WEBVTT - BAE Systems Rises, Adecco Drops, AB Foods Declines

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News, The.

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<v Speaker 2>Stock Movers Report, your roundup of companies making moves in

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<v Speaker 2>the stock market, harnessing the power of Bloomberg Data.

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<v Speaker 3>Let's look us some of the stocks on the move

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<v Speaker 3>today in Europe on Caroline Hepker with Lizzie Burton, and

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<v Speaker 3>we're joined by Bloomberg reporter Chloe Malay. The defense stock

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<v Speaker 3>rally here in Europe. BAE Systems one of the big winners.

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<v Speaker 3>What is prompting what is a very significant surge.

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<v Speaker 1>It's all about Trump. So Trump said that he wanted

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<v Speaker 1>to increase the US military budget, and it's not a

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<v Speaker 1>small booster. He's is requesting an increase of more than

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<v Speaker 1>fifty percent in annual defense spending for twenty twenty seven

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<v Speaker 1>and he said that that would be paid for by

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<v Speaker 1>the tariff revenue that was accumulated over the last year.

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<v Speaker 1>And so this is something that really really boosted Asian

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<v Speaker 1>defense stocks and now we are seeing the same with

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<v Speaker 1>the European names as well. Bea is really driving at

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<v Speaker 1>that rally. This is a company that generates almost half

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<v Speaker 1>of its revenue in the US, so it is much

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<v Speaker 1>more exposed than some of those other defense names. And

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<v Speaker 1>we also know, of course that Trump has previously been

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<v Speaker 1>a little bit more warm to the UK and he

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<v Speaker 1>has been to continental Europe, so that might play into

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<v Speaker 1>that as well. But we're really seeing positive movements across

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<v Speaker 1>the board. We have Ryan Mittel, also, Bileonardo also up,

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<v Speaker 1>all of those defense names definitely in the green today.

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<v Speaker 1>It's also worth noting, of course, that the continued heightened

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<v Speaker 1>geopolitical tensions that we've got with the Venezuela situation still unfolding,

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<v Speaker 1>is also really helpful for that defense straight so that's

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<v Speaker 1>another boost.

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<v Speaker 3>Look, I think it's worth saying that there are big caveats,

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<v Speaker 3>aren't there around President Trump and that request that Congress

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<v Speaker 3>increase the Pentagon's budget by this enormous amount. You know,

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<v Speaker 3>I just sort of I'm thinking about the numbers. The

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<v Speaker 3>US already spends almost a trillion dollars on defense. For

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<v Speaker 3>the UK it's about sixty billion, and versus even versus

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<v Speaker 3>China with its military, you know, they're not thought to

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<v Speaker 3>spend anywhere near what the US does, So I think

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<v Speaker 3>globally the number is absolutely huge, isn't it that we're

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<v Speaker 3>thinking about? Anyway, that was on my mind Lizzie.

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<v Speaker 4>No, it's really helpful perspective. Let's get back to the

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<v Speaker 4>individual stocks. The Swiss French recruitment company A Deco Chloe

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<v Speaker 4>is facing a drop this morning. What does that tell

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<v Speaker 4>us about the broader labor market trends?

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<v Speaker 1>Well, the business of recruitment isn't the best business to

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<v Speaker 1>be and perhaps at the moment, given that we're in

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<v Speaker 1>quite a tight labor market, companies are hesitant to spend

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<v Speaker 1>and candidates are also hesitant to move jobs as well.

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<v Speaker 1>And so Jeffrey's analysts downgraded three names in that recruitment

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<v Speaker 1>sector in Europe this morning, so Ranstaed hayes Enodecco in particular,

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<v Speaker 1>and A Decco was the one that moved the lowest

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<v Speaker 1>this morning, but all three were weaker So and I

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<v Speaker 1>said that those recruiters are facing a really cloudy outlook

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<v Speaker 1>in twenty twenty six and that they'll be facing both

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<v Speaker 1>cyclical headwinds and that will be exacerbated by structural new

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<v Speaker 1>structural challenges and there should really keep a lid on

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<v Speaker 1>earnings at this year. So this is not great news

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<v Speaker 1>for a sector that's already had a tough twenty twenty five.

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<v Speaker 1>A tough twenty twenty four, you know, there'll be certainly

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<v Speaker 1>even more pressure going forward. And AI is also another

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<v Speaker 1>big threat, first of all because of the impact on

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<v Speaker 1>the labor market itself, but also because it can make

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<v Speaker 1>the need for recruiters as an intermediary a bit more

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<v Speaker 1>redundant as well. So definitely want to keep an eye on.

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<v Speaker 3>Okay, now we've had a number of reports out for

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<v Speaker 3>UK businesses. There's a profit warning too from AB Foods today.

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<v Speaker 3>Why and how are the markets reacting to that?

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<v Speaker 1>Well? AB food shares are down quite a lot this

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<v Speaker 1>morning on the back of that profit warning. So AB

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<v Speaker 1>Foods has consists of Primark, but then also a range

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<v Speaker 1>of food businesses, including brands like Reveta, Crackers, King's Mill, Bread,

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<v Speaker 1>et cetera. And it's said this morning that kind of

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<v Speaker 1>everything was weak, but Primmark in particular struggling in continental

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<v Speaker 1>Europe and in the US. It's doing a little bit

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<v Speaker 1>better in UK, but definitely not as well as we

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<v Speaker 1>could have expected. After we saw the numbers from Next

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<v Speaker 1>earlier this week, it seems that perhaps that really good

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<v Speaker 1>performance from Next wasn't as indicative of a broader health

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<v Speaker 1>of the UK high street as we might have hoped,

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<v Speaker 1>and the profit warning also comes at a really pivotal

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<v Speaker 1>time for Abe Foods. It announced that it was considering

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<v Speaker 1>a splitting Primark from the rest of that business last year,

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<v Speaker 1>and that decision is expected to be coming in the

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<v Speaker 1>next few months, by April, so let's keep an eye

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<v Speaker 1>on that as well. With that news of the profit

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<v Speaker 1>warning in mind as.

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<v Speaker 2>Well the Stock Movers report from Bloomberg Radio. Check back

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