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US President Trump is due to arrive in the UK today (16 September) as part of a visit that will see him cover a variety of topics. A clear one is business and trade, so I expect some UK stocks to be sensitive to comments and trade deals being announced over the course of the week. Based on the sectors likely to be in focus, here are a couple of stocks I’m keeping a close eye on.
Anticipation around energy
First up is Rolls-Royce (LSE:RR), a stock that’s up 129% over the last year. The UK and US are reportedly due to sign a nuclear power cooperation deal. As part of this, it’ll accelerate investment in advanced modular nuclear reactors (AMRs) and small modular reactors (SMRs). When I consider stocks that could benefit from this, Rolls-Royce comes immediately to mind.
The business is a key UK player in SMR development, an area in which it has been investing heavily recently. In the latest half-year report, it was specifically called out, saying that “Rolls-Royce SMR was selected as the sole provider of the UK’s first small modular reactor programme. We expect Rolls-Royce SMR to be profitable and free cash flow positive by 2030.”
So if this deal gets inked, the regulatory cooperation, ease of licensing, and fresh investment could be huge. As a result, it could see the stock rally as investors consider the financial benefits for the company.
Of course, any such excitement needs to be tempered. If the announcements are more symbolic than substantive (such as long-term pledges versus immediate contracts), then it could be underwhelming. Further, at the divisional level, civil aerospace is still a much larger component of revenue and profit than SMR, so this needs to be taken into consideration.
Interest in AI
AI is another area that I expect news to come from, especially with recent news that Nvidia and OpenAI are looking to invest in UK data centres. If the President pushes this on his visit, I can see some UK stocks benefiting from this, such as Ocado (LSE:OCDO).
The application might not sound immediately clear, but stay with me. Ocado runs highly automated fulfilment centres, with thousands of robots moving groceries in tightly packed grids. AI algorithms coordinate traffic, routes, and stock management. It licenses out its AI-driven logistics platform to other parties as well.
As governments and companies invest in AI, there’s an increased appetite for automation in supply chains. If the US and UK invest together in AI and adoption increases, I’d expect higher interest in Ocado’s systems. This could result in new orders along with accelerated rollouts of pending centres.
Ocado’s AI-enhanced automation gives it a competitive advantage in reducing costs. If AI adoption is politically or financially incentivised, its model looks even more attractive.
Of course, there are risks with Ocado, as the stock is down 25% over the past year. Although it’s growing, the business continues to post losses. This is something that will worry some investors.
I’ve got both stocks on my watchlist and will consider buying them if it looks like they could materially benefit from anything announced later this week.
