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