- FTSE 100 and European futures down.
- Trump to hit button on Canadian and Mexican Tariffs next week.
- Hopes of UK trade deal alive after Starmer talks.
- US GDP growth slows as expected in Q4. PCE data later today.
- NVIDIA drags tech stocks despite earnings beat.
- Brent Crude pulls back at close to $73 per barrel.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“FTSE 100 and European futures are pointing to a shaky start for stocks this morning, echoing weak sessions on Wall Street and Asian exchanges. Tariffs continue to drive the narrative, and talk of a reprieve for Canada and Mexico has evaporated as next Tuesday’s deadline approaches. President Trump has also vowed to slap an additional 10% import duty onto Chinese goods, as he leans heavily on the anti-fentanyl narrative to justify the trade restrictions. The only certainty in this saga is uncertainty, so keep a close eye on developments between now and 4 March. Next on the agenda is reciprocal tariffs pencilled in for 2 April with other major US trading partners. The EU, in particular, will be in focus. An amicable start to talks with UK premier Keir Starmer looks to have set the tone for a potential trade deal with the UK but with no details outlined it has not been enough to boost enthusiasm for London listed shares.
Tariff talk is also stoking inflation fears and US Personal Consumption Expenditure (PCE), the Fed’s main measure of price rises, is out later today. January’s annualised core PCE is expected to have cooled slightly from 2.8% in December to around 2.6% – still above the target level of 2%. Any surprise beyond 2.6% could spell trouble for markets against a backdrop of tepid economic data and fading hopes for further interest cuts. There were no surprises in fourth quarter US GDP numbers, which slowed to 2.3% from 3.1% in the previous three months. But if consumer confidence is anything to go by, growth may be harder to find later in the year. Earlier in the week the Conference Board expectations index posted its biggest drop since August 2021, with all post-election optimism apparently evaporated as worries about job prospects and inflation take a toll on the outlook for the average American.
NVIDIA’s fourth quarter earnings beat hasn’t been enough to please investors either. The shares slid throughout the day, finishing down 8.5%, as concerns about slightly weaker gross margin guidance overshadowed positive news on demand. There was contagion across the Magnificent 7, with all members having a down day. The company’s investing some margin into the ramp of its next generation Blackwell chips. NVIDIA’s chief financial officer Colette Kress tried to reassure in the analyst call, saying she expects gross margins to improve from the low-seventies back to the mid-seventies once production is in full flow. The sell-off looks to have abated for now, with the stock price rising slightly in after-hours trading.
Brent Crude’s attempt to rally has been halted in its tracks, with prices per barrel back at around $73 after briefly reaching $74 in Thursday’s trading. February prices look set to post the biggest monthly decline since September, as growth and tariff concerns fail to offset fears of supply tightening from other interventions such as Donald Trump’s cancellation of Chevron’s Venezuela license.”
