- Tariffs paused for a host of countries, China battle continues
- Gold continues to see strong demand
- Alphabet confirms $75bn investment in data centres
- Oil dips on escalating US-China trade tensions
- Tesco stands ready for a price war
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“The White House has finally seen some sense and given a whole host of countries a 90 day pause, with reciprocal tariffs immediately lowered to 10%, while isolating China in a tense battle. Was this Trump caving to pressure or his master plan all along? Who knows, but markets ripped on the news with the S&P 500 posting its 9th best day in history and the FTSE 100 opening a more subdued 1.2% higher this morning.
We still don’t know if this tariff strategy is going to do more harm than good, and this should not be confused with a resolution to the underlying impact on areas like inflation and global growth. But it does give a host of countries a chance to come to the table and barter for a deal, while offering companies some much needed time to make whatever supply chain adjustments they can. What this means for the EU is still unclear, but given countermeasures were already declared it could find itself on Trump’s naughty list, as ever we await more clarity.
Gold continues to be in favour despite investors flocking back into riskier assets. Ongoing tensions with China and the prospect of higher inflation are both acting as demand drivers. It’s rare for Fed minutes to take a backseat, but the world has significantly shifted since their last meeting, so yesterday’s release felt a bit stale. Still, the near unanimous concern over higher inflation and lower growth is unlikely to have changed, adding to the appeal of gold.
The best move for investors is to stick to their longer-term strategies, there’s plenty of drama still to come.
Alphabet has reaffirmed plans to spend a massive $75bn this year to expand its data center capacity. There’s genuine concern that investment plans might slow as even the world’s largest companies reassess the landscape, but this is the first clear sign that investing in AI trumps everything else. The narrative remains the same: AI is a multi-decade opportunity, and falling behind now could mean the difference between being a leader in ten years or a name of the past. This is clearly positive news for Nvidia, which is set to capture a large share of this year’s AI-related investment.
Brent crude oil slipped toward $64 a barrel on Thursday, trimming gains from a rebound the day before. Prices are being dragged down by escalating US-China trade tensions after both countries sharply raised tariffs on each other’s goods in their ongoing tit for tat, overshadowing a broader de-escalation of trade tensions.“
The writer holds shares in Nvidia.
Aarin Chiekrie, equity analyst, Hargreaves Lansdown:
“Tesco continues to stand out as a British powerhouse, with further sharpening of its proposition helping the group record its highest market share in nearly a decade. Despite a slight pullback in its share price of late, the underlying story looks good as revenue and profits motor higher.
Fears of a price war that could squeeze profitability have weighed on sentiment across the sector recently, but it hasn’t materialised yet. Even if it does, Tesco reckons it’s in the most competitive position it’s been in for many years, helped by the ALDI price match and Clubcard prices keeping customers loyal. And despite recent headlines, ASDA doesn’t appear to have the financial firepower to disrupt this dynamic.
Looking ahead, guidance for this year looks a little conservative, leaving room for positive surprises. With operations focussed on this side of the Atlantic, President Trump’s tariffs pose little threat to disrupt operations directly. Shareholder returns remain a key part of the investment story, with dividends and a new £1.5bn share buyback programme backed by strong cash flows. With the valuation sitting below the long-term average, this looks like an attractive opportunity for investors looking to avoid some of the US-led volatility.”
