27th Mar 2025 08:00
(Alliance News) - London is called to open lower on Thursday, as the market digests the latest US tariff targeting the automobile industry, and ahead of UK Prime Minister Keir Starmer's appearance at a summit in Paris on Ukraine ceasefire talks.
Gold continues to climb, reaching a high of USD3,038.65 an ounce, while the pound shows signs of recovery against the US dollar after lower trading following the UK spring statement on Wednesday.
Meanwhile, US President Trump's introduction of a 25% tariff on imported cars could spell out trouble for the oil market, Exness analyst Maria Agustina Patti notes.
"Concerns over tighter global supply could continue to provide support, driven by US tariff threats on Venezuelan oil buyers and ongoing sanctions on Iranian oil. Geopolitical risks could heighten market uncertainty, as traders remain cautious about any developments that could exacerbate supply disruptions," Patti continued.
In early UK corporate news, FTSE 100's LondonMetric proposes a takeover of real estate investor Highcroft, while Marula Mining touts the receipt of long-awaited environmental approval at its Blesberg mine.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 0.4% at 8,658.19
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Hang Seng: up 0.6% at 23,622.54
Nikkei 225: closed down 0.6% at 37,799.97
S&P/ASX 200: closed down 0.4% at 7,969.00
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DJIA: closed down 132.71 points, or 0.3%, at 42,454.79
S&P 500: closed down 64.45 points, or 1.1%, at 5,712.20
Nasdaq Composite: closed down 372.84 points, or 2.0%, at 17,899.02
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EUR: down at USD1.0766 (USD1.0788)
GBP: up at USD1.2910 (USD1.2894)
USD: down at JPY150.31 (JPY150.53)
Gold: up at USD3,031.90 per ounce (USD3,018.09)
(Brent): down at USD73.54 a barrel (USD73.95)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
09:00 GMT eurozone money supply
12:30 GMT US initial jobless claims
12:30 GMT US wholesale inventories
12:30 GMT US quarterly personal consumption expenditures
12:30 GMT US GDP
12:30 GMT US trade balance
14:30 GMT US EIA natural gas stocks
15:00 GMT US Kansas City Fed manufacturing activity
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President Donald Trump has announced 25% tariffs on cars and parts imported into the US in a bid to boost the domestic auto industry. "This will continue to spur growth like you haven't seen before," he said in the announcement from the Oval Office on Wednesday. The 25% tariff will go into effect at 12:01 am eastern time on April 3 and apply to all cars not made in the US, meaning even US manufacturers with models made overseas would be hurt under the scheme. EU Commission President Ursula von der Leyen said: "I deeply regret the US decision to impose tariffs on European automotive exports." She added the EU would "continue to seek negotiated solutions, while safeguarding its economic interests". Meanwhile, Japanese Prime Minister Shigeru Ishiba said his government is considering "appropriate measures" in response, while Canadian Prime Minister Mark Carney described the tariffs as "a very direct attack".
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US tariff plans could increase inflation by as much as 1.2 percentage points if they are fully implemented, a senior Federal Reserve official said. Trump made tackling inflation a key campaign issue in the run-up to the 2024 presidential elections. But tariffs – his signature economic policy since his return to office – could have the opposite effect, St Louis Fed President Alberto Musalem warned during a speech in Kentucky on Wednesday. "New tariffs are expected to have both direct and indirect effects," said Musalem, who is a voting member of the Fed's rate-setting committee this year. Tariffs are likely to cause a direct, time-limited increase in prices, and another indirect – or second-round – effect, which could have a "more persistent" impact on inflation, he said. US inflation remains stuck above the Fed's long-term target of 2%, according to its favoured personal consumption expenditures measure. Staff at the St Louis Fed estimate that, "if fully implemented, a 10% increase in the effective US tariff rate – roughly the increase that would be associated with tariff hikes announced to date – could increase the PCE inflation rate by as much as 1.2 percentage points," Musalem said. "The direct and one-time price-level effect is estimated to be on the order of 0.5 percentage points," he said, adding that the indirect effect would likely be around 0.7 percentage points. "From the standpoint of monetary policy, it could be appropriate to 'look through' direct effects of higher tariffs on the price level and at the same time 'lean against' indirect and second-round effects," he said. "I would be wary of assuming that the impact of tariff increases on inflation will be entirely temporary," he continued, adding that a "patient and vigilant approach" to monetary policy was appropriate.
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The UK government is engaged in "extensive" discussions with the US about what the tariffs will mean for the UK, Chancellor Rachel Reeves has said. She said the UK and US economies are "closely intertwined". She told Times Radio: "The Prime Minister went to Washington just a couple of weeks ago and met the US president, and we are now having extensive talks with our counterparts in the US to protect trade between our countries, those conversations will continue. "Obviously, the announcements of tariffs is something that the US plan to bring in next week, but we are in discussions about what that means for the UK. A million British people work for American firms. A million Americans work for British firms. Our two economies are so closely intertwined. I believe – and we make this case to the US – that free trade, fair trade, is good for both of our countries, but let's see where we get to in the next few days." Around four out of five cars made in the UK are exported.
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UK car production has fallen for the twelfth month in a row, figures from the Society of Motor Manufacturers & Traders reveal. The total for cars and commercial vehicles was down by 12% to 82,178 in February compared with a year ago. Manufacturers turned out 10,787 fewer cars, vans, trucks, taxis, buses and coaches than last February, with model changeovers and plant restructuring among the reasons, said the SMMT. The EU remained the largest market for UK car exports, taking just over half, followed by the US at 20% and China at 6.3%. Shipments to the EU and China fell by 9.6% and 11% respectively, while those to the US increased by 35%. Production of battery electric, plug-in hybrid and hybrid cars fell by 6% last month but their share of production so far this year was 40%, up from 36% a year ago. Mike Hawes, SMMT chief executive, said: "These are worrying times for UK vehicle makers... Without substantive regulatory easements our manufacturing viability remains at risk and the UK's transition to zero emission mobility under threat."
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UK Prime Minister Keir Starmer will accuse Vladimir Putin of "hollow promises" in ceasefire talks as he co-hosts a summit of allied nations in Paris amid military planning to enforce a potential settlement in Ukraine. The Prime Minister will attend the meeting of the so-called coalition of the willing hours after French President Emmanuel Macron suggested a European peacekeeping force could "respond" if attacked by Russia. Starmer will present the outcomes of a series of defence talks at London's Northwood military headquarters, where officials were drawing up a strategy to support Kyiv and deter future aggression from Moscow. Number 10 said the Prime Minister will tell allies that "excellent progress" was made and Europe is "mobilising together in pursuit of peace, but now we must keep up the momentum". He will also accuse the Russian president of "playing games" with an agreement for a naval ceasefire in the Black Sea after separate talks between US negotiators and their counterparts in Kyiv and Moscow.
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Proposals by the UK government to create a "smoke-free generation" by gradually raising the age at which tobacco products can be bought have cleared the House of Commons. Anyone born on or after January 1 2009 will be prevented from legally smoking if the Tobacco & Vapes Bill becomes law. The bill also aims to ban the sale of all vaping or nicotine products to under 18s and allows ministers to regulate the flavours, packaging, and display of vapes so that they do not appeal to children. A total ban on vape advertising and sponsorship, including displays seen by children and young people such as on buses, in cinemas and in shop windows, is included in the proposals. The bill cleared the House of Commons on Wednesday evening after MPs voted 366 to 41, majority 325, to approve it at third reading.
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Lower-income households in the UK are forecast to become GBP500 a year poorer over the next five years as a result of the chancellor's spring statement, according to the Resolution Foundation think tank. Rachel Reeves has received criticism from unions and political opponents after she cut welfare and squeezed Whitehall budgets in her spring statement, with some three million families on incapacity benefits expected to be hit by the changes. An estimated 250,000 more people, including 50,000 children, will be left in relative poverty after housing costs by the end of the decade as a result of the government's squeeze on welfare, according to its own impact assessment. The changes will affect about three million families on incapacity benefits, while 800,000 claimants will have reduced personal independence payments, Pip. Initial analysis from the Resolution Foundation said the combination of a weak economic outlook and benefit cuts that fall disproportionately on lower-income families means that average income for the poorest half of households is on track to fall by GBP500 on average over the next five years.
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The EU imported more Russian gas in 2024 despite Moscow's ongoing war against Ukraine, according to a report by think tank Ember. The analysis found that EU imports of Russian gas, including both pipeline and liquefied natural gas, rose by 18% compared to 2023. Following Russia's full-scale invasion of Ukraine in February 2022, the EU imposed sanctions on Russian energy sources such as coal and oil. While the bloc aims to phase out Russian gas imports by 2027, the plan is not legally binding. Italy, the Czech Republic and France were among the countries that increased their Russian gas imports last year, Ember found. The think tank stated that imports are expected to rise further in 2025, despite no growth in demand within the EU.
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BROKER RATING CHANGES
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Goldman Sachs raises Barclays price target to 355 (350) pence - 'buy'
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Barclays starts Pets At Home with 'equal weight' - price target 260 pence
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UBS cuts Vistry price target to 450 (495) pence - 'sell'
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COMPANIES - FTSE 100
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LondonMetric agrees the terms for a potential takeover of Highcroft Investments, a UK REIT that owns a portfolio of logistics and retail warehousing real estate assets. Under the deal, Highcroft shareholders will receive 4.65 LondonMetric shares for each Highcroft share. This values each Highcroft share at 842.1 pence, based on LondonMetric's closing price of 181.1p on Wednesday, and values Highcroft's share capital at around GBP43.8 million in total. This is a 40% premium to Highcroft's closing price on Wednesday. Highcroft shareholders will also be entitled to retain the interim dividend of 35p per Highcroft share, and following the acquisition would be entitled to LondonMetric's fourth quarterly dividend for the quarter due to end March 31. LondonMetric expects the acquisition to be earnings accretive for the group, and notes that more than 60% of Highcroft shareholders to date support the deal. "This transaction adds complementary assets in our favoured sectors on an attractive basis across all key property metrics. It supports our strategy of greater consolidation within the sector," says LondonMetric Chief Executive Officer Andrew Jones. "We are confident of our ability to extract economies of scale to deliver both value and earnings accretion. We will immediately begin to integrate the Highcroft portfolio and work towards disposing of approximately 20% of assets that are deemed non-core."
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Sage Chief Financial Officer Jonathan Howell intends to step down from the role on December 31 to focus on "non-executive work", after 12 years with the accounting software maker and seven years as its CFO. Howell will be succeeded by an internal appointment, Jacqui Cartin, effective January 1, 2026. Cartin is currently EVP Group financial controller, and has held various finance leadership roles within the firm since joining in 2018.
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Nigel Farage has agreed to settle his de-banking dispute with NatWest Group nearly two years after a row over the closure of his accounts, which culminated in the resignation of the lending giant's chief executive. The bank has apologised to the Reform UK leader and the terms of the agreement are confidential, according to a joint statement. In July 2023, Farage obtained internal evidence from the bank suggesting his account with Coutts, which is owned by NatWest, had been closed partly due to his political views. Alison Rose was then forced to stand down as chief executive after she admitted to being the source of an inaccurate story about the politician's finances, which said the closure was instead for commercial reasons.
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COMPANIES - FTSE 250
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Gambling software developer Playtech swings to a pretax loss of EUR9.4 million during 2024 on its continuing operations, from a EUR70.4 million profit in 2023. Total revenue grows 4.7% to EUR1.79 billion from EUR1.71 billion, while revenue from its continuing operations rises 10% to EUR848.0 million from EUR771.9 million. Distribution costs prior to depreciation and amortisation are up 10% to EUR553.0 million from EUR500.7 million, while administrative expenses before depreciation and amortisation increase 39% to EUR156.7 million from EUR112.9 million. Playtech sets out new medium-term targets of adjusted earnings before interest, tax, depreciation and amortisation between EUR250 million and EUR300 million, against adjusted Ebitda of 11% to EUR480.4 million in 2024. Playtech says its new targets reflect the structure of its new agreement with Mexican partner Caliplay, ending a long-running dispute with the firm and shifting Playtech toward becoming a predominantly business-to-business operation. The disposal of Snaitech is on track to complete by the second quarter of 2025, which will also count towards Playtech's now discontinued operations. "Our core B2B business had an outstanding year, achieving the medium-term target we set two years ago ahead of schedule. The Americas saw substantial revenue growth, with Wplay in Colombia delivering a particularly strong performance. Meanwhile, our expansion in the US and Canada continues to gain momentum as we sign up and launch with a growing list of operators," says CEO Mor Weizer. Playtech intends to return between EUR1.70 billion and EUR1.80 billion to shareholders via a special dividend.
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OTHER COMPANIES
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Marula Mining celebrates the receipt of environmental authorisation for its Blesberg lithium and tantalum mine, a "very significant and major milestone for Marula and its shareholders". Its South African subsidiary Lithium & Tantalum Mining received a request for financial provision from the South African Department of Mineral Resources & Energy for the issuance of a ten-year mining right for Blesberg. The authorisation will be granted upon Marula's deposit of a ZAR11.9 million, or around GBP510,000, cash guarantee. The mining right will extend over the full 1,051 hectare Blesberg licence area, replacing the current two-year mining permit. Once the authorisation is issued, Marula can expand its planned operations at Blesberg to include the development of a large-scale and conventional open pit mining operation, beyond its current re-processing of historical stockpiles. "Marula can now focus its activities on the larger scale and higher value mining and processing operations at Blesberg and in strengthening our operational footprint and reinforcing our commitment to sustainable mining practices, local economic development, and environmental responsibility," says Chief Executive Officer Jason Brewer.
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By Emily Parsons, Alliance News reporter
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