Closing summary
Time to wrap up, after another day in which Donald Trump has moved the markets.
European carmakers’ shares have slid today after the US president said he planned to impose 25% tariffs on EU imports soon.
The selloff has intensified through the day – BMW are now down 4% on the Frankfurt stock market, followed by Porsche (3.6%).
Analysts at the Kiel Institute warned that new tariffs would hurt both the European and US economies, especially if the EU retaliated.
And the European Central Bank pointed out that eurozone businesses could suffer if cheap Chinese goods flooded to Europe rather than into the US.
The US dollar has rallied against other major currencies, after Trump announced that tariffs against Mexico, Canada and China will kick-in next week.
Matthew Ryan, head of market strategy at global financial services firm Ebury, says:
“The dollar is trading higher across the board this afternoon after President Trump cooked up another storm on his Truth Social account, proclaiming that tariffs aimed at Canada and Mexico would go ahead as planned next week.
Markets have been caught wrong-footed by the news, seemingly due to the belief that these levies would again be delayed and/or watered down relative to his initial threats - alas, there is no sign of that at this stage.
Our US Politics Live blog has more details:
A surprise jump in the number of Americans filing new claims for unemployment support has raised concerns that the US economy could be slowing.
Elsewhere today…
Gatwick has been given a qualified green light to operate a second runway after the government “set out a path to expansion” for London’s second biggest airport.
But, the deadline for the government to make a final decision has been extended to late October….
Rolls-Royce has said it will return £1.5bn to shareholders as the British jet engine manufacturer paid its dividend for the first time since the coronavirus pandemic. Its shares have soared 15% to a new alltime high.
But advertising firm WPP’s shares have slumped 15%, after it reported a slowdown in activity at the end of laast year.
Updated
Kyle Chapman, FX markets analyst at Ballinger Group, says Trump’s post has shaken the markets out of their complacency about tariffs:
“The dollar has surged today after a Truth Social post in which Trump assured markets that the Mexico and Canada 25% blanket tariffs would indeed be implemented on Tuesday. He also threw in an extra 10% on China for good measure.
“A complacency has built up in markets since the first tariff delay, and that always meant that a big correction was on the cards if calling Trump’s bluff turned out to be the wrong move. Before yesterday the euro was priced as if there was no longer any tariff risk, and Trump appears to be hell-bent on rectifying that this week. Much has been said about the market’s fatigue in responding to each and every tariff headline – that is not what is on display today.
“I am not going to pretend that I have any accurate foresight on where the tariff story goes from here. For a while there, investors seemed to think that they had figured Trump out. But the unknowability of Trump’s eventual policy moves is going to feed into higher volatility for some time.
“The chances are small at this stage, but for what it’s worth I think there is still time for a trade war to be avoided. That tariffs will be in place ‘until [the flow of fentanyl] stops, or is seriously limited’ sounds like a possible off-ramp to me.”
Dollar rallies as Trump says Mexico, Canada and China tariffs will start on 4 March
Newsflash: Donald Trump has announced that his proposed tariffs on Mexico and Canada will go into effect on 4 March, dashing hopes of another delay.
Trump has also revealed that the planned additional 10% tariff for China will kick in on the same day, next Tuesday.
Trump had delayed the introduction of new 25% tariffs on Mexico and Canada at the start of this month, after both countries pledged to boost their efforts to police their borders.
But today, Trump claims that illicit drugs are still pouring into the US from Mexico and Canada “at very high and unacceptable levels.”
Writing on his Truth Social site, Trump says:
“We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled.
China will likewise be charged an additional 10% Tariff on that date.
The April Second Reciprocal Tariff date will remain in full force and effect. Thank you for your attention to this matter. GOD BLESS AMERICA!
The news has driven up the value of the US dollar by around 0.6% against a basket of currencies.
The pound has dropped by a third of a cent to $1.264, while the euro is down half a cent at $1.0437.
New tariff news - In addition to the 25% Canada and Mexico tariffs taking effect March 4, Trump now says China will see an “additional” 10% take effect that day as well.
— Megan Cassella (@mmcassella) February 27, 2025
Comes on top of the 10% that took effect less than a month ago. pic.twitter.com/VPMuVIPJxd
Updated
The jump in US jobless claims last week doesn’t appear to be driven by Elon Musk’s ‘department of government efficiency’ program, which has been laying off government staff.
Today’s report says:
Initial claims for UI benefits filed by former Federal civilian employees totaled 614 in the week ending February 15, an increase of 1 from the prior week.
Claims:
— Guy Berger (@EconBerger) February 27, 2025
1/ Federal jobless claims not showing an obvious impact of the layoffs yet (though the data we have is a little early for that - week ended 2/15): pic.twitter.com/7ALU6ziOul
Rise in US initial claims for jobless support
The number of Americans filing new claims for unemployment benefits has risen to its highest level this year.
A total of 242,000 initial claims were filed in the week to 22 February, up from 220,000 in the previous week.
That’s the highest level since the first week of December, when 242,000 initial claims were also recorded.
It’s also a bigger jump than expected – economists had expected only a small rise, to 221,000.
242k on Initial Claims - hasn't been higher since Oct 5, 2024 pic.twitter.com/norGse169d
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) February 27, 2025
It may show that US firms are getting more nervous about economic prospects, and laying off staff.
The repoort says the largest increases in initial claims for the week ending February 15 were in Kentucky (+3,012), Tennessee (+2,766), Washington (+735), Michigan (+452), and Minnesota (+83), while the largest decreases were in California (-5,530), Pennsylvania (-1,110), Florida (-981), New Jersey (-903), and New York (-698).
Donald Trump’s tariff threats towards Europe have become “more concrete”, say analysts at ABN AMRO, following last night’s threat to impose a 25% levy.
They add:
We estimate the. eurozone and the US stand to take a 1.3% and 0.5% GDP hit from these tariffs.
ECB: Global trade might be hit hard by tariffs
Policymakers at the European Central Bank were concerned about the impact of new US tariffs on the eurozone, when they met last month.
The minutes of the ECB governing council’s last meeting, in late January, have just been released, and show concerns about new trade restrictions.
The minutes say:
Members concurred that the outlook for the international economy remained highly uncertain. The United States was the only advanced economy that was showing sustained growth dynamics. Global trade might be hit hard if the new US Administration were to implement the measures it had announced.
The ECB was also conscious that more low-price Chinese goods could be sent to Europe, due to US tariffs, which would push down inflation but hurt European manufacturers.
The ECB’s minutes say:
The challenges faced by the Chinese economy also remained visible in prices. Chinese inflation had declined further on the back of weak domestic demand. In this context, it was pointed out that, no matter how severe the new US trade measures turned out to be, the euro area would be affected either indirectly by disinflationary pressures or directly, in the event of retaliation, by higher inflation.
In particular, if China were to redirect trade away from the United States and towards the euro area, this would make it easier to achieve lower inflation in the euro area but would have a negative impact on domestic activity, owing to greater international competition.
The oil price has risen today, after Donald Trump cancelled a license given to energy giant Chevron to operate in Venezuela.
US crude oil is up 0.9% at $69.23 per barrel, while Brent crude, the international benchmark, is up 1% at $73.22 per barrel.
Trump announced yesterday that a permit issued by the US government allowing Chevron to pump and export Venezuelan oil will be terminated this week, which will end a financial lifeline for the South American country.
The US president accused his Venezuelan counterpart, Nicolás Maduro, of not meeting democratic conditions.
Trump wrote on his Truth Social site:
“We are hereby reversing the concessions that Crooked Joe Biden gave to Nicolás Maduro, of Venezuela, on the oil transaction agreement.”
Kiel: Trump's tariff threats on EU could trigger economic turmoil
Both the European and US economies would suffer from a new trade war, the Kiel Institute for the World Economy has warned today.
A simulation created by the Kiel Institute has calculated that there would be economic contraction in both the EU and the United States if the US imposed 25% tariffs on European goods.
The economic damage would be worse if Europe retaliated with its own tariffs.
The Kiel Institute says:
According to the simulations, the European economy would shrink by an average of 0.4 percent in real GDP terms within the first year, a significant impact for a short-run scenario.
The U.S. itself would not be spared, experiencing a contraction of 0.17 percent.
Should the EU retaliate with its own 25 percent tariffs, the economic damage to the U.S. would double and increase own costs for the EU by another 0.14 percentage points. Furthermore, price levels in the U.S. could increase by up to 1.5 percent due to higher costs for imported final goods and intermediate inputs, making domestic production more expensive and reducing overall competitiveness.
Kiel’s calculations show that European exports to the US would decline by 15% to 17% in the first year, including 20% plunge in Germany’s sales to the US.
In other trade news, France’s industry minister has called for more protection for Europe’s steel sector.
Marc Ferracci told a news conference on the future of the European steel industry that this could include stronger safeguard measures.
Ferracci says:
“The European industry and the steel sector need protection, which in the short term means beefing up safeguard measures.”
The existing safeguard measures include tariffs on steel imports over a set quote. Last summer they were extended until June 2026.
Polish prime minister Donald Tusk has responded to US president Donald Trump’s claim that the EU was formed “to screw the United States.”
In a social media post in English, Tusk said:
The EU wasn’t formed to screw anyone. Quite the opposite. It was formed to maintain peace, to build respect among our nations, to create free and fair trade, and to strengthen our transatlantic friendship. As simple as that. 🇪🇺🇺🇸
My colleague Jakub Krupa’s Europe liveblog has more details.
The New Economics Foundation (NEF) has warned that growing Gatwick airport will not create economic growth.
Dr Alex Chapman, senior economist at NEF, says:
“Growing Gatwick will not magic up the economic growth the government so desperately wants. Business air travel has collapsed while expansion will see three times as many tourists leave the country as come in.
“Voters living outside London and the south east will not thank the government for this decision. Expanding airports like Gatwick doesn’t create new jobs - it displaces jobs from the wider UK regions, and particularly the domestic tourism industry which is a key source of spending outside London and the south east.
“The UK is small country with a remarkably high number of international airports. People are already perfectly able to catch cheap flights on holiday or travel for business. If this government is so desperate for growth, it should focus on investing properly in the vital public services upon which the health of our economy really depends.”
Updated
The Unite union have welcomed the goverment’s decision to say it is ‘minded to approve’ the expansion of Gatwick.
Unite, which represents 7,000 workers at the airport, believes the expansion should boost highly skilled, well-paid, unionised jobs.
Unite general secretary, Sharon Graham says”
“Unite welcomes the announcement of the expansion of Gatwick but it needs to come with guarantees of well paid, unionised jobs and proper facilities for workers.
“It is also ever more urgent with every airport expansion that we ensure domestic production of sustainable aviation fuel (SAF) to offset carbon emissions and meet the government’s own targets on net zero.
Unite is also pushing for the Grangemouth refinery in Scotland to be upgraded to produce SAF, rather than being closed this summer.
Deadline for the final Gatwick decision extended by nine months
A final decision on Gatwick’s push to open a second runway will not come for several months, though, even though a ‘minded to approve’ letter was released today.
Transport minister Heidi Alexander has extended the deadline for deciding for certain whether Gatwick can turn its back-up emergency runway into a second runway until 27 October.
Alexander says:
The decision to set a new deadline is without prejudice to the decision on whether to give development consent…
Updated
Donald Trump’s enthusiasm for tariffs is creating economic uncertainty, and volatility in the finaancial markets.
Dan Ivascyn, group CIO at bond-trading giant PIMCO, explains:
“You do not only have uncertainty here in the United States, but you have a lot of uncertainty in terms of relationships with other countries, impact on markets. And that’s creating not only a lot of localized volatility but volatility across countries, across sectors, across yield curves and that’s a great opportunity as well.
So I think the key theme going into this year is to have a healthy degree of humility around the uncertainty. Acknowledge the uncertainty, but look to take advantage of the full global opportunity set, both within the liquid higher quality areas of the market, as well as in some of the more credit sensitive areas as well.”
Here’s our news story about Gatwick being given qualified consent to operate a second runway after the government “set out a path to expansion” for London’s second biggest airport.
PA: Minister has ‘set out path to approving’ Gatwick expansion
UK transport secretary Heidi Alexander has reportedly “set out a path to approving” Gatwick airport’s expansion project, to open a second runway.
That’s according to PA Media, who are citing a Government source.
They explain:
This comes after the Planning Inspectorate initially rejected the West Sussex airport’s application to bring its emergency runway into routine use.
The Planning Inspectorate then recommended that Ms Alexander should give the project the go-ahead if adjustments are made on issues such as the proportion of passengers who travel to and from the airport by public transport, and noise mitigation.
It is understood to be the first time the body has recommended an alternative plan when assessing a project.
Gatwick has until April 24 to respond to the new proposals, shortly after which Ms Alexander is expected to make a final decision.
Updated
European carmaker shares fall on tariff threat
Shares in European automakers are falling this morning after Donald Trump threatened to slap 25% tariffs on imports from the EU.
President Trump’s statement yesterday that new European tariffs will be announced “very soon” and fall “on cars and all other things” (see opening post) has hit Europe’s stock markets this morning.
Germany’s DAX index has dropped by 1.2%, with carmaker such as BMW (-2.9%), Porsche (-2.8%), Volkswagen (-2.75%) and Mercedes-Benz (-2.5%) leading the fallers.
Across Europe, car giant Stellantis are down 2.75% while Renault have lost 1.2%.
Li Xing financial markets strategist consultant to Exness, explains:
President Donald Trump’s announcement of a 25% tariff on EU cars and goods has reignited global trade worries, although the lack of clarity surrounding the policy may limit its immediate market impact.
Trump is hoping to close the US’s $208bn trade in goods deficit with the EU by imposing tariffs (which will make imports from Europe more expensive). That’s the second largest trade in goods deficit, following China’s $279bn.
Should Trump impose tariffs on the EU, some countries are likely to be hit harder than others. Germany has by far the most goods exports, worth €158bn (£131bn) in 2023. The Netherlands imports the most goods from the US, worth €76bn.
Trump also caused a stir by claiming that the EU “was formed to screw the United States”.
Carl Bildt, the former prime miniser of Sweden, points out there were other motivations….
President Trump 🇺🇸 has a seriously distorted view of history. Now he claims 🇪🇺 was set up ”to screw the United States”. It was actually set up to prevent war on the European continent. pic.twitter.com/czirI913IV
— Carl Bildt (@carlbildt) February 26, 2025
Updated
Another loss at Ocado
Grocery delivery firm Ocado’s shares are also sliding, down 13% this morning, after it reported another annual loss.
Ocado made a statutory loss of £373m in the 12 months to 1 December 2024, lower than the £387m it lost in 2023. Total revenues rose 14%.
City investors may be disappointed that Ocado hasn’t announced any fresh deals for its robotic warehouses this morning.
It launched three of these customer fulfillment centres (CFCs) last year, in Sydney, Melbourne and Madrid, and is planning at least seven more over the next three years, starting with Warsaw this year.
But the opening dates of two of those CFCs, in Charlotte, North Carolina, and Phoenix, Arizona, has slipped to early 2026, following a “new Auto Freezer order”.
Adam Vettese, market analyst at eToro, says:
“A familiar story from Ocado’s results: on the surface there is plenty to be optimistic about - the loss has narrowed, on track to be cash-flow-positive, fastest growing UK grocer. Unfortunately, optimism isn’t going to pay the bills.
“The trouble is that while all of these things are great, the sticking point is that operationally there are still some issues. The rollout of robotic grocery warehouses to partners isn’t where the firm would want it to be, and of those confirmed in the pipeline, we are seeing them kicked back towards 2026.
“The firm insists more warehouse deals are coming. But just how much longer will they have to burn cash for is the question investors eagerly await to be answered. Shares are trading at less than half of what they were at the beginning of last year, some investors might be looking at this as a cheap play with things seemingly only able to improve. If the orders don’t come and there are more delays on what Ocado does have then this may not be the case.”
Ocado’s shares are down 15%, the worst performer on the FTSE 250 index, at 281p
WPP shares slide after results
While Rolls-Royce’s shares soar to the top of the FTSE 100 leaderboard, advertising group WPP have slumped 18% to the bottom of the pack.
WPP missed sales forecasts this morning, reporting a 0.7% drop in reported revenues in 2024.
The slowdown worsened in the last quarter of the year, when revenues fell in North America, the UK, and China, although they rose in Western Continental Europe.
Mark Read, chief executive officer of WPP, says Q4 was hit by “weaker client discretionary spend”.
We did see growth from our top 25 clients of 2.0% and an improving new business performance in the second half of the year with wins from Amazon, J&J, Kimberly-Clark and Unilever reflecting the strength of our integrated offer.
“The actions we are taking across WPP will strengthen our existing client relationships and drive our new business results. We expect some improvement in the performance of our integrated creative agencies in the year ahead. At the same time, we have comprehensive efforts underway to improve our competitive positioning through new leadership at GroupM, with further investment in AI, data and proprietary media.
“Though we remain cautious given the overall macro environment, we are confident in our medium-term targets and believe our focus on innovation, a simpler client-facing offer and operational excellence will support our growth and deliver greater value for our shareholders.”
On the UK specifically, WPP reports:
The United Kingdom declined in 2024 reflecting a strong comparison (2023: +5.6%) and the impact of slower client spending in Q4 with further weakness in project-based work across creative and specialist agencies exacerbated by an uncertain macro outlook, only partially offset by growth in GroupM and Ogilvy.
Updated
Rolls-Royce shares soar
BOOM! Shares in Rolls-Royce are soaring at the start of trading, as investors hail its financial recovery.
Rolls-Royce’s stock has jumped by over 15% to 735p per share, a new all-time high.
Rolls Royce off like a train $RR pic.twitter.com/L61HV6V75b
— Andrew Dowson (@AndrewDowson) February 27, 2025
The City will be impressed with Rolls’s upgraded forecasts for profit growth (see 7.48am), as well as relieved that the dividend has been restored (as had been expected).
They've taken off, and are powering higher!
— Michael Brown (@MrMBrown) February 27, 2025
*ROLLS-ROYCE SHARES RISE 16% AFTER GUIDANCE INCREASE, BUYBACK
Updated
In another sign of confidence, Rolls-Royce has lifted its mid-term financial targets.
It tells shareholders:
Upgraded mid-term targets of £3.6bn-£3.9bn underlying operating profit, 15%-17% operating margin, £4.2bn-£4.5bn free cash flow, and 18%-21% return on capital based on a 2028 timeframe.
The company is also aiming for between £2.7bn and £2.9bn underlying operating profits this year, up from the £2.5bn in 2024.
This shows that CEO Erginbilgiç’s turnaround plan – dubbed “the most astonishing turnaround at a major FTSE 100 company in decades” by my colleague Nils Pratley – is continuing to pay off.
Updated
Rolls-Royce restarts dividend payments
UK engineering firm Rolls-Royce is resuming payouts to shareholders for the first time since the Covid-19 pandemic hit its operations.
Following “strong results” in 2024, Rolls-Royce has announced it will pay a dividend of 6.0p per share to investors. It also plans to spend £1bn on a share buyback scheme – another way of returning cash to shareholders.
The news comes as Rolls-Royce annouces that earnings rose by over 50% last year – with underlying operating profit up to £2.5bn, from £1.6bn in 2023.
Chief executive Tufan Erginbilgiç says Rolls-Royce is being transformed into a “high-performing, competitive, resilient, and growing business”.
All core divisions delivered significantly improved performance, despite a supply chain environment that remains challenging.
We are moving with pace and intensity. Based on our 2025 guidance, we now expect to deliver underlying operating profit and free cash flow within the target ranges set at our Capital Markets Day, two years earlier than planned.
Significantly improved performance and a stronger balance sheet gives us confidence to reinstate shareholder dividends and announce a £1bn share buyback in 2025.
It’s quite a turnaround since Covid-19 buffeted Rolls-Royce, which makes and services jet engines, runs a defence arm, and produces a range of power and propulsion products, including nuclear propulsion plants for the Royal Navy’s nuclear submarines. It is also developing small modular nuclear reactors.
Rolls suspended dividend payments in April 2030, as its airline customers kept flights grounded due to the pandemic.
The crisis, drove its share price down below 40p in October 2020. Last night they closed at 631p, having hit a record high earlier this month.
The company has been cutting costs under Erginbilgiç, and also reported record-breaking orders amid mounting military tension around the world.
Updated
Gatwick second runway decision expected today
We’re expecting to learn later today whether Gatwick airport will be allowed to open a second runway.
The Transport Secretary, Heidi Alexander, is due to announce today whether she has granted a development consent order which could allow more than 100,000 extra flights a year at the West Sussex airport.
Gatwick wants to modify an emergency runway and taxiway to allow it to be used alongside its existing main runway.
The BBC reports that on Tuesday Alexander told the annual dinner of trade body Airlines UK in London that she had “no intention of clipping anyone’s wings,” and said aviation was good for growth, adding:
“I am not some sort of flight-shaming eco warrior. I love flying – I always have.”
Introduction: EU facing fresh US tariffs
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The spectre of tariffs is stalking Europe today after Donald Trump announced last night he will soon hit goods made in the European Union with tariffs of 25%.
Trump told his first cabinet meeting, on Wednesday, that he will soon release details of the latest tariff threat, declaring:
“We have made a decision and we’ll be announcing it very soon. It’ll be 25%.”
Trump did not give further details but mentioned carmakers and said the levies would be applied “generally”, adding:
“And that’ll be on cars and all other things.”
European stock markets are expected to open in the red, as investors anticipate a new front opening up in Trump’s tradae wars.
Traders were already bracing for the looming March 4 deadline for US tariffs against Canada and Mexico, and for the steel and aluminum duties set to drop on March 12.
Each of these points could rattle markets, warns Stephen Innes, managing partner at SPI Asset Management, adding:
For now, markets are still fixated on tariff risk, not the impact. Absolute volatility begins when investors fully price these tariffs’ inflationary and/or growth ripple effects. The dollar, bonds, and equities are about to enter the trade war vortex again, and positioning will be everything.
The agenda
12.30pm ECB minutes from Jan meeting
1.30pm US GDP (1st revision) for Q4
1.30pm US initial jobless claims data
Updated
