99 billion by 2029 and over £9.85 billion a decade out. While analysts typically provide forecasts for up to five years, Simply Wall St extends the projection further by applying reasonable industry growth trends to cash flow estimates over a longer period.

Based on the DCF model, the estimated intrinsic value for GSK is £45.51 per share. This figure represents a substantial 60.7% discount compared to the current trading price. According to these cash flow projections, the market may be significantly undervaluing GSK’s shares at this time.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests GSK is undervalued by 60.7%. Track this in your watchlist or portfolio, or discover 927 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for GSK.

For established, profitable companies such as GSK, the Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics. The PE ratio gauges how much investors are willing to pay for each pound of earnings, making it a practical benchmark for companies that consistently generate profits.

The “right” or fair PE ratio for a stock depends not just on its current profits, but also on future growth expectations and business risk. Companies with higher projected earnings growth or lower risk often justify a higher PE, while those with more uncertainty or slower growth may trade at a discount.

GSK currently trades at a PE ratio of 13.1x. This is noticeably lower than the average PE for the pharmaceuticals industry, which stands at 23.1x. It is also below the peer average of 17.4x. However, just looking at these benchmarks may ignore important nuances. That is where Simply Wall St’s proprietary “Fair Ratio” comes in.

The Fair Ratio for GSK is calculated at 25.4x, reflecting factors such as expected earnings growth, profit margins, GSK’s industry, company-specific risks, and its overall market capitalization. This makes it more comprehensive than a simple comparison with peers or industry norms, which can overlook company-specific strengths or risks.

With GSK’s actual PE (13.1x) significantly below the Fair Ratio, the data suggest the stock is trading at a valuation well below what would be expected given its fundamentals.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1430 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story, your own perspective on a company’s outlook, built on your assumptions for future revenue, earnings, margins, and an estimated fair value.

Narratives go a step beyond traditional ratios by linking GSK’s story to a dynamic financial forecast and arriving at a fair value that makes sense for you. They are easy to create and ready for you to explore on Simply Wall St, right within the Community page used by millions of investors globally.

With Narratives, you do not just see what the numbers say, but why they matter, helping you decide whether to buy or sell by transparently comparing your Fair Value with the current market price. Plus, every Narrative is kept up to date, automatically reflecting the latest news or earnings to ensure your view evolves alongside real company developments.

For example, one GSK Narrative might target a fair value as high as £78 per share, while another might take a far more conservative view at just £11.20. This illustrates how different investors weigh risks, rewards, and future prospects. With Narratives, your investment decisions become as adaptable and personalized as your view of the company’s future.

Do you think there’s more to the story for GSK? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include GSK.L.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Story Continues

What determines a “normal” or “fair” PE ratio? Growth expectations and risk play key roles. A higher PE ratio can be justified if a company is expected to grow earnings quickly or is seen as low risk. Conversely, slower growth or higher risk can warrant a lower PE ratio, as investors become less willing to pay a premium for those earnings.

TC Energy currently trades on a PE of 21.2x. This is broadly in line with its peer group average of 21.5x, but noticeably higher than the Oil and Gas industry average of 14.7x. At first glance, this premium may suggest investors are pricing in stronger prospects or greater reliability compared to broader industry peers.

To provide a more tailored perspective, Simply Wall St calculates a “Fair Ratio” for each company. This proprietary benchmark considers unique factors like TC Energy’s earnings growth, industry profile, profit margins, market size, and risk. It is more insightful than broad industry or peer comparisons since it captures the nuances that set each business apart.

For TC Energy, the Fair Ratio stands at 17.2x, significantly below the current multiple. This suggests that, even after adjusting for the company’s distinctive characteristics and environment, the market price still implies a premium that may not be fully justified.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1430 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply the story you believe about a company, based on your perspective of its future: how fast you think it will grow, the profits it can earn, and the risks it faces. Narratives allow you to connect your personal view about TC Energy’s future revenue, earnings, and margins directly to a financial forecast, making it easy to see what you think the company is worth.

On Simply Wall St’s Community page, millions of investors use Narratives to quickly build and share their outlooks, linking company stories to fair value estimates that automatically update as new information or news arrives. This helps investors cut through the noise by comparing their own Fair Value with the current market Price, providing clarity on whether it is time to buy or sell.

For TC Energy, for example, some Narratives expect a conservative fair value as low as CA$59 per share, focusing on regulatory risks and pressure on fossil fuels, while more optimistic Narratives project valuations as high as CA$80, betting on sustained demand and strong execution. This approach makes it easy to sense-check your assumptions against a range of market views, all in one place.

Do you think there’s more to the story for TC Energy? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include TRP.TO.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Anglo American declined to comment. BHP did not immediately respond to a request for comment outside regular business hours.

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BHP has made overtures to Anglo American in recent days, Bloomberg News reported earlier, citing people familiar with the matter, adding that deliberations are ongoing and there is no certainty of a deal.

Anglo American’s market capitalisation is about $41.80 billion, while BHP’s is around $132.18 billion, based on LSEG data.

If the BHP/Anglo deal had gone ahead, the combined entity would have been the world’s largest copper producer, with a total annual production of around 1.9 million metric tons.

The new Anglo Teck group is expected to have a combined annual copper production capacity of approximately 1.2 million tons, still second to BHP.

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Frozen dinners were useful when no one was home to cook. A fancy cheese or apple roll felt like a family treat. But not any more. “We can’t afford to do those little luxuries any more because they’re just too expensive to feed five with,” says Cat Hill. “There’s not any wiggle room.”

The 43-year-old from Hornby, New York, has been hit by both higher grocery prices and rising costs for her small business running a horse stable. Under Donald Trump, she worries it may get even harder. “With this administration, it doesn’t appear to be stabilising,” she adds. “It’s hard to think about how exactly we are going to ride this out.”

Hill is among millions of people feeling the pain of the US’s affordability crisis. The costs of groceries, housing, childcare, education and healthcare have become intolerable to many, who in turn put the blame on politicians. As Thanksgiving approaches, it appears that the US president is belatedly waking up to the problem and scrambling for answers.

During last year’s election campaign, Trump was all too conscious of the political utility of the high cost of living. He promised voters that he would bring down prices “starting on day one”. But two days after winning, he changed course by remarking: “Our groceries are way down. Everything is way down … So I don’t want to hear about the affordability.”

Much of the first year of Trump’s second term was then dominated by his trade wars, his draconian crackdown on illegal immigration, his decision to send national guard troops into American cities and the longest government shutdown in history.

But voters had other concerns. Prices rose in five of the six main grocery groups tracked in the consumer price index from January to September. These include meats, poultry and fish (up 4.5%), non-alcoholic beverages (up 2.8%) and fruits and vegetables (up 1.3%).

Officials at the Federal Reserve have long been clear that Trump’s tariffs caused inflation, though it is uncertain how long the effects will last. Consumer prices had been increasing at an annual rate of 2.3% in April when Trump launched the import taxes and that rate accelerated to 3% in September.

Adding insult to injury, even as the shutdown deepened the financial woes of many, Trump launched remodeling projects including a gilded ballroom attached to the White House and threw a Great Gatsby-themed party at his luxurious Mar-a-Lago estate in Florida.

Tara Setmayer, co-founder and chief executive of the Seneca Project, a women-led Super Pac, said: “The ads write themselves [for the midterm elections] in 2026 when you have a president who promised to make the American people’s lives better – and who was supposed to be a champion of the working class and not of the elite – bragging repeatedly from his gilded Oval Office while military families are on food bank lines.

“It’s so tone-deaf and so ‘let them eat cake’ it’s hard to believe that he’s serious about this but he is and keeps constantly doing this. It screams: ‘I don’t give a damn about everyday people,’ and his base is beginning to wake up to the fact that perhaps he doesn’t care about us.”

The shutdown froze the collection of the most recent data but it is clear that people feel like prices are too high. Consumer sentiment dropped to a near record low in November, going from 71.8 out of 100 in November 2024 to 51, according to the University of Michigan’s Surveys of Consumers.

Joanne Hsu, the director of the survey and an economist at the University of Michigan, said that even while concerns over tariffs have started to level off, consumers are still experiencing higher prices.

Consumers “are continuing to be very frustrated by these high prices”, Hsu said. “They feel like those high prices are eroding their living standard, and they just don’t feel like they’re thriving at the end of the day.”

It was against this backdrop that Republicans were blindsided by this month’s elections when Democrats swept the board from New York to Virginia with a message laser-focused on affordability. Economic worries were the dominant concern for voters, according to the AP Voter Poll.

Trump entered a period of denial. He posted on social media: “Affordability is a lie when used by the Dems. It is a complete CON JOB. Thanksgiving costs are 25% lower this year than last, under Crooked Joe! We are the Party of Affordability!”

But he was also stung into action. He conceded that some consumer costs are “a little bit higher” and floated some half-formed ideas to ease financial pressures. He said he may stretch the 30-year mortgage to 50 years to reduce the size of monthly payments.

He partially backtracked on tariffs, a core part of his economic agenda, reducing levies on imports of products such as coffee, beef and tropical fruit, admitting they “may, in some cases” have contributed to higher prices.

Adam Green, co-founder of the Progressive Change Campaign Committee, said: “The fact that Trump decided to lower tariffs on coffee and bananas is a complete admission that across the economy he is jacking up prices on millions of families. That was a big tell and Democrats should be exploiting that.

“Every Democrat should be going to a supermarket pointing to bananas and coffee on social media and saying, if you see prices come down, that is Trump admitting that he’s jacking up prices everywhere: your car, your baby diapers, your other foods.”

Trump also proposed a $2,000 dividend, funded by tariff revenue, for all Americans except the rich. This could take the form of a cheque bearing his signature, reminiscent of stimulus cheques he sent to millions of Americans during the Covid-19 pandemic.

But Republicans on Capitol Hill were distinctly sceptical about the idea at a time when the federal government is burdened by debt, warning that the Trump cheques could fuel even further inflation.

It might be too little too late. In a recent Fox News poll, 76% of respondents had a negative view of the state of the economy – down 9% since July. In a Marquette University survey, 72% disapproved of Trump’s handling of inflation and the cost of living. And in a Reuters/Ipsos poll, 65% of respondents, including a third of Republicans, disapproved of Trump’s handling of the cost of living.

On Monday, Trump used a summit sponsored by McDonald’s to insist the economy was moving in the right direction and cast blame on his predecessor, Joe Biden. “We had the highest, think of it, the highest inflation in the history of our country,” he said.

“Now we have normal inflation. We’re going to get it a little bit lower, frankly, but we have normal, we’ve normalized it, we have it down to a low level, but we’re going to get it a little bit lower. We want perfection.”

But Trump’s troubles might be giving voters a feeling of déjà vu. Biden tried to convince Americans that the economy was strong. “Bidenomics is working,” he said in a 2023 speech. “Today, the US has had the highest economic growth rate, leading the world economies since the pandemic.”

His arguments did little to sway voters as only 36% of adults in August 2023 approved of his handling of the economy, according to a poll at the time by the Associated Press-Norc Center for Public Affairs Research.

Now Trump is leaning on a message that echoes Biden’s claims in 2021 that elevated inflation is simply a “transitory” problem that will soon disappear. “We’re going to be hitting 1.5% pretty soon,” he told reporters earlier this month. ”It’s all coming down.”

But Jared Bernstein, a former chair of the White House Council of Economic Advisers under Biden, disputes the notion that Biden and Trump were equally guilty of downplaying inflation. He said: “We were talking past people. They’re telling people things that are false. In terms of ineffective messaging, those are equivalent. In terms of truthfulness, one is is honest and the other is false.”

Bernstein, now a senior fellow at the Center for American Progress thinktank, added: “They’re making a very consequential mistake, which is strongly, loudly asserting that people are better off than they know they are. What’s fascinating about all this to me is that Donald Trump believes, correctly, that he has a superpower. He can get his followers to believe whatever reality he puts out there, and that’s worked for him for a very long time but it won’t work on this. Affordability is kryptonite to his superpower because his followers know which way is up when it comes to prices.”

Two and a half centuries ago, the American colonies launched a violent protest against British rule, triggered by parliament’s imposition of a monopoly on the sale of tea and the antics of a vainglorious king. Today, the tables have turned: it is Great Britain that finds itself at the mercy of major US tech firms – so huge and dominant that they constitute monopolies in their fields – as well as the whims of an erratic president. Yet, to the outside observer, Britain seems curiously at ease with this arrangement – at times even eager to subsidise its own economic dependence. Britain is hardly alone in submitting to the power of American firms, but it offers a clear case study in why nations need to develop a coordinated response to the rise of these hegemonic companies.

The current age of American tech monopoly began in the 2000s, when the UK, like many other countries, became almost entirely dependent on a small number of US platforms – Google, Facebook, Amazon and a handful of others. It was a time of optimism about the internet as a democratising force, characterised by the belief that these platforms would make everyone rich. The dream of the 1990s – naive but appealing – was that anyone with a hobby or talent could go online and make a living from it.

US tech dominance wasn’t the result of a single policy decision. Yet it was still a choice that countries made – as is highlighted by China’s decision to block foreign sites and build its own. While that move was far easier under an authoritarian system, it also amounted to an industrial policy – one that left China as the only other major economy with its own full digital ecosystem.

The pattern was sustained through the 2000s and 2010s. Cloud computing was quickly cornered by Amazon and Microsoft. No serious European or UK competitor emerged to challenge platforms such as Uber or Airbnb. These companies have undoubtedly brought us convenience and entertainment, but the wealth of the internet has not spread as widely as many hoped; instead, US firms took the lion’s share, becoming the most valuable corporations in history. Now the same thing is happening with artificial intelligence. Once more, the big profits look destined for Silicon Valley.

How did all this meet with such little resistance? In short, the UK and Europe followed the logic of free trade and globalisation. Nations, according to this theory, should focus only on what they do best. So just as it made sense for the UK to import French burgundies and Spanish hams, it also seemed logical to rely on American technology rather than trying to do it locally. Better to specialise instead in the UK’s own strengths, such as finance, the creative industries – or making great whisky.

But when it comes to these new platforms, the analogy with regular trade breaks down. There is a vast difference between fine wines and the technologies that underpin the entire online economy. Burgundies can be pricey, but they don’t extract value from every commercial transaction or collect lucrative data. The trade theories of the 1990s masked the distinction between ordinary goods and what are, in effect, pieces of market infrastructure – systems essential to buying and selling. That’s what Google and Amazon represent. A better analogy might be letting a foreign firm build toll roads across the country, charging whatever it likes to use them.

We’re seeing this again with the build-out of artificial intelligence. During President Trump’s state visit in September, the UK proudly celebrated Google and Microsoft’s investments in “datacentres” – vast warehouses of computer servers that power AI systems. Yet datacentres are the bottom rung of the AI economy, private infrastructure that simply channels profits back to US headquarters.

In another timeline, the UK could have been a true leader in AI. US researchers were once far behind their British and French counterparts. Yet, in a move neither Washington nor Beijing would have permitted, the UK cheerfully allowed the sale of most of its key AI assets and talent over the last decade or so – DeepMind’s purchase by Google being the most famous example. What remains is an AI strategy consisting of the supply of electricity and land for datacentres. It’s like being invited to a party only to discover you’re there to serve the drinks.

If tech platforms are indeed like toll roads, the logical step would be to limit their take – perhaps by capping fees or charging for data extraction. Yet no country has done so: we accept the platforms but fail to regulate their power as we do with other utilities. The European Union has come closest, with its Digital Markets Act, which regulates how dominant platforms treat dependent businesses. The US government, for its part, is also at the mercy of its homegrown tech giants, yet Congress remains paralysed.

If the UK wanted to take a different path, to resist this economic colonisation and extraction, it could partner with the European Union and perhaps Japan in order to develop a joint strategy – one that forces platforms to support local businesses and nurtures alternatives to mature US technologies. So far, though, alongside other nations disadvantaged by American dominance, it has been slow to adapt, instead hoping that the 90s playbook will still work, despite evidence to the contrary.

The truth is that we now live in a more cynical and strategic era. One way or another, the world needs an anti-monopoly framework with far greater force than anything seen so far. Wherever you live, it’s clear the world would be better off with more firms from different countries. The alternative is not only costly but politically dangerous, feeding resentment and dependence. We can do better than a future where what counts as economic freedom is merely a choice between relying on the United States, or relying on China.

Tim Wu is a former special assistant to President Biden and author of The Age of Extraction: How Tech Platforms Conquered the Economy and Threaten Our Future Prosperity (Bodley Head).

Further reading

The Tech Coup by Marietje Schaake (Princeton, £13.99)

Supremacy by Parmy Olson (Pan Macmillan, £10.99)

Chip War by Chris Miller (Simon & Schuster, £10.99)

The dearth of data on the state of the US economy caused by the federal government shutdown is set to continue after the Bureau of Economic Analysis postponed two releases that had been due on Wednesday next week.

The BEA said on Thursday that its planned releases of data on third-quarter GDP and September inflation would be rescheduled to dates to be advised, adding to investor uncertainty after fears of tighter than anticipated monetary policy contributed to the jitters hitting stock markets in recent days. With the Federal Reserve due to make its next decision on interest rates on December 10, the postponements risk leaving policymakers with even less to go on.

Economists polled by Reuters had expected GDP to come in at an annualised pace of 3 per cent in the three months to September 30, down from 3.8 per cent in the second quarter. Despite the expected decline, a 3 per cent reading would be a further sign that the economy has held up after a negative reading in the first quarter.

A separate Reuters poll showed inflation holding steady, with the index of core personal consumption expenditures — the Fed’s preferred metric of inflation that strips out volatile food and energy prices — expected to have risen 2.9 per cent in the month, unchanged from the rate in August.

The BEA’s double postponement came after the Bureau of Labor Statistics said that its closely watched report on non-farm payrolls for October had been cancelled outright.

Fed chair Jay Powell said last month that the lack of adequate data caused by the shutdown would be a factor in policymakers’ thinking. “What do you do when you’re driving in the fog? You slow down,” Powell said, adding that there was “a possibility” this would influence the debate at next month’s meeting.

Questions have also surfaced over the true health of the world’s largest economy and whether investments in artificial intelligence have masked other issues. Last month, the IMF upgraded its outlook for the US but warned that an “investment surge” in AI had helped the economy avoid a slowdown. Alexandra White

What will the UK Budget mean for sterling?

The pound has weakened in recent weeks, falling to its lowest against the euro in two years as weak inflation and poor economic data opened the door to more Bank of England interest rate cuts.

Also weighing on sterling have been fiscal concerns, underlined by the UK government dropping plans to raise income tax in Wednesday’s Budget — with investors closely tracking the government’s commitment to balancing its books.

“There’s a lot of bad news already priced into sterling,” said Steven Englander, head of FX research at Standard Chartered, pointing to the government’s fiscal “black hole”.

Analysts say this could go one of two ways. If investors view the government’s policies as doing enough to restore health to public finances — with a comfortable margin of spending “headroom” — then “the pound will appreciate, because some of this risk premium will be priced out”, said Tomasz Wieladek, chief European economist at T Rowe Price. If not, the pound could stay low, or weaken further.

“The issue will be whether the market believes that the policies that are announced are going to be effective, and getting to the objectives they’ve declared,” said Englander.

But many analysts see the Budget as likely to be negative for the pound if the government tightens the public finances, sapping growth, but also manages to enact measures that reduce inflation.

“Anything that over the next year or two reduces the disposable income of households, the Bank of England will see as a shock to demand, and cut rates more than expected,” delivering bad news for sterling, Wieladek added.

There is also the continued undercurrent of a potential leadership challenge to Prime Minister Sir Keir Starmer, especially if the Budget proves unpopular with those on the left of the ruling Labour party.

“Lingering political risks are unlikely to allow for a full removal of [sterling’s] risk premium, even in the event of a smoothly delivered budget from a market perspective,” said Shreyas Gopal, FX strategist at Deutsche Bank. Rachel Rees

Will Germany continue to disappoint?

After the November flash estimate for Germany’s purchasing managers’ indices on Friday suggested that manufacturing in the country had fallen ever deeper into contraction, all eyes will be on a flurry of economic data to be released from Monday.

The all-important Ifo business climate survey, to be published by the Munich-based think-tank at the start of the week, is expected to edge up by 0.1 points to 88.5, as analysts polled by Reuters forecast that the assessment of current conditions will have improved a bit in November.

Europe’s largest economy narrowly avoided a technical recession in the third quarter as it stagnated after a 0.1 per cent decline in the second. The Bundesbank said on Thursday in its monthly report that the economy could continue to grow “slightly” in the final three months of the year. The country’s statistical office will release data on consumption, domestic investment and exports for the third quarter on Tuesday.

Despite the long-lasting economic slump, Germany’s labour market is still holding up strongly, with analysts expecting that unemployment, to be reported on Friday, will have remained flat at 2.9mn people in November. Inflation, also to be reported on Friday, is forecast to have risen by 0.1 percentage points to 2.4 per cent, well above the ECB’s medium-term 2 per cent target for the overall currency area. Olaf Storbeck

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Vaccine-maker Moderna has become the most shorted company in the S&P 500, with its share price slumping to its lowest level since before the Covid-19 pandemic as people skip jabs.

After months of anti-vax rhetoric from US health secretary Robert F Kennedy Jr, the number of Americans getting Covid shots is down about 24 per cent from this point last year, according to a November 21 report from Jefferies, an investment bank.

Despite plenty of supply, analysts have said vaccine fatigue was contributing to lower Covid vaccination rates in the past few months compared with 2024 or 2023.

“It’s not a huge surprise vaccinations have not picked up as they have in the last two years,” said Seema Shah, medical director of epidemiology and immunisation for San Diego county.

Vaccine shipments were delayed this year, prompting paediatric healthcare providers to wait to administer shots until supplies were stocked, she said.

“Those [delays] definitely caused a slow pick up compared to the last two years,” she added.

Boston-based Moderna has been the S&P 500’s most shorted stock since the end of September, according to S3 Partners. Short sellers had about $622mn of unrealised profits in the company in 2025, S3 said. Moderna shares closed at $23.72 on Friday, down 43 per cent so far this year, and matching its share price in February 2020.

When it joined the S&P 500 index in July 2021, Moderna’s fortunes were flourishing. That year, the US government bought hundreds of millions of Moderna Covid vaccines. Chief executive Stéphane Bancel became a multi-billionaire. Moderna’s 2021 operating margin was higher than Warren Buffett’s Berkshire Hathaway.

But Moderna has been unprofitable since 2023, well before Kennedy brought his vaccine scepticism to Washington this year. Its revenues have dropped by more than 80 per cent from 2021.

At an investor day on Thursday, Moderna executives touted a turnaround starting in 2026. The company is expanding sales in markets outside the US and is racing to apply its mRNA technology to attack cancers.

In an interview with the Financial Times, Moderna’s chair, Noubar Afeyan, said the short interest in Moderna’s stock had not changed the company’s behaviour.

“We are concerned about a lot of unknowns. I don’t know that the shorting is adding to the unknowns,” said Afeyan, who is chief executive of Flagship Pioneering, a Boston investment firm that founded Moderna.

People should not forget the detrimental effects of Covid-19, he said, adding that more than 10mn people were living with the long-term symptoms of the virus.

“People have lost the narrative that they are essentially a source of infection for other people,” he said.

“Why should you follow traffic laws? You don’t just put yourself in harm’s way. This is a transmissible disease.” And by not getting vaccinated, “you are not just an innocent bystander but a culprit”.

The US health secretary is a long-standing vaccine sceptic. In June, Kennedy fired all the members of a top vaccine advisory committee, and two months later limited the government’s recommendations for Covid shots.

Last week, the Centers for Disease Control and Prevention, which is part of Kennedy’s department, changed its website to say: “Studies have not ruled out the possibility that infant vaccines cause autism.”

In Washington, Moderna has spent more than $1.2mn on lobbying already this year, a record amount for the company.

Because of its exposure to vaccines, Moderna did not make a great acquisition target for giant pharmaceutical companies, said Myles Minter, an analyst at William Blair.

“You need to see some pretty compelling oncology data” for an acquirer to get interested in buying Moderna, he said.

While big drugmakers were looking to refill their product offerings, “I’m not convinced that declining Covid vaccine revenue is the way to fix that for a big pharma” company, he added.

For now, Moderna said sales to Australia, Canada and the UK would help it to increase revenues by up to 10 per cent next year. In 2027, a Pfizer deal to sell Covid vaccines to the EU expires, opening the European market for Moderna to compete.

Ultimately, Moderna is hoping that its vaccines can generate enough cash to fund its cancer work. 

“We see a turning point in our finances and we believe we have a line of sight to break even in 2028,” said Jamey Mock, Moderna’s chief financial officer.