The latest economic news and market highlights from the UK and abroad.
The headlines
📉 US slowdown fears – consumer confidence is sinking, and the US composite PMI hit a 17-month low after a contraction in the services industry - stoking fears of a recession.
🤖 Tech and crypto sell-off – stellar results from Nvidia failed to stop a widespread US tech sell-off, with Bitcoin also tumbling below $80,000 – do we hear bubbles bursting?
🥊Tariff escalations – US President Trump declared the 25% tariffs on Canada and Mexico would go ahead next week, alongside an additional 10% tariff on imports from China. And what about the UK? Trump said tariffs would be unnecessary if a trade deal could be agreed.
🤝 Big minerals deal? – Trump and Ukrainian President Zelensky could strike a deal today covering access to rare earth metals, security guarantees, and investment for the reconstruction of Ukraine.
🪙 Trump plays his gold card – US residency and a path to citizenship will be offered to wealthy foreigners who invest $5 million for a “gold card”. US Commerce Secretary Howard Lutnick has suggested the program could raise $1trn to pay down the national debt and help stimulate the economy.
What does that mean for your clients?
Uncertainty from the new US administration is weighing on markets. If tariffs are watered down, expect some market reversals, but for now, investors are seeking safety in bonds.
There’s also been a shift of capital into global equities, especially in Europe and China, both rallying off low valuations. Meanwhile, UK Prime Minister Keir Starmer made progress in trade talks with Trump, showing his tough stance can be softened.
But where US President Trump has been consistent is in his “America First” approach, as can be seen by the “gold card” proposal to attract wealth. Time will tell if he can wrestle back US market dominance.
Chart of the week - go with the flow
Source: J.P. Morgan Asset Management
Why’s this worth sharing?
In a fallow week for Six Nations fixtures we can look back and see the importance of home bias.
Home hasn’t been where the heart is for European investors for some time. Our chart of the week shows that has begun to change, with a sharp decline in ETF money from Europe flowing into US stocks. At the same time, flows from US investors into Europe have risen.
Year to date we’ve seen a rotation in fortunes across markets that have mirrored the rotation in flows, with European equities surging ahead of all regions other than China. It may have felt like US leadership would never change, but 2025 is showing us that it can.
(A Welsh rugby fan can only hope for a similar comeback.)
The markets
FTSE strides forward: Increased price targets from brokers boosted banking stocks this week, with mining stocks also rising after improved sentiment on copper tariffs. Index returns benefitted from soaring shares in Rolls-Royce and the London Stock Exchange Group (LSEG), both of which delivered upbeat forecasts.
US Tech tumbles: Improved results from Nvidia failed to meet sky high market expectations, and brought about a broader semiconductor sell-off which sent the S&P into negative territory for the year to date.
Hang Seng highs: A flood of money from mainland China investors drove the Hang Seng higher this week, with tech stocks particularly in vogue as Tencent released their high speed Hunyuan Turbo AI model.
Euro stocks tap the breaks: The rousing rally in European stocks took a pause for breath after US President Trump threatened 25% tariffs on European Union imports, with the prominent automotive sector taking a hit.
Safe haven switch: Gold fell back this week, with capital instead seeking refuge in US treasuries in response to concerns over an economic slowdown.
| ‎ | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 1.23% | 7.66% |
| FTSE 250 | -0.93% | -0.70% |
| S&P 500 | -2.43% | -1.03% |
| NASDAQ | -4.89% | -3.03% |
| MSCI Europe ex UK | 0.04% | 10.64% |
| Hang Seng | 1.04% | 17.59% |
| Nikkei 225 | -1.52% | -0.42% |
| Brent Crude | -0.94% | -2.62% |
| Gold Spot | -2.04% | 9.41% |
| UK 10yr Gilt yield | -6bps | -5bps |
| US 10yr Treasury yield | -17bps | -31bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close Thursday 27th February 2025.
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