7th Mar 2025 07:48
(Alliance News) - Stocks were called lower on Friday, as investors digest the latest US tariff-related news and the European Central Bank's as-expected quarter-point rate cut.
"The longest hour of this long week came yesterday, in the form of ECB President Lagarde's press conference," commented Pepperstone's Michael Brown. "When a G10 central banker starts waffling about oceans, and water temperature, to explain their policy decisions, it tends to suggest they are more than a little out of their depth!
"In any case, the main takeaway from the March ECB meeting...was a statement tweak, with the policy stance now being defined as "meaningfully less restrictive". A victory for the hawks, here, with that line being an implicit nod towards the possibility of a slower pace of cuts going forwards, particularly with the deposit rate now at the top end of where neutral may sit.
"Still, with the risks of undershooting the 2% inflation target still high, and growth risks being tilted firmly to the downside, the direction of travel for rates remains lower."
Brown continued: "For the common currency, though, the ECB's hawkish pivot, coupled with Germany's turning on of the fiscal taps, is creating something of a 'best of all worlds' scenario. The EUR traded north of the 1.08 figure yesterday for the first time since last November, while being on track for its best weekly gain in five years. EUR bulls out there can be found singing 'Ain't no stoppin' us now…We're on the move…Ain't no stoppin' us now…We've got the groove'."
In corporate news, Alliance Witan underperformed against its benchmark but still delivered a "strongly positive" NAV total return for last year.
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 39.1 points, 0.5%, at 8,643.74
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Hang Seng: down 0.8% at 24,176.25
Nikkei 225: down 2.2% at 36,887.17
S&P/ASX 200: down 1.8% at 7,948.20
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DJIA closed down 427.51 points, 1.0%, at 42,579.08
S&P 500: closed down 1.8% at 5,738.52
Nasdaq Composite: closed down 2.6% at 18,069.26
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EUR: higher at USD1.0833 (USD1.0827)
GBP: higher at USD1.2901 (USD1.2890)
USD: lower at JPY147.69 (JPY148.10)
GOLD: lower at USD2,913.30 per ounce (USD2,916.75)
OIL (Brent): higher at USD69.91 a barrel (USD68.84)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
China People's Political Consultative Conference continues
China National People's Congress continues
10:30 CET eurozone European Central Bank president Christine Lagarde speaks
08:00 CET Germany factory orders
08:30 EST US nonfarm payrolls
08:30 EST US average weekly hours
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UK retail footfall growth slowed but increased for the second consecutive month, as retail parks outperformed other destinations. According to British Retail Consortium-Sensormatic data, total UK footfall increased by 0.2% in February from the previous year, down from 6.6% in January. Retail park footfall grew by 2.0% in February, down from 7.9% in January. High street footfall grew 0.1%, down from 4.5% in the previous month. Shopping centres rose 0.1%, down from 7.4% in January. "The variety of larger retail outlets and the option of free parking enticed customers to visit retail parks over their local high street or shopping centre which saw only marginal improvements," BRC Chief Executive Helen Dickinson said. "Strong investment in retail parks and fewer empty stores has led to consistent positive shopper traffic over the past year." "At a time when many high streets are in desperate need of revitalisation, the government must do more to support the retail industry's ability to invest. Ensuring no shop pays more as a result of business rates reform and delaying the new packaging levy would allow for more investment in stores and jobs, giving footfall a better chance of recovery in 2025," Dickinson said.
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Halifax reported that the average UK house price was USD298,602 in February, down 0.1% on-month compared with a 0.6% rise to GBP298,815 in January. Annually, however, house prices have grown by 2.9% in February, the same as in January. Halifax also said that shortages and affordability challenges persist in the UK housing market. "February's figures highlight the delicate balance within the UK housing market," said Halifax Head of Mortgages Amanda Bryden. "While there's been talk of a last minute rush on new mortgages ahead of the changes to stamp duty, inevitably we've seen some of the demand that was brought forward start to fade as the April deadline ticks closer, given the time needed to complete a purchase." She added: "While house price growth has slowed overall, market activity remains strong and comparable to pre-pandemic levels, demonstrating a resilience amongst buyers that’s been evident in the face of higher borrowing costs."
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The US has delayed some tariffs on Canada and Mexico, leading Ottawa to halt an upcoming wave of countermeasures. Stock markets tumbled after Trump's duties of up to 25% took effect Tuesday, as economists warned that blanket levies could weigh on US growth and raise inflation. Trump signed orders Thursday to hit pause on the fresh tariffs for Canadian and Mexican imports covered by a North American trade agreement, though he dismissed suggestions that his decisions were linked to market turmoil. A White House official told reporters that about 62% of Canadian imports will still face the new tariffs, although much of these are energy products hit by a lower rate of 10%. Trump said more tariffs would come on April 2, adding they will be "reciprocal in nature." He had earlier vowed reciprocal levies to remedy practices Washington deems unfair. Trump told reporters Thursday in the Oval Office that he had a "very good conversation" with Mexican President Claudia Sheinbaum, but Canadian Prime Minister Justin Trudeau said Thursday that Ottawa will remain in a trade war with Washington for "the foreseeable future" even if there are "breaks for certain sectors."
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The EU has committed to bolstering its defences by making hundreds of billions of euros available for spending on security. The agreement comes after US President Donald Trump's repeated warnings that he would cut them adrift to face the threat of Russia alone. Emergency talks in Brussels on Thursday saw EU leaders explore new ways to beef up their security and ensure future protection for Ukraine. The leaders signed off on a move to loosen budget restrictions so that willing EU countries can increase their military spending. They also urged the European Commission to seek new ways "to facilitate significant defence spending" in all member states, a statement said. The EU's executive branch estimates that around EUR650 billion could be freed up that way. The leaders also took note of a commission offer of loans worth EUR150 billion to buy new military equipment.
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China's exports grew slower than expected during the first two months of the year, official customs data showed Friday, as a deepening trade war with the US piles on economic malaise. Exports in US dollar terms in January and February combined grew 2.3% compared to the same period last year – well short of a Bloomberg forecast of 5.9% expansion. Meanwhile, imports fell sharply in the first two months of the year as sluggish domestic consumption weighed down demand. Imports into China during January and February combined fell 8.4% compared to the same period last year, significantly below a Bloomberg forecast of 1% growth.
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Donald Trump has renewed doubts over his commitment to Nato on Thursday. The US president reiterated his view that countries are failing to spend adequately on their militaries. "If they don't pay, I'm not going to defend them," he told reporters in the Oval Office. Trump was responding to reporters after NBC News reported earlier Thursday that he is considering a plan to calibrate US military support in a way that favours member countries that spend a higher proportion of more of their gross domestic product on defence. The president has previously called for allies to lift annual defence spending to 5% of gross domestic product from the current 2% target, which Nato expected only 23 of 32 members to meet last year. The move would weaken Nato's core Article 5 which stipulates that any member attacked will be defended by all the others.
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Eurostar has suspended services between London and Paris after the discovery of an unexploded Second World War bomb near tracks in the French capital. Thousands of passengers are disrupted as the cross-Channel operator cancelled 10 services on Friday morning. All trains in the Paris to London direction are cancelled until at least 12.09pm. Eurostar said in a statement: "Due to an object on the tracks near Paris Gare du Nord, we are expecting disruption to our services this morning. "Please change your journey for a different date of travel." France's national train operator SNCF said in a statement that services at Gare du Nord would be suspended until mid-morning at the request of the police. It added: "We invite travellers to postpone their trip." Eurostar services to and from Brussels appear to be unaffected.
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BROKER RATING CHANGES
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Berenberg raises Fresnillo to 'buy' (hold) - price target 1,020 (840) pence
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JPMorgan cuts Whitbread to 'neutral' (overweight) - price target 3,000 (4,400) pence
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Berenberg raises Kenmare Resources to 'buy' (hold) - price target 580 (350) pence
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COMPANIES - FTSE 100
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Alliance Witan celebrated a "landmark year" and said it achieved a net asset value total return of 13.3% in 2024. While "strongly positive" this was down from a 21.6% return for 2023 and "trailed our benchmark index, the MSCI All Country World Index" which delivered a 19.6% return. NAV per share increased to 1,304.9p at December 31 from 1,175.1p. The total dividend for 2024 is 26.70p per share, up 6.0% on-year and including a fourth interim payout of 6.73p. "Since the start of President Trump's second term of office in January, tariffs have created uncertainty about the outlook for equities," noted Chair Dean Buckley. "Diplomatic tensions over efforts to end the war in Ukraine and conflict in Gaza have also raised geopolitical risks." Looking ahead, he commented: "While there is a risk that heightened levels of uncertainty will impact on business and consumer confidence, global growth and corporate earnings forecasts are currently healthy, giving some grounds for cautious optimism, about further gains for shareholders, especially if there is a broadening out of market leadership."
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COMPANIES - FTSE 250
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Just Group released its annual results. Statutory pretax profit declined to GBP113 million in 2024 from GBP172 million in 2023, while adjusted pretax profit fell to GBP482 million from GBP520 million, "as strong underlying profit was offset by lower non-operating items". Insurance revenue rose to GBP1.81 billion from GBP1.56 billion, and underlying operating profit rose 34% to GBP504 million from GBP377 million, "driven by new business sales growth, higher recurring in-force profit and increased scale". The retirement income products and services provider said it will pay a final dividend of 1.8p per share, bringing the total payout to 2.5p, up 20% on-year. "We made a pledge three years ago to double profits over five years," said CEO David Richardson. "We have significantly exceeded that target in just three years and created substantial shareholder value as a result. Our markets remain buoyant and we are confident in our ability to grow earnings at an attractive rate from this significantly higher level."
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OTHER COMPANIES
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European Metals announced that the Cinovec project has been declared a "strategic deposit" by the Czech government. This "is a major step forward for the project, enabling Geomet to obtain certain permits and take actions to secure the development of the project without undue delay". It said the designation will help to expedite approval processes, reducing the time required for project preparation and mining initiation, and reduce the administrative burden by streamlining coordination between various authorities. "Overall, this status will enhance the predictability and speed of permitting processes, facilitating the timely extraction of raw materials critical for energy security and industrial needs," the company said. "The designation of the Cinovec Project as a strategic deposit is a significant milestone which has been achieved through the diligent work of Geomet and CEZ," Executive Chair Keith Coughlan said. "This designation will enable the project timeline to be expedited and provides a clear signal of the importance of the development of Cinovec by the Czech government for both the European car industry as well as the EU green transition."
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By Emma Curzon, Alliance News reporter
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Just GroupAlliance WitanEuropean Metals HoldingsFresnilloWhitbreadKenmare Resources