10th Apr 2025 07:50
(Alliance News) - The FTSE 100 was called to open higher on Thursday, as markets react with relief to US President Donald Trump's decision to pause most new tariffs.
"The red line was the sovereign bond markets," commented Swissquote's Ipek Ozkardeskaya. "It was the flash selloff in US Treasuries over the past few days that finally made Donald Trump take a step back from his tariff strategy. He didn't care about the equity selloff, he couldn't care less about the global risk rout, and he was likely pleased to see Chinese assets and crude oil tank.
"But the fire sale in US Treasuries dialled up the pressure to a point that apparently became unbearable—even for Trump. He announced a 90-day pause for countries that haven't retaliated, while doubling down on China. Chinese products will be taxed at 125%, in response to China's announcement of 84% tariffs on US imports."
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 401.7 points, 5.3%, at 8,081.18
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Hang Seng: up 3.1% at 20,882.04
Nikkei 225: up 9.0% at 34,558.07
S&P/ASX 200: up 4.6% at 7,717.40
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DJIA: closed up 2,962.86 points, 7.9%, at 40,608.45
S&P 500: closed up 9.5% at 5,456.90
Nasdaq Composite: closed up 12% at 17,124.97
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EUR: lower at USD1.0981 (USD1.1060)
GBP: higher at USD1.2864 (USD1.2786)
USD: higher at JPY146.81 (JPY144.86)
GOLD: higher at USD3,122.92 per ounce (USD3,085.53)
OIL (Brent): higher at USD65.02 a barrel (USD60.41)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
11:00 BST Ireland CPI
14:00 BST UK Bank of England Deputy Governor Sarah Breeden speaks
UK Delphi Economic Forum
13:30 BST US CPI
13:30 BST US initial jobless claims
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US President Donald Trump abruptly paused new tariffs on most countries Wednesday after admitting they made the markets nervous, but he doubled down on a trade war with rival China. Following days of market turmoil, Wall Street stocks surged in reaction to Trump's announcement on his Truth Social network that he was halting tariff hikes for almost all nations for 90 days. Trump had imposed a 10% baseline tariff on all countries which came into effect on Saturday, as well as higher rates on key trading partners like China and the EU, which activated on Wednesday. But on Wednesday, Trump paused the higher tariffs, while the baseline would remain. It is understood that this does not mean any immediate change for the UK. However, Trump said he was raising tariffs on China to 125% because of a "lack of respect." Trump denied that he had backtracked on the tariffs, telling reporters that "you have to be flexible." He said he had been watching the "very tricky" state of the crucial US bonds market before his decision. The president added: "I saw last night where people were getting a little queasy." Trump however predicted that trade deals would be made with all countries, including China. Downing Street said that the UK will "coolly and calmly" continue its negotiations.
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The UK housing market became subdued towards the end of March, following an initial rush to beat the stamp duty deadline at the end of last month, according to surveyors. The Royal Institution of Chartered Surveyors said its feedback from professionals points to house prices flattening out in recent months. A net balance of 2% of surveyors reported prices rising rather than falling in March, shrinking from a balance of 11% in February and 20% in January. The picture is mirrored across most of the UK, but Scotland and Northern Ireland appear more resilient to downward price pressures, the report said. Demand from new house hunters fell deeper into negative territory in March, with a net balance of 32% of surveyors reporting a decrease in demand rather than an increase, following a balance of 16% reporting this the previous month. The latest survey marks the weakest measure of demand since September 2023, Rics said. A net balance of 16% of surveyors also reported sales falling back in March, although a balance of 11% expect sales to rise in the next 12 months.
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Federal Reserve officials felt a cautious approach to monetary policy was appropriate given policy uncertainty, minutes from the Federal Open Market Committee's March meeting showed. Officials said uncertainty about the net effect of an array of government policies on the economic outlook was "high", making it appropriate to take a cautious approach. At the March meeting, the FOMC left interest rates unchanged, offered reassurance that any impact from tariffs would be transitory and forecasted two rate cuts this year. At the time, Fed Chair Jerome Powell said he expected the impact of tariffs on inflation to be "transitory" but accepted uncertainty around trade policy is "high". Minutes showed participants assessed the FOMC was well-positioned to wait for more clarity on the outlook. Some participants observed FOMC may face difficult trade-offs if inflation proved more persistent while the outlook for growth and employment weakened. Some emphasised that elevated inflation could prove to be more persistent than expected, the minutes added. Almost all participants viewed risks to inflation as tilted to the upside and risks to employment as tilted to the downside. Others cautioned that an abrupt repricing of risk in financial markets could exacerbate the effects of any negative shocks to the economy.
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Consumer prices in China fell for the second month running in March, while producer prices saw their sharpest decline in four months, data showed Thursday. According to China's National Bureau of Statistics, the consumer price index, the country's main gauge of inflation, fell 0.1% year-on-year in March, easing from a 0.7% decline recorded in February. The latest reading matched the consensus forecast cited by FXStreet. Meanwhile, the producer price index declined 2.5% year-on-year in March, accelerating from a 2.2% decline a month earlier. The PPI measures price changes for products at the factory gate and the latest reading was larger than the 2.3% decline expected based on consensus.
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BROKER RATING CHANGES
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Jefferies raises Hikma Pharmaceutical to 'buy' (hold) - price target 2,400 (2,090) pence
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Berenberg raises Hilton Food price target to 1,120 (1,090) pence - 'buy'
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JPMorgan raises Ryanair price target to 27 (26.5) EUR - 'overweight'
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COMPANIES - FTSE 100
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Tesco said it has started a share buyback programme worth up to GBP1.45 billion, to run until April 2026 at the latest. The retailer also reported annual results, with pretax profit down to GBP2.22 billion in the financial year ended February 22, from GBP2.29 billion a year prior. Revenue however rose to GBP69.92 billion from GBP68.19 billion, with post-tax profit rising 37% to GBP1.63 billion from GBP1.19 billion. Cost of sales increased to GBP64.21 billion from GBP62.84 billion. The supermarket's market share in the UK increased by 67 basis points to 28.3%, while in the Republic of Ireland, it was up 29 basis points at 23.9%. Tesco also proposed a final dividend of 9.45 pence per share, bringing the total payout to 13.70p, up 13% from 12.10p. Looking ahead, the company expects adjusted operating profit to fall in FY26 compared to FY25 amid an increase in the competitive industry of the UK market. Tesco expects adjusted operating profit of between GBP2.7 billion and GBP3.0 billion in financial 2026, down at least 4.1% from GBP3.13 billion in just-posted financial 2025. It also expects a GBP235 million increase for the current year in national insurance contribution costs.
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COMPANIES - FTSE 250
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Zigup announced the completion of the final phase of its debt refinancing programme, through three transactions over the past six months. The Darlington, England-based mobility solutions company said the programme included a GBP500 million revolving credit facility, which replaced an existing GBP475 million RCF. It said this has extended its debt maturity out to beyond 2030 and increased liquidity by GBP285 million, giving it total available debt facilities of GBP1.1 billion. "The success of this refinancing demonstrates the strong support from our lenders for our business model and our robust balance sheet," commented Chief Executive Officer Martin Ward. "With average debt maturity extended out beyond 2030 and a current drawn debt funding cost of 3.3%, this places ZIGUP in a strong position for sustainable growth."
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OTHER COMPANIES
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Rank Group released a trading update, saying that group like-for-like net gaming revenue grew 10.9% in the third quarter to GBP195.6 million. NGR in the year to date rose 12% on-year. Grosvenor venues' LFL NGR grew 13% to GBP90.4 million and Digital LFL NGR rose 15% to GBP58.4 million, jumping 18% for the UK Business and 43% for the Grosvenor brand. "Since announcing our interim results in January, we have continued to deliver strong growth and expect to deliver Group like-for-like operating profit for the full year in line with expectations," commented CEO John O'Reilly. "This is notwithstanding the uncertain economic environment and the significant cost and regulatory headwinds that we face from the start of Q4. We expect the government to publish the statutory instruments for land-based casino reforms in the coming weeks and anticipate the roll out of additional machines and sports betting to commence during the summer."
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Cooks Coffee issued a trading update for the fourth quarter and year ended March 31, fourth quarter group store sales rose 35% to GBP9.5 million from GBP7.1 million, "reflecting strong trading momentum". Full-year sales rose 26% to GBP35.1 million. Cooks also noted "continued growth in operating cash flow as a result of increased demand and strength of estate", and a "strong pipeline of new stores anticipated in the UK with additional geographies being explored". Furthermore it said it has refinanced its group debt with the Bank of New Zealand to repay or refinance all existing debt, which it said significantly reduces its ongoing finance costs and provides further funding to support ongoing operations and strategic initiatives. "As a result of the anticipated growth in our estate, the group's healthy balance sheet and the strong trading momentum, we are confident about the future prospects of the group and view the future with optimism," commented CEO Aiden Keegan.
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By Emma Curzon, Alliance News reporter
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