14th Apr 2025 07:43
(Alliance News) - The FTSE 100 was called to open higher on Monday, with the US government announcing exemptions to its import tariffs covering a range of consumer electronics.
A notice late Friday by the US Customs & Border Protection office said smartphones, laptops, memory chips, and other products would be excluded from the global levies that Trump rolled out a week ago, partially dialling down the US' trade war with China.
Nonetheless, Pepperstone's Michael Brown early on Monday commented: "Ugh, here we go again then. Surely this week can't be quite as crazy as last. Surely?! No, I'm not going to take my chances on that one either, given how choppy things have been of late."
He continued: "At this point, though, the actual tariff % doesn't really matter at all. With tariffs this high, we effectively have a trade embargo between the world's two largest economies. Only those products that are in ridiculously high demand and can't be sourced anywhere else, or have humongous margins, will continue to be imported into the US.
"The weekend did bring some excitement that smartphones, and other tech, will be excluded from the US 'reciprocal' tariffs, but this is likely down to them instead being levied with a semiconductor-specific tariff...What worries me even more than that, though, is the continued dislocations that we see in the Treasury complex.
"Once more, we saw benchmarks sell-off across the curve as the week drew to a close, with this move now feeling a lot less like a liquidation to fund margin calls, and a lot more like a loss of confidence in the US economy, and its institutional credibility. Think Liz Truss, October 2022, on steroids."
In corporate news, Ashmore reported a decrease in assets under management, but said there are "increasingly powerful reasons" for investors to "rebalance" away from the US and towards 'Emerging Markets'.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 141.8 points, 1.8%, at 8,105.98
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Hang Seng: up 2.0% at 21,350.66
Nikkei 225: up 1.6% at 34,120.61
S&P/ASX 200: up 1.3% at 7,746.40
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DJIA: closed up 619.05 points, 1.6%, at 40,212.71
S&P 500: closed up 1.8% at 5,363.36
Nasdaq Composite: closed up 2.1% at 16,724.46
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EUR: higher at USD1.1404 (USD1.1339)
GBP: higher at USD1.3147 (USD1.3057)
USD: lower at JPY142.55 (JPY143.46)
GOLD: lower at USD3,234.49 per ounce (USD3,239.41)
OIL (Brent): higher at USD64.82 a barrel (USD63.43)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
08:30 CEST Switzerland producer and import prices
11:00 EDT US consumer inflation expectations
13:00 EDT US Federal Reserve Governor Christopher Waller speaks
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China's exports surged in March while imports remained weak, data from the General Administration of Customs showed Monday. China's exports jumped approximately 12% year-on-year in March, accelerating from the 2.3% growth recorded across January and February. The latest figure exceeded the 4.4% increase expected according to the FXStreet-cited consensus forecast. Imports dropped 4.3% in March, falling more sharply than the expected 2% decline, but moderating from the 8.4% contraction seen in January and February. China reported a trade surplus of USD102.64 billion in March, beating the USD77 billion forecast but down from USD170.51 billion previously.
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The Trump administration has exempted a raft of consumer electronics from its import tariffs – offering relief to US tech firms and partially dialling down a trade war with China. A notice late Friday by the US Customs & Border Protection office said smartphones, laptops, memory chips, and other products would be excluded from the global levies President Trump rolled out a week ago. The move came as retaliatory Chinese import tariffs of 125% on US goods took effect Saturday, with Beijing standing defiant against its biggest trade partner. The exemptions will benefit US tech companies like Nvidia and Dell, as well as Apple, which makes iPhones and other premium products in China.
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New US tariffs on semiconductors will be announced "over the next week," Trump said Sunday. "The tariffs will be in place in the not distant future," he said.
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The US Federal Reserve is "absolutely" prepared to intervene to help calm nervous financial markets, a senior central bank official said. The Fed would "absolutely be prepared" to deploy its various tools to help stabilise the financial markets if the need arose, Boston Fed President Susan Collins told the Financial Times in an interview. Any intervention by the Federal Reserve would depend on "what conditions we were seeing," added Collins, who is one of 12 voting members of the Fed's all-important rate-setting committee this year. "The higher the tariffs are, the more the potential slowdown in growth as well as elevation and inflation that one would expect," Collins said in a separate interview with Yahoo Finance, adding that she expects inflation to rise "well above" 3% this year, but no "significant" economic downturn. Her comments indicate she expects price growth to remain stuck firmly above the US central bank's long-term target of 2%, likely preventing the Fed from being able to cut interest rates in the coming months.
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Tariffs rarely deliver the promised economic benefits, according to WTO Chief Economist Ralph Ossa. In Friday's blog post, Ossa does not mention the US, which aims to boost domestic production with hefty tariffs, by name. "At their core, tariffs are simple: they raise the domestic price of imported goods," wrote Ossa. "But their effects ripple through the economy in complex ways - altering prices, wages, exchange rates and trade patterns." Tariffs could favour domestic industries that compete with imported goods. However, this draws labour and capital away from the exporting sector, he says.
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UK businesses hit by Trump's tariffs are set to receive extra support as the government announced a new export finance package worth billions of pounds. Chancellor Rachel Reeves said thousands of businesses would benefit from the move, which will expand UK Export Finance's support for firms by GBP20 billion. Up to GBP10 billion of that support will be used specifically for firms "impacted in the short term by the current situation", according to the Treasury. Reeves said: "The world is changing, which is why it is more important than ever to back our world-leading businesses and support them to navigate the challenges ahead. "Today's announcement will do that just, with thousands of businesses right across the country set to benefit.
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The UK business secretary has issued instructions to British Steel, using the emergency powers approved by Parliament on Saturday to save the Scunthorpe blast furnaces. A government source confirmed that Jonathan Reynolds had given directions to the company following the extraordinary sitting of Parliament. But they declined to give details of those instructions, saying they would not provide a running commentary on them. On Saturday, MPs and peers had approved emergency legislation without opposition, giving Reynolds the power to require British Steel to keep the Scunthorpe plant going after talks with its Chinese owner, Jingye, broke down. In a highly unusual step, the government had recalled Parliament from its Easter recess at short notice, fearing that the blast furnaces could be irrevocably closed within days without urgent action.
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The average price tag on a UK home has jumped by more than GBP5,000 in the space of a month to hit a new record high, according to Rightmove. The average asking price in April for a property coming on the market is GBP377,182, which is GBP5,312 or 1.4% higher than the average asking price of GBP371,870 in March. Rightmove said that this is a bigger-than-usual increase for April, with a long-term average increase for the month at 1.2%. The record high comes despite stamp duty discounts becoming less generous for some buyers from April 1 onwards. Stamp duty applies in England and Northern Ireland. On the upside for home-buyers, some mortgage rates have been edging down in recent days, with Barclays cutting several rates below 4% on Friday last week.
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BROKER RATING CHANGES
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UBS raises Tesco price target to 363 (360) pence - 'buy'
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Barclays raises Diageo price target to 2,580 (2,490) pence - 'overweight'
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Berenberg cuts B&M European Value Retail price target to 590 (630) pence - 'buy'
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COMPANIES - FTSE 100
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ConvaTec announced that the outlook for its InnovaMatrix products has improved due to the postponement of local coverage determinations in the US, by the Centers for Medicare & Medicaid Services for skin substitute grafts or cellular and tissue-based products for the treatment of diabetic foot ulcers and venous leg ulcers. "We previously guided to InnovaMatrix revenue of approximately USD50m in FY25," ConvaTec said. "As a result of the postponement of the LCD, and reflecting the ongoing uncertainty in the market, we now expect InnovaMatrix sales of approximately USD75m in FY25. There is no change to any other financial guidance."
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COMPANIES - FTSE 250
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Ashmore Group reported that assets under management totalled an estimated USD46.2 billion as of March 31, down 5% from USD48.8 billion at December 31. This USD2.6 billion decrease comprised positive investment performance of USD1.3 billion and net outflows of USD3.9 billion. The London-based investment firm said subscriptions activity in the period comprised new mandate wins, notably from Asian institutions; however, the inflows were outweighed by a small number of large institutional redemptions towards the end of the quarter. However, Chief Executive Officer Mark Coombs commented: "These decisions do not appear indicative of a broader pattern of client activity and encouragingly, levels of investor interest in Ashmore's Emerging Markets fixed income and equity strategies continue to be strong." He added that "market volatility has heightened due to increased tariffs and changes to terms of global trade", and that "there are increasingly powerful reasons for investors to rebalance their asset allocations away from the US capital markets".
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OTHER COMPANIES
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Cerillion issued a trading update for the half year ending September 30. The London-based billing, charging and customer relationship management software company expects revenue of approximately GBP20.9 million, down on-year from GBP22.5 million, "reflecting the anticipated higher weighting of software licence renewals/extensions to the second half". Adjusted earnings before interest, tax, depreciation & amortisation is forecast at approximately GBP10.0 million, down from GBP11.0 million, and Cerillion's "new customer pipeline remains very strong and a little ahead of last year's record level". Net cash was around GBP31.0 million at March 31, up from GBP26.6 million one year prior. "The company remains very well-placed to meet market expectations for the current financial year and beyond," Cerillion continued. "This is supported by a number of factors, including January's major new contract win worth USD11.4m, a term renewal worth GBP5.4m agreed in March with a major European customer, as well as another significant European customer recently confirming its intention to use Cerillion's BSS/OSS software...This major migration programme is expected to benefit revenues in both the current and next financial year."
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ensure Group announced that Ageas has agreed to acquire ensure from Bain Capital for GBP1.30 billion, in a deal which "creates [a] multi-channel motor and home insurer with broad customer appeal across the UK". "The proposed transaction is fully aligned with Ageas's strategic priorities for M&A in Europe under Elevate27," Ageas commented. "It increases Ageas's European markets presence through the acquisition of a controlled entity, reinforces its positioning in the UK, generates shareholder value from the realisation of synergies and enhances the cash generation of the group." It continued: "The combination of Ageas UK and esure will create the third largest UK personal lines platform with a balanced and diversified distribution spanning Direct, PCW, brokers and partnerships. The acquisition of esure will enable Ageas UK to accelerate the diversification of its distribution strategy into the important PCW channel in the UK market." Ageas expects the transaction to complete in the second half of 2025, although it remains subject to regulatory approvals.
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By Emma Curzon, Alliance News reporter
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