- FTSE 100 opens down as Trump tariffs become reality.
- UK shop prices rise at fastest level in a year.
- US stocks have their worst day of 2025 as NVIDIA sheds over 8%.
- Bitcoin falls 3% erasing weekend gains.
- Defensive stocks offer some respite.
- Brent crude at 3-month low.
- Record sales for Greggs as clouds gather.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100 has retreated from record highs this morning, taking direction from Wall Street where stocks had their worst day of the year so far. The time for talking on tariffs is up for now with Donald Trump imposing a blanket 25% border tax on all imports from neighbouring Canada and Mexico. Canada’s hit back already with a 25% charge on $30bn of US imports with more wide-ranging reciprocal action planned for the end of the month.
According to the British Retail Consortium and NielsenIQ Shop Price Index, despite prices being lower than they were one year ago, shop prices rose 0.4% in February compared to January levels. The biggest spike in twelve months. Basic ingredients such as dairy goods and cereals have driven up food inflation, with non-food inflation also trending higher as January promotions evaporate. With National Insurance and minimum wage increases around the corner, there could be more upward pressure ahead. Clothing was one area where discounting looks to be more entrenched ‘against a backdrop of weak demand.’
The inflationary narrative won’t be helped by the escalation in trade-tensions and will provide little hope to Chancellor Rachel Reeves about the prospects for government borrowing costs to fall. While UK Gilt yields have come back a little from recent peaks. They remain stubbornly high and have edged up again today to over 4.5%.
AI wonder stock NVIDIA was one drag on US markets falling 8.7%, driven by fears of further export restrictions to territories including China. But Chinese sales aren’t as big a part of the picture as they once were at around 13% of the group total. Nearly half of sales now originate in the US. NVIDIA and volatility tend to walk hand in hand these days, but the long-term outlook still looks very strong.
Higher-risk assets such as Bitcoin are also in negative territory. The crypto bellwether has now given up all its weekend gains that had been driven by Trump’s plans for a U.S. strategic crypto reserve, with tariff fears and concerns over genuine economic data points such as global growth now dominating the outlook.
Traditional defensive plays offered some pockets of shelter, with healthcare, real estate, utilities, and consumer staples all in positive territory. Energy stocks slid as oil prices headed towards three-month lows.
Brent crude is now priced at under $71 per barrel as both supply and demand dynamics exert downward pressure on the value of oil. 10% of extra duties on Chinese goods have also come into effect and the potential fall-out of an all-out trade war on energy demand is at the front of traders’ minds. Meanwhile, OPEC+ has unexpectedly announced that it will re-open the taps on 2.2 million barrels of daily oil production from 1 April.”
On a relatively quiet day for stocks the UK’s favourite budget-baker Greggs has posted record results but is battening down the hatches for a challenging 2025.
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“2024 was a year of highs and lows for sausage roll maker Greggs as it surpassed £2bn in revenue for the first time, though conditions deteriorated over the year. Greggs has limited influence over consumer sentiment but continues to perform well in a tougher environment, with its value-focused offering helping to maintain market share.
At best, like-for-like sales growth of 1.7% over the past couple of months can be described as robust, and management’s comments that trends improved in February are fairly encouraging. However, 2025 is shaping up to be a tricky year; consumers are hardly flush with cash, and costs are set to rise as Rachel Reeves’s Budget measures take effect. It’s good news that the company’s growth engines – store expansion, delivery options, evening trade, and digital channels – are all showing continued momentum, giving investors some hope that Greggs can keep pushing forward despite sector headwinds.”
