- Asian markets rally on hopes of tariff exemptions
- Halfords lifts guidance after strong trading
- De La Rue agrees takeover
- Dollar slips again
- Brent holds steady at $65
Steve Clayton, head of equity funds at Hargreaves Lansdown:
“Futures markets were suggesting a steady start to trading in London and Europe after Asian markets rallied overnight. Sentiment was boosted after US President, Donald Trump suggested that he might pause the introduction of some of his proposed tariffs affecting the automobile sector. Japanese car makers were amongst the leading risers in Tokyo. European investors picked up the baton too, with the prices of BMW, Mercedes and Renault all rising in early European trading. With no firm numbers on the table, these moves are pure guesswork, but with autos seen as one of the worst impacted sectors in the trade war initiated by the US, investors are taking whatever comfort they can find in President Trump’s comments.
Halfords have reported a strong end to their financial year, steering the market to expect an outcome toward the top of their previously guided £32m – £37m profit figure for the year just ended. Demand for tyres may have run flat, but the group raised sales in Servicing, Maintenance and Repair in their Autocentres, while like for like sales in both Motoring and Cycling turned positive toward the year end in the retail stores. The group’s cost-management plans offset over £30m of cost pressures in the year, but the group warn that they face a £23m headwind in FY26 from the hike in National Insurance charges for employers. Prices in stores and the Autocentres look set to rise as a result and the group flag that while they do not trade directly with the US, their supply chain may face tariff impacts. The group will push hard on rolling out their Fusion format, which brings retail stores and autocentres into a single location, citing sales uplifts of as much as 50% from sites transformed to date. Lastly, Halfords announced the departure of CEO Graham Stapleton, to be replaced by Henry Birch, former CEO of the Very Group.
De La Rue, the 211 year old currency printer that supplies banknotes to around half of the world’s note issuers has agreed to be bought out by US private equity firm, Atlas FRM for 130p per share. De La Rue is in the process of selling off its Authentication division, so Atlas will be acquiring a pure-play currency operation. The deal represents a premium of 19% to the share price immediately before the deal was first mooted and more than three times the level that the shares had sunk to in mid-2023. Investors will be relieved perhaps to see such a recovery. But those with longer teeth are more likely to remember that De La Rue’s directors fought off an approach by French rival Oberthur back in 2010, an approach that was valued at over 900 pence per share. Whoops.
President Trump has often said that he wants a weaker dollar, because it could help US exporters to win business and it looks like he is getting his way. The greenback has slipped further and is now trading at $1.32 to the pound, compared to $1.22 when Trump took office in January. It’s the same story against the euro, with a $ now worth just 0.88 euros, having been close to parity back in mid-January. With tariffs taking effect against a weakening currency backdrop, the Federal Reserves task of managing inflation while supporting US employment is not getting any easier.
Crude oil has taken a bashing of late and today looks to be holding steady at around $65.2 for Brent crude futures. Oil faces something of a perfect storm currently, with trade wars raising the spectre of reduced demand for oil, just as production restraint within OPEC seems to be breaking down, pushing more oil onto the markets.”
