Speaker 1: Bloomberg Audio Studios, podcasts, radio News, The.
Speaker 2: Stock Movers Report, your roundup of companies making moves in
Speaker 2: the stock market, harnessing the power of Bloomberg Data.
Speaker 3: Let's take a look at some of the stocks on
Speaker 3: the move today here in Europe. I'm Caroline Hepgar with
Speaker 3: Lizzie Burton, and we joined by Bloomberg with port of
Speaker 3: Chloe Malay. Chloe. Good to speak to you the start
Speaker 3: of this week. European defense stocks getting quite a significant
Speaker 3: lift given the concerns around Greenland. How are the likes
Speaker 3: of BA Systems and others reacting well.
Speaker 1: Quite positively. It's been, as you mentioned, a really good
Speaker 1: start to the year for defense stocks, and that has
Speaker 1: given all the geopolitical tensions that have been happening. And
Speaker 1: we are starting this week again quite strongly, and this time,
Speaker 1: as you said, because of Greenland. So a group of
Speaker 1: European countries, led by Germany and the UK, is discussing
Speaker 1: plans at the moment for military presence in Greenland, and
Speaker 1: that would be with the purpose of pushing back against
Speaker 1: Trump's threats to take over that territory. You know, he
Speaker 1: said previously that he wasn't ruling out the possibility of
Speaker 1: military force to do so, and then also to really
Speaker 1: show that Europe is serious about a security in the
Speaker 1: Arctic region and that they have the situation they're under control.
Speaker 1: Trump insisted on Sunday that the US would own Greenland,
Speaker 1: saying that acquiring that territory was necessary for national security reasons.
Speaker 1: So all of that points to growing tensions and growing
Speaker 1: uncertainty really because it is still unclear what Trump is
Speaker 1: actually planning to do, and that of course that uncertainty,
Speaker 1: that tension is of course really beneficial for that defense
Speaker 1: trade and we are seeing those defense stocks move high
Speaker 1: NBA in particular, perhaps because the UK is one of
Speaker 1: the big drivers behind behind this plan to put military
Speaker 1: forces in Greenland.
Speaker 3: Okay. Also turning to Barclays, we're looking at it down
Speaker 3: this morning, Clary after Trump's comments on credit card rates,
Speaker 3: talks through that story.
Speaker 1: Yeah, so Trump called for a one year cap on
Speaker 1: those credit card interest rates at ten percent and said
Speaker 1: that credit card lenders would be in violation of the
Speaker 1: law if they don't do that, and there's a deadline
Speaker 1: of January twentieth. So Barclays was weaker this morning on
Speaker 1: the back of that. It has a big US credit
Speaker 1: card business, and then we can also probably expect US
Speaker 1: payers like JP Morgan and City Group would also be
Speaker 1: lower today. So the average interest rate is about twenty percent,
Speaker 1: which is obviously quite steep for consumers. But banks have
Speaker 1: argued that reducing those rates would be a threat to
Speaker 1: profitability for them because there's you know, with credit cards,
Speaker 1: there's no asset to repossess when there's a default, and
Speaker 1: therefore there's no way to cushion that loss, and those
Speaker 1: the arguments therefore is that lower rates might mean that Americans,
Speaker 1: that many Americans could actually lose access to credit and
Speaker 1: therefore be left to pay their lenders and loan sharks
Speaker 1: and whatever. And so this is the argument from banks.
Speaker 1: But we'll see if Trump keeps pushing this. But in
Speaker 1: the meantime, we are seeing Barclays react quite negatively to that.
Speaker 3: Yeah. Again, very interesting sort of intervention into a particular
Speaker 3: business with sort of instant impact.
Speaker 1: Really.
Speaker 3: Morgan Stanley also talking about its preference for software over
Speaker 3: IT services that having an impact on names hire in Europe.
Speaker 1: Yeah. So cap Gemini in particular is down this morning
Speaker 1: after Morgan Stanley downgraded a bunch of stocks in the
Speaker 1: IT sector IT services sector in particular, saying that the
Speaker 1: industry will not be seeing any kind of clear rally
Speaker 1: in twenty twenty six. So one of the biggest threats
Speaker 1: for cap Gemini in particular is actually AI because that
Speaker 1: comes with what analysts have called disintermediation risks, so essentially
Speaker 1: a fancy word just to say that the service is
Speaker 1: provided by cap Gemini, and some of those piers could
Speaker 1: actually become redundant in the AI era. And in addition
Speaker 1: to that, the clients of cap Gemini are also quite
Speaker 1: reluctant perhaps at the moment, to spend on those IT
Speaker 1: services because of continued economic uncertainty. This is the only
Speaker 1: cell rating on that stock don Jim and I, which
Speaker 1: might mean that this is perhaps quite a contrariant take
Speaker 1: from Morgan Stanley and the company might actually end up
Speaker 1: being in better shape than fit. But we'll see if
Speaker 1: Morgan Stanley analysts actually end up being proven right. But
Speaker 1: in the meantime, this downgrade has led to a lot
Speaker 1: of weakness in that stock.
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