The FTSE 100 (^FTSE) and European stocks stormed forward on Wednesday, recovering from heavy losses in the previous session, as the US dollar hit a four-month low on the back of a warning from US president Donald Trump that his tariffs will cause “a little disturbance”.
It was the currency’s lowest level since November, with the pound (GBPUSD=X) rising above $1.28 for the first time since December.
In the first major policy speech since he took office, Trump doubled down on his decision to impose 25% tariffs on Canada and Mexico, the US’s two biggest trading partners, and an additional 10% levy on China.
“Tariffs are about making America rich again, and making America great again. It’s happening, and it will happen rather quickly,” he said.
All three countries announced they would hit back with retaliatory actions, sparking worries about a slowdown in the global economy.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “After a tortuous Tuesday for global markets, investors have clung onto sparks of positivity which have helped the FTSE 100 (^FTSE) make some gains in early trade, although it’s tentative progress.
“Hopes are rising that a Ukraine peace deal could be back on, China’s latest services snapshot shows promise and there are even some glimmers of possibility that some reprieve from punishing tariffs could be in sight.
“Expectations have risen that US relations with Ukraine are warming up from the ice-cold intensity of Friday’s Oval Office meeting between Trump, Vance and Zelensky.
“Trump brandished a letter from the Ukrainian president in his address to Congress, which he said indicated Kyiv was ready to come to the negotiating table. The renewed willingness from Zelensky to sign a minerals deal has led to hopes that a way can be found out of a diplomatic quagmire, which has eased some geopolitics fears.”
Meanwhile, US private sector firms added the fewest number of jobs since July last month, according to the latest industry figures.
Payrolls increased by 77,000 in February, down from a revised 186,000 in January, according to ADP Research, which was well below the 140,000 that had been expected by analysts.
London’s benchmark index (^FTSE) was 0.2% higher by the end of the session
Germany’s DAX (^GDAXI) stormed 3.6% ahead after a German debt brake deal was announced, while the CAC (^FCHI) in Paris headed 2.1% into the green.
The S&P 500 (^GSPC) rose about 0.4% after the bell, while the Dow Jones Industrial Average (^DJI) advanced 0.6%. The Nasdaq Composite (^IXIC) was up 0.2%. Both the S&P 500 and Nasdaq entered Wednesday’s trading session near four-month lows.
The pound was 0.6% up against the US dollar (GBPUSD=X) at 1.2870.
Well that’s all from us today, thanks for following along.
Be sure to join us again tomorrow, when we’ll be back for more of the latest markets news and all that’s happening across the global economy.
We will have final results from ITV, PageGroup, Harbour Energy, Melrose, Reckitt, Rentokil, Admiral and Entain so it’ll be a busy one.
…Not to mention EU retail sales, US jobs data and UK PMI construction data.
See you tomorrow!
Adidas warns of slower growth
Adidas (ADS.DE) warned of slower growth in its latest set of results, despite clocking a 12% increase in full-year sales for 2024. It said it expects revenues to increase at a high-single-digit rate in 2025.
“While some upstarts have managed to gain traction in certain niche markets, the sportswear space is essentially a duopoly divided up between Adidas and Nike (NKE),” said Russ Mould, investment director at AJ Bell.
For 2024, it posted an operating profit of €1.3bn, while revenues amounted to €23.7m for the full year.
The highly-rated defence stocks investors are buying up
Defence stocks have surged as investors expect governments across Europe to ramp up spending following recent developments in geopolitical tensions.
A rally in UK defence stocks on Monday helped propel the FTSE 100 (^FTSE) to a record high close of 8,904 points.
This came following a fiery exchange between US president Donald Trump and Ukrainian president Volodymyr Zelensky at a meeting in the White House on Friday.
European leaders then assembled in London on Sunday for emergency talks on finding a way forward to help end the Russia-Ukraine war. UK prime minister Keir Starmer said Europe must act to support Ukraine, and that the UK and France would lead a “coalition of the willing” to secure peace.
The summit saw European leaders agree to boost defence spending. Starmer had already set out plans last week to increase the UK’s spending on defence to 2.5% of gross domestic product (GDP) by 2027, up from its current level of 2.3%, with the target of reaching 3% in the next parliament.
Late on Monday, the White House then announced that the US would pause its military aid to Ukraine to support its continued fight against Russia’s invasion. This heightened expectations that Europe could end up shouldering more of the responsibility for its own security.
Bank of England expects inflation rise this year as UK enters ‘even greater uncertainty’
The Bank of England expects a rise in UK inflation this year, although it will be “nothing like a few years ago”.
This was according to Bank of England (BoE) governor Andrew Bailey, who appeared before the Treasury committee on Wednesday along with other policymakers.
He said that Britain was entering a world of “even greater uncertainty,” which had “widened” since the last meeting in February, when the monetary policy committee (MPC) voted to cut interest rates to 4.5%
Present at the meeting alongside Bailey were senior officials including Huw Pill, Megan Greene and Alan Taylor.
Greene told MPs that a tariffs retaliation might actually damage Britain’ growth, and would also push down inflation, all things being equal.
She said tariffs would have an impact on exchange rates but warned the outlook was “most uncertain”.
It comes as most officials at Threadneedle Street have taken the view that rates should stay higher for longer in order to counter the risk of elevated inflationary pressures.
Matthew Ryan, head of market strategy at global financial services firm Ebury, said: “For now, we think that most officials will reinforce the view that a ‘gradual’ pace of cuts remains warranted, which would probably cement market expectations for just two more UK rate cuts during the remainder of the year.”
Alan Taylor, a professor at New York’s Columbia University and an external member of the MPC, echoed concerns, pointing to recent a series of global economic shocks such as Brexit, the COVID-19 pandemic, and Russia’s invasion of Ukraine.
US economy adds fewest jobs in eight months
US private sector firms added the fewest number of jobs since July last month, according to the latest industry figures.
Payrolls increased by 77,000 in February, down from a revised 186,000 in January, according to ADP Research, which was well below the 140,000 that had been expected by analysts.
Nela Richardson, chief economist at ADP, said:
Trade and transportation, health care and education, and information suffered job losses, the data showed.
Pay growth for job-stayers was 4.7% year-on-year and for job-changers pay gains slowed slightly to 6.7%.
Worst day for German bonds since the fall of the Berlin Wall
Now here’s an incredible statistic for you…
German bonds are suffering their worst day since the fall of the Berlin Wall! The 10-year German bund yield, the benchmark for eurozone sovereign debt costs on bond markets, leapt by 25 basis points (bps) today to 2.74%.
CMA: Microsoft/OpenAI partnership does not qualify for investigation
Britain’s competition authority has ruled that Microsoft’s partnership with OpenAI Inc does not qualify for an investigation.
The CMA has concluded that the tie-up does not fall under the merger provisions laid out in the Enterprise Act 2002.
The regulator had decided to look at the partnership, after a bout of leadership and boardroom turmoil at OpenAI which resulted in the firing and rehiring of CEO Sam Altman, and Microsoft getting a non-voting observer seat on the OpenAI board.
A Microsoft spokesperson has welcomed the CMA’s decision, saying the partnership with OpenAI will “promote competition, innovation, and responsible AI development”, adding
M&S store staff get 5% pay rise
Marks & Spencer (MKS.L) is handing its 50,000 shop workers a 5% pay rise from 1 April, it has been revealed, costing the company £95m.
Pay for UK customer assistants will go up to at least £12.60 an hour, while those in London will get £13.85 an hour.
The move comes ahead of the 6.7% rise in the UK’s national minimum wage to £12.21 an hour for most adults from next month.
Stuart Machin, M&S chief executive, said:
The problem with forcing employees to list workplace achievements
For some workers, compiling a weekly progress report is a routine part of their job, and forgetting to do it usually carries little or no consequences.
However, the ramifications can be more severe for others – as many US federal employees found out when they received an email instructing them to submit their weekly accomplishments or face having to quit. Elon Musk, who leads the White House’s Department of Government Efficiency (DOGE), warned on X: “Failure to respond will be taken as a resignation.”
While the latest move by the Trump administration to curtail government spending through funding cuts and firings may not apply to everyone, the situation does highlight the potential pitfalls of employers asking staff to compile a list of what they’ve done over a certain period.
Service sector firms cut jobs at the fastest rate since 2020
Firms in the UK service sector cut jobs at the fastest rate since 2020 last month as they battled weak demand and growing costs ahead of tax and wage rises in April.
The S&P Global UK services PMI survey came in at 51 in February, slightly up from 50.8 recorded in January.
Any reading above 50 means a sector is in growth, while a score below this means it is shrinking.
The February score was slightly behind the 51.1 reading predicted by a consensus of economists.
Companies are facing growing costs when the minimum wage and employer taxes rise at the start of the new financial year in April.
But about a quarter of services firms polled reported that they were shedding jobs in February, citing the rising payroll costs as well as subdued market conditions and geopolitical uncertainty.
Tim Moore, economics director at S&P Global Market Intelligence, said services sector firms had seen a “clear loss of growth momentum since last autumn”.
Market movers at midday
As we sail into the afternoon, here’s a quick look at what’s been happening in equity markets this morning:
Games Workshop (GAW.L) surged to the top of the FTSE 100 (^FTSE) as it lifted guidance for the full year, saying trading in January and February had been ahead of expectations, with strong trading across both the core business and licensing.
Barclays (BARC.L) also rose sharply after an upgrade to ‘outperform’ by BNP Paribas Exane.
Breedon (BREE.L) racked up strong gains after full-year results and as it announced the acquisition of US construction materials and surfacing solutions business Lionmark for $238m (£187m).
Wealth management outfit Quilter (QLT.L) jumped as it lifted its full-year dividend by 13% after a strong end to 2024, as the company reported double-digit profit growth and a big increase in assets under management and administration.
Moonpig (MOON.L) shot higher after an initiation at ‘outperform’ by RBC Capital Markets.
New car sector down 1%
The new car market remains sluggish, with February marking the fifth consecutive month of declining sales, down 1% to 84,054 units.
According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), rises in private and business buyer volumes were offset by a 4% fall in fleet registrations, which have driven previous market growth.
Battery electric vehicle (BEV) deliveries rose 41.7% to 21,244 units, accounting for one in four new car registrations.
ECB expected to deliver 25bp rate cut on Thursday
The European Central Bank (ECB) is expected to deliver a 25bp rate cut on Thursday, with comments on the future path in focus.
It comes after executive board member Isabel Schnabel told the Financial Times that the central bank “should now start to debate a pause or a halt to rate cuts.”
Here’s where the key rates currently stand:
Deposit facility rate: 2.75%
Main refinancing rate: 2.90%
Marginal lending facility: 3.15%
Dave Chappell, senior fund manager, fixed income at Columbia Threadneedle, said:
UK’s cheapest supermarket revealed
Aldi has been named the cheapest supermarket in February, with an average household basket full of groceries and other essentials coming in at £182.64, a study by consumer group Which? found.
Lidl came in second, with the same shopping list costing only £1.87 more at £184.51 with the supermarket’s loyalty scheme Lidl Plus and £2.30 more without, at £184.94.
Aldi shoppers saved an average of £63.15 over the month compared with customers at Waitrose, which at £245.79, was the most expensive retailer.
The basket of 100 items cost £201.85 at Asda, £205.31 at Tesco (TSCO.L) with a Clubcard, £212.98 at Morrisons with a More card, £213.46 at Sainsbury’s (SBRY.L) with a Nectar card, and £230.90 at Ocado (OCDO.L).
Gen H, TSB and Coventry announce cuts but brokers issue fees warning
Mortgage rates continue to be cut by lenders as competition warms up and swap rates fall slightly.
Gen H is cutting fixed rates by up to 0.3%, with improvements to their core and homebuying bundle, and existing client products for renewals.
Meanwhile, TSB has just launched a sub-4% 2-year fixed for their existing clients looking for a new deal, but it comes with a fee of £1495.
Coventry BS have also announced cuts to both interest only and offset deals, which will launch Friday.
Sean Horton, owner at Respect Mortgages said:
Stephen Perkins, managing director at Yellow Brick Mortgages said:
Euro and pound rise as dollar slides
The euro has extended its gains against the dollar today, up by 0.75% to $1.0704 while the pound is trading nearly 0.4% higher at $1.2842.
Chris Turner, global head of markets at ING, said:
BlackRock to buy Panama Canal ports
BlackRock (BLK) has agreed to buy two major ports on the Panama Canal from their Hong Kong-based owner as part of a $22.8bn deal, following pressure from Donald Trump over alleged Chinese influence at the vital waterway.
The FT has the details:
Under the agreement, the ports’ Hong Kong-based owner CK Hutchison (0001.HK) would sell the business to a consortium including BlackRock, Global Infrastructure Partners and Terminal Investment Limited, according to a company statement on Tuesday. The group would acquire a 90% stake in the company that owns and operates the two ports in Panama.
Trump has frequently alleged that “China is running the Panama Canal”, and rattled Panama when he threatened earlier this year to “take it back” under American control. The Trump administration has also demanded Panama reduce Chinese influence at the canal, claiming Beijing’s involvement in the ports had violated a treaty concerning its neutrality.
The deal announced on Tuesday also includes an 80% stake of CK Hutchison’s ports subsidiaries, which run 43 ports in 23 countries, including in the UK and Germany. It also runs ports in south-east Asia, the Middle East, Mexico and Australia.
The remaining 20% stake is held by port operator PSA, which is owned by Temasek, the Singapore sovereign wealth fund. CK Hutchison said it expected to receive cash in excess of $19bn from the deal, a figure that includes repayment of some shareholder loans. CK Hutchison’s market capitalisation is HK$148bn ($19bn).
The group’s share price surged 22% in morning trading in Hong Kong on Wednesday.
HSBC kicks off search for new boss
HSBC (HSBA.L) has started its process to find a new chief executive for its UK business after appointing Ian Stuart to a newly created role in charge of customer engagement and culture.
The lender said that an update on the position, as well as with the start date for the new role will be provided in due course.
The move is part of the bank’s transition to a “simpler, more dynamic, agile organisation” by operating through four key businesses, HSBC said in a statement.
Group CEO Georges Elhedery said:
It comes as the Asia-focused lender previously unveiled a plan in October to merge some operations and split its geographic footprint into East and West, removing duplicate roles to drive down costs and boost income.
Warhammer owner Games Workshop upgrades guidance
Games Workshop (GAW.L) raised its profit guidance on Wednesday after reporting that January and February trading came in ahead of expectations thanks to a strong performance across the core business and licensing.
The group, which has a deal with Amazon.com (AMZN) for the adaption of the Warhammer 40,000 universe into films and TV series, beat City expectations with half-year profit up by a third to £126.8m.
It was its first set of results as a FTSE 100 (^FTSE) company. Shares have risen more than 50% in the past year.
German debt brake deal announced
The yield on Germany’s two-year government bond jumped 7.8 basis points to 2.093% after a new deal to loosen the German debt brake was announced.
The partners in Germany’s next government have said they will seek to loosen rules on running up debt to allow for higher defence spending.
Economists at Deutsche Bank (DBK.DE) said it was a “historic ‘whatever it takes’ moment”.
The leaders of CDU/CSU and SPD agreed on an even more significant fiscal expansion than expected.
They are in talks to form a coalition government after a national election just over a week ago.
The plan is to make three big changes to the debt brake (which limits new borrowing to 0.35% of GDP) in the very near term, and to convene the outgoing parliament in which the centrist parties still hold a constitutional majority to push this through:
A €500bn special purpose vehicle for infrastructure investment, of which €100bn will be allocated to the federal states, called Länder.
A reform of the debt brake to exempt any defence spending over and above 1% of GDP, effectively permitting open-ended borrowing for defence.
A reform of the debt brake at the Länder level to raise their net borrowing cap from 0% to 0.35% of GDP, as at the federal level.
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