- Wait and see mood on the markets, amid countdown to ‘’Liberation Day’’ announcements.
- Wall Street makes tentative gains and London market has opened lower.
- Trump camp makes diputed claims that tariffs will raise $6 trillion.
- Gold hovers near record highs as investors continue to seek out safer havens.
- UK mulls concessions on agriculture and digital services tax to mollify the US.
- Convenience food manufacturer Greencore is to gobble up its rival Bakkavor
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’Investors are on tenterhooks as the clock ticks down what’s expected to be the biggest wave of tariffs on US trading partners. It’s been dubbed Liberation day by President Trump, but it’s more like entrapment day, with more countries set to be tangled up in a web of fresh duties. The internationally focused FTSE 100 is on the back foot in early trade as concerns swirl about the effect on growth prospects for economies around the world. Wall Street made some tentative moves of recovery after the week’s early losses, a trend likely to continue later. But a pattern of one step forward, two steps back has been emerging as hopes for more leniency in trade policy keep being dashed, and the Trump administration seems intent on playing hardball.
The lofty aims of building up American manufacturing and curtailing the might of Chinese technology is in some ways understandable, but given the strategies deployed have been criticised as economically incoherent and could backfire on the US. Trump’s aides have claimed that the policy will raise $6 trillion in revenue over the next ten years. But that’s only if consumer behaviour remains unchanged, which is highly unlikely if as expected imported goods shoot up in price. US businesses and consumers are likely to bear the immediate brunt in the form of increased costs, and as a knock-on effect, higher interest rates look set to linger for longer.
Stubborn inflation and stumbling growth are the unpleasant ingredients of stagflation, which risks bedding in. and despite the hopes of a boost to US manufacturing the latest snapshot has shown a slowdown of activity. The ISM manufacturing PMI for the US fell to 49 in March from 50.3 in February with anything under 50 indicating a contraction. Price pressures felt by firms soared to the highest level since June 2022, and are an indication firms are gearing up for higher costs ahead. .
Gold is still hovering near record levels after a glittering run upwards, as investors seek out safer havens for their money. President trump’s capricious nature and willingness to turn old friends into new foes is unnerving and has sent ominous clouds over the global economy. Rules-based policy making which the world has relied on to navigate trading relationships has been ripped up. This is a transactional government focused on delivering quick wins to satisfy election promises of putting America first, rather than strategically nurtured relationships. Given that decisions can be made and reversed on a whim, new alliances are forming around the world, with China, Japan and South Korea, agreeing to strengthen trade ties.
The UK is unlikely to be immune and is reportedly considering concessions aimed at mollifying Trump such as lowering tariffs on some US meat imports and reducing the headline rate of its digital services tax, which would benefit large American tech firms. Ministers appear to have weighed up that these are reductions worth offering up, as insurance against the risk of a blanket of punitive taxes on UK exporters, which could cost the economy much more. But this is a hard message to pull off, as Trump’s demands appear to be appeased, while there are hints of austerity in the swathes of spending cuts planned for government departments.
Convenience food manufacturer Greencore looks set to gobble up its rival Bakkavor in a £1.2 billion takeover deal. Greencore has been courting Bakkavor for some time, and finally its increased offer has hit the spot. Greencore clearly believes it has the winning recipe for success and is keen to expand further into the food service market. Greencore already supplies major supermarkets in the UK and has seen a surge of appetite for its food-to-go ranges with sushi sales in particular doing well, with growth of around 15%. It’s satisfying the hunger pangs of workers and travellers on the go and is clearly fired up to pursue a next round of growth.
Oil prices have fallen back as traders mull the prospect of lower demand for energy if Trump’s tariffs, as expected, act as a drag on global growth. But the latest threats from the US President to slap secondary sanctions on Russia and Iran are keeping a floor on prices, given that such moves could put more of a squeeze on crude supplies.
