Closing post
Calm has returned to the markets today, despite the anxiety caused by the new trade conflict between the US and China.
The Dow Jones industrial average is now flat, while the broader S&P 500 is now up 0.5%, as investors take the latest tariffs imposed by Washington DC and China on each others exports in their stride.
In London, the FTSE 100 share index has clawed back most of its earlier losses – and is now down just 0.1%, or 10 pints, at 8572 points.
Despite Goldman Sachs’s warnings that the eurozone faces a ‘sizeable hit’ from rising trade tensions, shares are now higher in Frankfurt and Paris.
And the pound has now recovered its earlier losses against the dollar, to trade around $1.246.
Our US Politics Live blog is covering the latest action in America:
US jobs openings fall
The number of job openings across the US fell at the end of last month, a possible sign that America’s labor market is cooling.
Job openings fell to 7.6m at the end of December, down from over 8m at the end of November, a three-month low according to Bloomberg.
The US Bureau of Labour Statistics reports:
The job openings rate, at 4.5%, decreased over the month.
The number of job openings decreased in professional and business services (-225,000), health care and social assistance (-180,000), and finance and insurance (-136,000). Job openings increased in arts, entertainment, and recreation (+65,000).
JOLTS showing some softness. Job openings fell to 7.6 mil and ratio of openings to unemployment rose. Conditions in the job market still appear solid but slowing. pic.twitter.com/rNFXmNOlrN
— Kathy Jones (@KathyJones) February 4, 2025
Updated
Palantir shares surge 26%
Shares in Palantir, the US spy tech company, have surged by a quarter in early trading after it beat expectations in is results last night.
Palantir’s shares are up 26% at $105.53, taking its gains over the last year to 382%.
Last night it reported stronger-than-expected fourth-quarter results and guidance driven by AI, including $828m in revenue, beating estimates of $776m.
The S&P 500's best-performing stock of 2025:
— Brew Markets (@brewmarkets) February 4, 2025
Palantir. pic.twitter.com/pb91QPlZKu
Palantir was co-founded by Peter Thiel, the major Silicon Valley supporter of Donald Trump, who was singled out by prime minister Pedro Sánchez in a speech in Davos last month warning that tech billionaires want to overthrow democracy.
Trading in New York has begun in a subdued fashion.
The Dow Jones industrial average has dipped by 0.1%, or 44 points, to 44,370 points.
The S&P 500 share index has nudged slightly higher, up amost 0.1%.
Samer Hasn, senior market analyst at XS.com, says:
US stocks are set to fall further today despite the de-escalation of the trade war with the suspension of tariffs from the US on Canada and Mexico.
Meanwhile, the market is still waiting for the start of this war with China, which in turn responded with steps that will remind us of the consequences of the escalation on the US domestic front.
The Financial Times are reporting that Beijing has revived an antitrust investigation into Nvidia and is considering a new probe against Intel, as part of its response to Donald Trump’s new 10% tariff on Chinese imports.
That’s on top of the investigation into Google announced earlier today.
The FT says:
China’s State Administration for Market Regulation announced on Tuesday that it had opened an competition investigation into Google, which two people familiar with the matter said would focus on dominance of the US group’s Android operating system and any harm caused to Chinese phonemakers, such as Oppo and Xiaomi, which use the software.
Chinese regulators, who announced a similar antitrust investigation into Nvidia in December, were now also looking at launching a formal probe into Intel, said two people familiar with the situation.
However, the nature of the probe into the US chipmaker remained unclear, one of the people said, adding whether it was officially launched could be affected by the state of US-China relations. President Xi Jinping is expected to speak to Trump in the coming days.
More here: China targets Google, Nvidia and Intel as Trump tariffs bite
Estee Lauder to cut up to 7,000 jobs amid tariff fears
Beauty firm Estee Lauder has announced plans to cut up to 7,000 jobs, as it braces for a global trade war.
Estee Lauder is “significantly expanding” a restructuring programme, and now expects to cut between 5,800 to 7,000 positions in a drive to cut costs by $1bn per year.
It says this “expanded plan” will fund a return to sales growth, lift operating margins, and allow it to “continue to manage external volatility, such as potential tariff increases globally”.
The company announced the planned job cuts in its latest financial results, which show a 6% fall in net sales in the last quarter, and a fall in profit margins.
It adds:
The Company continues to monitor the effects of the global macro environment, including the risk of recession; currency volatility; inflationary pressures; supply chain challenges; social and political issues; competitive pressures; legal and regulatory matters, including the imposition of tariffs and sanctions; geopolitical tensions; and global security issues
Donald Trump’s attention is likely to soon turn to the European Union, predicts Lindsay James, investment strategist at Quilter Investors.
Trump has already claimed the EU treats the US “very badly”, and military spending – as well as trade levels – are a sore point.
James explains:
As well as being upset that EU countries still spend far less than the US on defence, at 1.9% of GDP in 2024 vs around 3.4% in the US, at a time when it is the EU rather than the US that is being threatened, spending on energy is also likely to be a sore subject.
In 2024 Europe has sought to evade sanctioned Russian gas by instead importing its unsanctioned LNG at the expense of US volumes. In 2024 US LNG imports to Europe fell 15% year on year whilst Russian imports rose 11%. This funded the Russian war machine to the tune of 7.3bn euros, whilst the EU simultaneously relied on the US to supply ammunition that is in desperately short supply, following years of underfunding of its defence capability and capacity.
“With Germany two years into a mild recession, parties such as the AfD, which are openly calling for Nordstream to be restored, are now second place in the polls with around 25% of the vote, closing the gap with the CDU to just two points in recent polls. With the global LNG market expected to move into surplus in 2025, as the dominant supplier, the US will be keen to ensure Russia does not strengthen its foothold into European markets, particularly given the winds of political change that are now being felt across the continent.
Christine Lagarde, as Head of the ECB, has already urged leaders to buy more US LNG and weaponry in order to avoid tariffs. The alternative is likely to be a further hit on the already weak European automotive sector, with over a fifth of EU car exports going to the US. With this sector representing approximately 7% of GDP and a similar proportion of the workforce, EU leaders would be well advised to listen.
Oil price falls after tariffs delayed
The oil price has fallen back today, amid relief that the US delayed tariffs on Canada – which sends most of its oil exports across its southern border – and Mexico.
The US crude oil price has dropped by 2.25% to $71.53 per barrel, while Brent crude is down 1.4%. Both benchmarks rose yesterday as the markets anticipated that a trade war would cause supply disruption.
Today’s falls may also reflect concerns that the new US-China tariffs will weaken economic growth.
Razan Hilal, market analyst at City Index, says “bearish sentiment dominates crude oil,” adding:
Crude oil dipped below $72 following a short-lived rally on tariff concerns. The next key support levels to watch are $69.50 and $66.
A deeper decline could signal the start of a more extended bearish trend.
Updated
Shares in gambling group Entain have jumped by 8% after its US sports betting arm, BetMGM, announced it expects to make a profit this year.
BetMGM, joint owned by Entain and MGM Resorts, told shareholders that it expects the 2025 financial year to be EBITDA positive, with net revenue of $2.4bn to $2.5bn.
In a financial update, BetMGM also reports it made a loss of $244m in 2024.
Adam Greenblatt, chief executive officer of BetMGM, says:
“2024 was a year of investment and rebuilding of momentum for BetMGM.
Our successful strategic refinement saw BetMGM exit the year with encouraging run rates across our key metrics and Q4 EBITDA trend towards breakeven on a normalized basis. Our leading iGaming business continues to grow strongly and deliver attractive returns.
The financial markets are calmer today than during yesterday’s gyrations, and Jefferies’ analyst Brad Bechtel suspects some complacency is setting in.
Bechtel writes:
The dust settled a bit on the tariff noise with the Mexican and Canadian situations postponed for 30 days. The assumption in markets seems to be that the issue is resolved, and we can all move on but I am not so sure it will be that easy.
The market is also glossing over the reality that the 10% tariffs on China did in fact come into effect as of midnight last night, NY time, and China quickly responded with levies of it’s own. It also announced it was looking into the activities locally of Google.
China’s tone, in terms of headlines and public comments, remains one in which they seem willing to work with Trump and the US while pushing back lightly on the implementation of tariffs. Their response with taxes and tariffs of their own indicate they will push back that way as well.
Another day, another defeat for Saba.
The New York hedge fund has been rebuffed by another UK investment trust, Henderson Opportunities Trust, whose shareholders have rejected a proposal to oust four existing directors and install two Saba representatives.
Henderson reports that 65.36% of the total votes cast were voted against the Resolutions, which is quite unanimous given Saba controlled almost 25% of the companys shares, and 33.66% of votes cast.
Back at parliament, the UK’s national statistician has insisted that data showing high levels of economic inactivity are reliable – despite the well-known problems with the labour force statistics.
Ian Diamond told MPs:
“Please, please, please don’t think I am being complacent. I lie awake at night worrying about this the whole time.”
That data shows around nine million people (corrected!) have dropped out of the labour market due to economic inactivity, including a rise in ill health since the Covid-19 pandemic.
Diamond says the ONS works closely with the data it gets from payrolls and employers, and has found the data “hang up pretty well”, especially when compared to records of benefit claimants and from the NHS.
Updated
The copper price has risen today, amid relief that the US delayed import tariffs on Mexican and Canadian goods last night.
Three-month copper on the London Metal Exchange (LME) rose 0.5% to $9,146 a metric ton this morning, Reuters reports
Copper, which is seen as a gauge of global growth prospects, had hit a four-week low yesterday, before Donald Trump suspended the imposition of steep tariffs on Mexico and Canada for a month.
Spotify posts first full year of profitability
Audio streaming company Spotify has reported ‘record profitability’ at the end of last year, and predicted earnings will continue to rise in the current quarter.
In its fourth-quarter results, just released, Spotify says almost all its key performance indicators (KPIs) exceeded guidance and “profitability reached record levels”.
Following price hikes and job cuts over the last year or so, Spotify made an operating profit of €477m in Q4, up from €454m in Q3 and a loss of €75m in Q4 2023.
It expects to grow its operating income to €548m for January-March.
Spotify has also reported:
Monthly Active Users grew 12% Y/Y to 675 million.
Subscribers increased 11% Y/Y to 263 million.
Total Revenue was up 16% Y/Y to €4.2 billion.
Gross Margin climbed by 555 bps YoY to 32.2%.
Operating Income rose to €477 million.
The company says it recorded its first full year of profitability in 224
Daniel Ek, Spotify founder & CEO, says:
“I am very excited about 2025 and feel really good about where we are as both a product and as a business.
We will continue to place bets that will drive long term impact, increasing our speed while maintaining the levels of efficiency we achieved last year. It’s this combination that will enable us to build the best and most valuable user experience, grow sustainably and deliver creativity to the world.”
Shares in Spotify have jumped over 8% in pre-market trading.
Spotify, $SPOT, Q4 2024 Results:
— EarningsTime (@Earnings_Time) February 4, 2025
🟢 +7.4% Pre-Market ($590.00)
📊 Adj. EPS: €1.76 🔴
💰 Revenue: €4.24B 🟢
📈 Net Income: €367M
🔎 Spotify achieved its first full year of operating income profitability, with record free cash flow of €877M in Q4. pic.twitter.com/iVfQsa6PsS
Updated
Brazil's central bank: certain US policies may hit asset prices
Over in Brasilia, Brazil’s central bank has warned that asset prices could be hit by Donald Trump’s policies.
In the minutes of its latest policy meeting, Banco Central do Brasil points out that the value of the Brazilian real could be affected by US economic policies.
It says:
The Committee closely followed the movements of the exchange rate, which has reacted notably to domestic fiscal news, U.S. economic policy news, and the interest rate differential.
The implementation of certain policies in the U.S. may pressure domestic asset prices.
The bank’s monetary policy committee is concerned about the risk of a deanchoring of inflation expectations, which would force tighter monetary policy for longer. A weaker exchange rate could be inflationary.
Updated
The head of the Office for National Statistics then called for more cash to help combat falling response rates to its surveys, and to improve the quality of data.
Sir Ian Diamond, ONS chief statistician, said it “routinely” offers people incentives to respond to its surveys and it needs “more resources” to improve rates.
He told the Treasury Committee of MPs that the public body also needs better data sharing between Government departments to support its work.
He said:
“Really important is the potential of administrative data to support… and that does require a culture of data sharing in government, one that so many people have commented on as not being in the right place that it should be”.
Diamond also tells MPs that the ONS has increased the incentive it provides to people who take part in its surveys, from £10 to £50 [which I think is paid as a voucher].
Updated
Vodafone expects “no real direct impact” from US tariffs
Shares in Vodafone slumped almost 7% in early trading making the telecoms company the biggest faller among FTSE100 stocks, after reporting a further slump in performance in its biggest market Germany.
The fall in market value, which more than wiped out gains over the last year, came despite strong results in the group’s other regions including the UK.
Service revenue in Germany fell 6.4% in the company’s third quarter to the end of 2024, a deterioration from the 6.2% recorded in the previous three months.
The company blames the ongoing impact of a change in pay-TV laws in Germany, which prohibits landlords from billing cable TV fees to tenants freeing them up to choose their own TV technology for the first time in decades, as well as “intensifying competitive pressure” in the market.
Margherita Della Valle, the chief executive of Vodafone, said that the impact of the TV law impact is now over in Germany but that it would take several quarters for the “financial drag to wash through”.
However, even excluding the impact of the law change service revenue in Germany declined by 2.6%, with the company losing just over half of the customers affected by the change.
“On top of that the market has been a lot more promotional than usual around Christmas and Black Friday and that is also impacting all players in the market,” she said, as the company re-iterated its full year guidance on profit and free cashflow.
Della Valle said that the prospects of tariffs on the European Union would have “no real direct impact” on Vodafone, which operates in 50 countries but not the US.
Overall, Vodafone group service revenues rose 5.2%, up from 4.2% in the previous quarter, with Della Valle saying that the 70% of its business outside of Germany is performing “exceedingly well”.
In the UK, service revenue rose 7.6% as the company looks ahead to completing its merger with rival operator 3 UK, as Vodafone added 37,000 mobile and 72,000 broadband customers.
ONS: Very, very, very high rise in survey refusals
Britain’s labour market statistics were undermined by a rise in people refusing to take part in the survey, MPs have heard.
The UK’s national statistician, Ian Diamond, has told the Treasury Commmittee that there was a plunge in engagement with the survey after the pandemic.
The labour force survey was suspended in October 2023 when response rates fell. Diamond explains that low response rates have been a challenge since the data series began in the 80s.
The problem became worse after Covid-19, Diamond says. The pandemic forced the ONS to suspend its face-to-face interviews, in which a researcher visited people for a 45-minute interview over their jobs situation, and replaced it with telephone interviews.
But the ONS found that as the UK came out of the pandemic, people didn’t return to being happy to host interviewers.
This led to a steady reduction in response rates, forcing the ONS to suspend the survey in October 2023 because the risk of bias was too high.
Diamond tells MPs is it taking “two times” the effort to arrange an interview as before the pandemic.
The ONS samples the population to choose candidates for an interview, asking them to phone up to arrange an appointment. But under a third of people actually do that.
The ONS is now conducting a “knock-to-nudge” programme, contacting 3,000 people per week to encourage them to take part.
But resistance is high, Diamond explains, saying:
“We’re finding very, very, very high levels of flat refusal compared with pre-pandemic [levels].”
He explains that the ONS doesn’t have a directory of mobile phones, or email addressses, to contact peopel with. All they have is a list of addresses, and landlines to nudge them on.
[Committee chair Meg Hillier asks for a show of hands of which MPs have a landline – less than half the committee appear to have one!].
The committee quizzed Diamond and ONS staff about how long they had known about the problem before October 2023. Diamond said the low response rate had been monitored very closely, but did concede that the ONS’s board felt they hadn’t been made aware of the problem.
Diamond added that, “with the benefit of hindsight”, he would have put fixing the LFS into its own programme, rather than keeping it within its ARIES programme – which addresses the development for economic statistics
Last month, Hillier warned that policymakers risk making “misinformed” decisions because of the defects in the jobs survey.
Updated
European markets are slightly lower today, with Germany’s DAX down 0.1%.
The automobile sector are down another 0.6%, on fears that the US will impose tariffs on the EU.
Wall Street is expected to dip into the red when trading resumes in New York, in five hours time.
The Dow Jones industrial average is down 0.2% in the futures market, as is the broader S&P 500 share index, after the US imposed 10% tariffs on China, and Beijing retaliated with its own tariffs.
Eurozone facing 'sizeable' activity hit from trade tensions
The eurozone economy will suffer a “sizeable hit to activity” from the rise in trade tensions, Goldman Sachs warns.
They say today that recent events support their forecast of weak Euro area growth, ongoing disinflation and continued sequential interest rate cuts by the European Central Bank.
Goldman say:
First, we expect a sizeable hit to activity from the ongoing rise in trade tensions.
While the Euro area might benefit slightly from trade diversion associated with any US tariffs on Canada and Mexico, President Trump has reiterated his plan to also raise tariffs on the EU.
They predict that “elevated trade policy uncertainty” will weigh on growth in coming months, mainly via lower investment and confidence.
“Trade diversion” refers to the possibility that manufacturers in countries facing new US tariffs decide to sell their goods in Europe rather than the US.
Goldman also warn that the eurozone labour market is slowing, with unemployment ticking up in France and Italy, and wages cooling.
Updated
ABN Amro: US-China tariff war 2.0 kicks off
The 10% US tariff on all imports from China that kicked in today is not a “game changer” for China’s growth forecasts, says European bank ABN Amro.
They predict Beijing will respond with “a further stepping up of monetary easing and fiscal support” – meaning interest rate cuts and more government spending.
But, they also warn that America could potentially impose further tariffs.
In a note titled US-China tariff war 2.0 kicks off, economist Arjen van Dijkhuizen explains:
Although the first tariff implementation now seems to have come even earlier than anticipated in our Global Outlook, The Year of the Tariff, in our base case we already anticipate a material (gradual) stepping up of US import tariffs on China to an average effective tariff rate of 45% per Q2-2026.
While talks between Trump and Xi may potentially smoothen the risk of a further escalation for now, Trump stated earlier this week that he sees the 10% tariffs as a first salvo, with tariffs on China potentially moving much higher if no agreement is reached.
Updated
UBS are sticking with their forecast for the US stock market to keep rising this year, despite the escalating trade tensions.
Mark Haefele, chief investment officer at UBS Global Wealth Management, explains:
“Although we will continue to monitor trade policy closely, our base case remains for the S&P 500 to rise to 6,600 by year-end.
If implemented, tariffs on Canada and Mexico are unlikely to be sustained, resilient US economic growth should support stocks, and we continue to believe that AI presents a powerful structural tailwind for earnings and equity markets.
We believe that the recent development of DeepSeek, a lower-cost AI model, will lead to even broader proliferation of AI, enhancing growth and productivity.”
UK grocery inflation drops to 3.3%
UK grocery inflation has eased back for the first time in six months – as retailers ramped up promotions to attract budget-conscious shoppers.
The price of groceries increased by 3.3% in the year to January, down from 3.7% in December, with prices falling in toilet roll and cat food but rising in chocolate, butter and chilled juices according to analysts at Kantar.
The figure is a drop of potentially good news for the government, as the pace of price rises on food as been one element underpinning persistent inflation in the UK, putting pressure on households’ disposable income.
It could also include the Bank of England to lower interest rates on Thursday – the money markets suggest there’s a 98% chance that the BoE lowers Bank Rate from 4.75% to 4.5%.
Updated
FTSE 100 falls
Stocks in London are dropping in early trading, with the FTSE 100 dropping by around 40 points or 0.5%.
Vodafone are the top faller, down almost 6%, after reporting a drop in sales in Germany.
It blamed a 6.4%% drop in revenues in Germany on the “TV law change”, which prevents landlords from bundling TV services at apartment blocks.
Diageo are down 3% after warning of the impact of tariffs on its North America business.
Updated
Tech stocks in Hong Kong have rallied by 5% today, despite the tit-for-tat tariffs between the US and China.
The wider Hang Seng index gained 2.8%.
Hang Seng Tech Index about to close near day high, up ~5%. Nice.
— Brian Tycangco 鄭彥渊 (@BrianTycangco) February 4, 2025
Diageo warns of $200m hit from tariffs
Drinks giant Diageo has warned that its profits will be hit if the US imposes tariffs on imports from Canada and Mexico.
Diageo withdrew its medium-term profit guidance this morning, blaming “the current macroeconomic and geopolitical uncertainty” in many of its key markets, which are slowing its recovery plan.
Diageo’s brands include Canadian whisky Crown Royal, and tequila brands which need to be made in Mexico for geographic origin requirements.
Chief executive Debra Crew told shareholders:
Diageo has anticipated and planned for a number of potential scenarios regarding tariffs in recent months. The confirmation at the weekend of the implementation of tariffs in the US, whilst anticipated, could very well impact this building momentum. It also adds further complexity in our ability to provide updated forward guidance given this is a new and dynamic situation.
We are taking a number of actions to mitigate the impact and disruption to our business that tariffs may cause, and we will also continue to engage with the US administration on the broader impact that this will have on everyone supporting the US hospitality industry, including consumers, employees, distributors, restaurants, bars and other retail outlets.
Speaking to reporters this morning, Crew indicated that Diageo sees a gross impact of $200m to its operating profits from the tariffs on Mexico and Canada, which have now been delayed until 1 March.
Updated
Consumer rights champion and regular US presidential candidate Ralph Nader has warned that the market mayhem created by Donald Trump’s tariff announcements creates a lucrative insider trading opportunity.
Posting on X, Nader says:
The plunge in the stock market based on Trump’s announcement of 25% tariffs on Mexico and Canada was suddenly reversed when he paused for a month. The market then surged back. This is the first of many vast insider trading opportunities for the Trumpsters who get advance notice about how Trump’s impulsive actions are going to be announced.
Will the Securities and Exchange Commission apply the requisite staff to track these possible serious violations? There will be many more surges up and down in the stock market to come given the preliminary dictates and announcements of the Trump Administration.
The plunge in the stock market based on Trump’s announcement of 25% tariffs on Mexico and Canada was suddenly reversed when he paused for a month. The market then surged back. This is the first of many vast insider trading opportunities for the Trumpsters who get advance notice…
— Ralph Nader (@RalphNader) February 3, 2025
Will the Securities and Exchange Commission apply the requisite staff to track these possible serious violations? There will be many more surges up and down in the stock market to come given the preliminary dictates and announcements of the Trump Administration. -R
— Ralph Nader (@RalphNader) February 3, 2025
A quick factcheck, though: Although the US stock market did recover from its lows yesterday, it still finished in the red. The S&P 500, for example, was down 1.9% in early trading, before closing just 0.75% lower – recovering once Mexico’s president announced the breakthrough that delayed tariffs by a month.
Also, there’s no suggestion (that I’ve seen, anyway) of insider trading by Trump insiders.
China has criticised the US’s decision to slap a 10% tariffs on its imports into America.
In a statement announcing retaliatory tariffs, China’s finance ministry said:
“The unilateral imposition of tariffs by the US seriously violates the rules of the World Trade Organization.
“It is not only unhelpful in solving its own problems, but also damages the normal economic and trade cooperation between China and the US.”
Those retaliatory measures by China include:
15% tariffs on US coal and liquefied natural gas
10% tariffs on crude oil, farm equipment, large-displacement vehicles and pickup trucks from the US.
An anti-monopoly investigation into Google
Adding US companies PVH Corp and Illumina to China’s “unreliable entities list”.
Asia-Pacific markets are rallying (though China's still closed)
Asia-Pacific markets are rallying this morning, despite the trade war breaking out between China and the US.
In Hong Kong, the Hang Seng share index has jumped by almost 2.5% while South Korea’s KOSPI has jumped 1.3%.
This suggests relief that Donald Trump delayed the tariffs on Mexico and Canada yesterday, and hopes that he might reach a similar agreement when he speaks with China’s president, Xi Jinping, later this week.
Chinese markets remain closed due to the Lunar New Year holiday and will reopen tomorrow, giving traders a chance to react to the tariffs imposed by Washington DC and Beijing today.
Jim Reid, strategist at Deutsche Bank, says:
While markets are generally breathing a sigh of relief, relative to where we were over the weekend, the past few days have raised ongoing questions over Trump’s tariff policy plans. Some immediate concessions on the border issues have avoided immediate severe escalation, but Trump’s comments suggest that he will look to use the delay to leverage broader economic concessions.
Indeed, with tariffs being arguably the strongest economic tool that is almost fully at the President’s discretion, we should surely expect that these will continue to be used to both create negotiating leverage and pursue different objectives such as supply security, revenue generation and trade deficit reduction.
And some of these, notably using tariff revenue to help fund offset tax cuts, would require actual implementation of new tariffs. So there are reasons to expect lingering uncertainty in markets, and we are seeing this to some extent.
Updated
Introduction: US dollar boosted by trade tensions
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The US dollar is strengthening this morning, after a day of drama in the world of trade.
Overnight, the US has imposed additional 10% tariffs on Chinese imports, implementing what Donald Trump signed off last weekend – and Beijjing has hit back, with retaliatory levies on some US goods and an investigation into Google.
But after the leaders of Mexico and Canada agreed to take new measures at their borders with the US, their 25% tariffs have been delayed for a month – easing fears of a global trade war (at least for the moment).
That reverse-ferret yesterday helped to lift stock markets off their lows.
Addressing reporters in the Oval Office on Monday, Trump maintained that tariffs were a “very powerful” means of both strengthening the US economically and “getting everything else you want”.
Every country wants to agree a way to avoid US tariffs, the president claimed. “In all cases, they all wanna make deals.”
The feeling in the City is that Trump is using tariffs as a negotiating tool to push other nations into supporting his political priorities – namely border control – rather than tackling trade deficits.
Michael Brown, senior research strategist at brokerage Pepperstone, says:
In reality, tariffs appear to have little-to-nothing to do with trade agreements, or narrowing the US trade deficit, whatever pretences might be thrown around.
So while investors digest the situation – and brace for the next Trump-related newsflash – they’re seeking the safe haven of the dollar.
This morning, sterling has dropped by half a cent against the US dollar to $1.24, while the euro is down a similar amount at $1.03 – putting parity in sight again.
The Canadian dollar, which slumped to a 20-year low yesterday before rebounding, has weakened again this morning too – to 1.445 to the dollar (still above Monday’s low, though).
The Mexican peso has dipped by 0.1% to 20.35/$, again higher than the three-year low hit at one stage yesterday.
The agenda
8am GMT: Kantar UK supermarket share data
3pm GMT:: US JOLTS job vaacancies report
3pm GMT: US factory orders for December
Updated
