Here’s a summary of the latest economic developments:
A [temporary?] reprieve for US and European stock markets… Trump has now bowed to pressure and delayed reciprocal tariffs by 90 days above a 10% baseline for most countries save for China. After initially suffering heavy losses, US stock markets are rallying. On Wednesday 23rd, the S&P 500 was 2.9% higher in early trading, following a 2.5% gain on the 22nd. The Dow Jones was up 2.5% and the Nasdaq leapt by 3.7%.
Wall Street’s strong gains followed higher stocks across much of Europe on Wednesday; the FTSE 100, Germany’s DAX, France’s CAC and Italy’s FTSE MiB have all grown.
You’re [not] fired: Last weekend, Trump had Federal Reserve Chair Jerome Powell firmly in his sights, criticising him for being too slow and “a major loser”, and suggesting he would like to remove him from post. This sparked a sell off of bonds, stocks and the US dollar, however he appeared to tone down that language on Tuesday, confirming from the Oval Office that he had “no intention of firing” Powell.
China escalation: China is still firmly in the US Administration’s sight lines, with tit for tat tactics meaning that US tariffs on Chinese goods are now at 145% and China imposing 125% tariffs on US exports. The decision to lift that on consumer electronics has allowed tech firms to breathe out slightly, however with Trump’s proclamations that there will still be a “type of tariff”, the situation comes with an amber flag.
In Au we trust: Gold maintains its status as a “safe haven” investment, sitting at $3,331 an ounce (as at Wednesday 23rd), after rising above $3,500 earlier in the week.
Domestic growth: Figures released mid-month highlighted a 0.5% growth in the UK economy in February, according to the Office for National Statistics (ONS) with exports to the US increasing by £500M as businesses rushed to beat US tariffs. Goods exports to the US increased for the third consecutive month and were at the highest level since November 2022. The services sector also had a strong month with manufacturing, electronics and pharmaceuticals all performing well.
As per: Our previous observations stand; this style of Trump decision-making is characteristic of what we’ve seen in the past, with a strong initial decision that may be followed by pullbacks. The roller coaster hasn’t stopped yet, we’re just on a calmer bit of the ride.
Some thoughts on what’s ahead:
Further short-term volatility is inevitable: Although Trump’s 90-day reprieve on tariffs has given the markets breathing space, the broader pattern remains unclear, particularly after Trump’s short-lived animosity towards Jerome Powell. Even with the consumer electronic exemptions to China tariffs, tech could still be hit hard. As of last Thursday, the US placed new export controls on Nvidia’s H20 AI chips, requiring them to be licenced for export to China for an indefinite period of time, risking a huge impact to the firm in a market responsible for 13% of their total sales last year.
Shockwaves could be felt by another of the so-called ‘Magnificent 7’ tech companies this as the iPhone 17 is due out this year and Nintendo’s Switch 2 console launch in June could be subject to a price hike in the US as most of its console manufacturing is still done in China. As iPhones are ever-present in business and personal lives, markets will continue to watch the impact China tariffs has on consumer tech closely, and when you consider that Nintendo sold 150.86 million units across the switch family (placing it just behind the DS in terms of all-time best-selling consoles), a stunted US launch could have far-reaching implications for the gaming giant and this area of consumer tech.
The dollar devalued? Despite this week’s US stock market recovery, if investors continue to avoid buying US government debt, the dollar will continue to weaken, and US debt will continue to rise. Trump has said in the past he wants a weaker dollar to help “Make America Great Again”, but as the world’s reserve currency, a weaker dollar risks impacting not only where companies base themselves, but the nature of the globalisation of finance. Domestic finance sources across the globe may need to consider how they are positioned to fund themselves and their economy.
Domestic growth in context: The UK’s strong February comes ahead of the impact of tax rises on businesses and household energy and water bill increases in April. The private sector has also gone into decline for the first time in five years with the S&P Global reporting a slump for the first time since October 2023 as new demands for exports fell, in a sign that Trump’s triggering trade wars are causing wariness. We are also yet to see the impact of the nationalisation of British Steel and the manoeuvrings between the British and Chinese governments on market prices.
How we continue to support you:
Keeping calm and carrying on: Keeping a level head is what my team and I will be continuing to do, and the approach we will be stressing to all of our clients. We account for times of uncertainty in our investment strategies, which aim to protect our client portfolios through all market conditions. Even with a volatile US administration, our tailored strategies will work to maximise invested assets, as we look to balance out shorter-term fluctuations over the longer term.
Industry-leading expertise: Together, our team has amassed decades of experience which enables us to provide cutting-edge advice. We monitor a diverse range of market communications from a multitude of esteemed investment houses, including Ascencia Investment Management. We spend the time considering this professional insight to distil into clear, actionable information that empowers you and your choices.
Communication Is Key: We believe in transparent and open communication. I have always been proud of our holistic approach to client support, and I would urge anyone who has any questions or concerns about financial strategies we’d advise on behalf of your clients to contact us. No question is too small, your peace of mind is the priority.
You can get in touch with us directly 0161 886 8000 or email us at enquiries@frenkeltopping.co.uk. We will talk you through any questions or concerns until you feel happier.
Anxiety during periods of market volatility is natural. I view us as one team, collaborating to ensure that your clients’ investments provide the maximum support for their circumstances and we will take steps to alleviate any concerns this period raises.
This is our world, and we keep up with the latest changes so you get the best possible guidance, that keeps things simple and never overcomplicates. We will support you as we always have done, navigating these challenging times together.
