London Pre-Open: Stocks to Slump After Heavy US, Asian Losses

Stocks

Summary:

London stocks were set to open lower amid concerns over Trump’s tariff threats. UK house prices rose more than expected in February.

London stocks were set to slide at the open on Friday following heavy losses on Wall Street and in Asia amid concerns about Donald Trump’s tariff threats.

The FTSE 100 was called to open around 50 points lower.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "FTSE 100 and European futures are pointing to a shaky start for stocks this morning, echoing weak sessions on Wall Street and Asian exchanges.

"Tariffs continue to drive the narrative, and talk of a reprieve for Canada and Mexico has evaporated as next Tuesday’s deadline approaches. President Trump has also vowed to slap an additional 10% import duty onto Chinese goods, as he leans heavily on the anti-fentanyl narrative to justify the trade restrictions. The only certainty in this saga is uncertainty, so keep a close eye on developments between now and 4 March.

"Next on the agenda is reciprocal tariffs pencilled in for 2 April with other major US trading partners. The EU, in particular, will be in focus. An amicable start to talks with UK premier Keir Starmer looks to have set the tone for a potential trade deal with the UK but with no details outlined it has not been enough to boost enthusiasm for London listed shares."

Investors will also be mulling the latest data from Nationwide, which showed that house prices rose more than expected in February.

Prices were up 0.4% on the month following a 0.1% increase in January, beating expectations for a 0.2% jump.

On the year, house prices rose 3.9% in February, down from 4.1% the month before.

The average price of a home stood at £270,493, up from £268,213.

Nationwide chief economist Robert Gardner said housing market activity has remained resilient in recent months, despite ongoing affordability challenges.

"Indeed, the second half of 2024 saw a noticeable pick up in total housing transactions, which were up 14% compared with the same period in 2023," he said. "However, taking 2024 as a whole, transactions were still modestly (6%) lower than the levels prevailing before the pandemic struck in 2019.

"In terms of the pattern of transactions, it is notable that first-time buyer activity continued to recover, with mortgage completions in 2024 just 5% below 2019 levels. This represents a solid performance, given the interest rate environment – for example, five-year fixed mortgage rates are currently around 4.4% (for borrowers with a 25% deposit) compared to c2% in 2019.

"Cash transactions remained particularly robust, with activity 2% above pre-pandemic levels."

Looking ahead, Gardner said changes to stamp duty at the start of April are likely to generate volatility in transactions in the near term, as buyers bring forward their purchases to avoid the additional tax.

"This will likely lead to a jump in transactions in March, and a corresponding period of weakness in the following months, as occurred in the wake of previous stamp duty changes."

In corporate news, British Airways owner IAG reported a better-than-expected jump in annual profits after doubling earnings in the final quarter, driven by "robust" leisure travel and said it planned to return a further €1bn to shareholders.

Adjusted operating profit rose 26% to €4.4bn, beating estimates of €4.08bn.

Weir Group reported a 9% improvement in full-year adjusted operating profit in its final results, to £472m, despite revenue for 2024 narrowing by 1% to £2.51bn.

The FTSE 100 company also announced an agreement to acquire mining software specialist Micromine for £657m, in a deal expected to close in the second quarter.

It said it would fund the purchase through existing cash and new debt, with net debt-to-EBITDA anticipated to remain below 2x by the end of 2025 and declining further in 2026.

Source: Sharecast

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Political

Economic

[Quick Facts]

◆ Trump's "Tariff Threat" crushes U.S. Stocks

◆ Putin: Russia and the U.S. are prepared to re-establish cooperative relations

◆ Federal Reserve officials signal a hold on interest rates

[News Details]

Trump's "Tariff Threat" crushes U.S. Stocks

President Trump's recent announcement of impending tariffs on Canada and Mexico, slated to commence next week with reciprocal tariffs effective April 2, has triggered a market downturn. The Canadian Prime Minister's immediate response, vowing a strong reaction to the implementation of these tariffs, has exacerbated the situation. Consequently, the U.S. stock market has shifted into risk-off mode, resulting in a broad-based decline across the three major indices. Notably, technology giants, which have spearheaded market gains over the past three years, have led the downturn. As a casualty of this volatility, Nvidia, a prominent semiconductor firm, experienced a significant drop of over 8% despite reporting better-than-expected earnings, causing its market capitalization to fall below the US$3 trillion threshold.

Putin: Russia and the U.S. are prepared to re-establish cooperative relations

During a Federal Security Service board meeting on February 27, Russian President Vladimir Putin stated that Russia and the U.S. are prepared to re-establish cooperative relations. Putin indicated that Russia is engaging with the new U.S. administration, with both sides committed to restoring bilateral relations and gradually addressing the numerous issues that have accumulated during the evolution of the global landscape.

Putin also stated that Russia has never rejected a peaceful resolution to the Ukrainian crisis, calling for adherence to the principle of the indivisibility of European and global security, which means not safeguarding one's own security at the expense of other countries' security.

Notably, prior to this, delegations from Russia and the U.S. reached some consensus during talks in Saudi Arabia on resolving "thorny issues" between the two countries and ending the Russia-Ukraine conflict.

Federal Reserve officials signal a hold on interest rates

On Thursday, voting member for this year and President of the Federal Reserve Bank of Kansas City, Schmid, cautioned that the current risks of inflation and concerns about economic growth coexist in the U.S. The Federal Reserve may have to seek a balance between the two and may need to reconsider the concept of core inflation, as food prices now behave more like other commodities.

Voting member for next year and President of the Federal Reserve Bank of Philadelphia, Harker, remains optimistic about the economic outlook. He believes that action should not be taken hastily based on a single report, and that the current policy interest rate is still sufficiently restrictive to continue exerting downward pressure on inflation.

Voting member for next year and President of the Federal Reserve Bank of Cleveland, Hammack, is more hawkish. She believes that the Federal Reserve's current interest rate policy may be approaching a neutral level, and the Federal Reserve may maintain the current interest rate level for "a considerable period of time". Current stock valuations are high, and the economy can adapt to higher interest rates in the long run.

[Today's Focus]

UTC+8 15:00 UK February Nationwide House Price Index MoM

UTC+8 15:30 Switzerland January Real Retail Sales YoY

UTC+8 15:45 France February CPI MoM Preliminary

UTC+8 16:55 Germany February Unemployment Change (in ten thousands) Seasonally Adjusted

UTC+8 21:00 Germany February CPI MoM Preliminary

UTC+8 21:30 U.S. January Core PCE Price Index YoY

UTC+8 22:00 U.S. February Chicago PMI

Pending Ukrainian President Zelenskyy's visit to Washington, expected signing of rare earth minerals agreement

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Warren Takunda

Economic

The war-torn Ukrainian economy could expand by 5% next year if a ceasefire is agreed, the European Bank for Reconstruction and Development (EBRD) has predicted – but prospects for reconstruction depend on a lasting peace.

The London-based lender has invested $6.2bn (£4.9bn) in projects in Ukraine over the course of the three-year conflict.

It forecasts GDP growth for Ukraine at 3.5% this year, as the country battles inflation caused by Russian attacks on power generation, and 5% in 2026, if hostilities are halted.

Beata Javorcik, the EBRD’s chief economist, said it is prepared to support the rebuilding of Ukraine in the event that negotiations secure an end to the war. “We stand ready to invest when the time comes,” she said.

As Washington hails an anticipated agreement with Kyiv on extracting Ukraine’s valuable mineral resources, Javorcik praised the Zelenskyy government’s approach to steering the economy through terrible circumstances.

“The positive things are that despite three years of the war, the Ukrainian government managed to maintain macroeconomic stability,” she said. “That’s a great achievement.”

But asked about the longer-term outlook for Ukraine, Javorcik pointed to EBRD analysis of two centuries’ worth of data, which showed that of those countries in which a war is fought, half still bear the economic scars 25 years later.

“The success of reconstruction is not assured,” Javorcik said. “To a large extent this is driven by the fact that peace is elusive, that conflict gets reignited relatively quickly.”

She added: “What this resolution to the conflict will mean for Ukraine will depend on how stable the situation is.”

Donald Trump has begun talks with Moscow aimed at ending the war but the US has not invited Kyiv to join the negotiations, and appears to be contemplating making significant concessions to Russia.

Trump initially mooted the mineral extraction arrangement as a way of Kyiv repaying US backing for the country’s war efforts. It remains unclear what role the US expects to play in reconstructing Ukraine, if peace talks succeed.

The chancellor, Rachel Reeves, said: “Russia’s illegal invasion of Ukraine has placed a heavy burden on the global economy, with higher energy prices, higher food prices and disruption to global trade.”

Speaking at the G20 meeting of finance ministers in South Africa, Reeves added: “It is essential it’s a just and a durable peace if we are to get the benefits both for Ukraine and indeed the global economy.”

Javorcik was speaking as the EBRD, which is backed by 75 countries as well as the EU, issued its latest economic forecasts for the region it covers – which includes central and eastern Europe, the Baltic states and the Caucasus.

Across these countries, the EBRD has revised down its forecast of average GDP growth for 2025 to 3.2%, from the 3.5% it had forecast in September.

Javorcik pointed to the impact of continued economic uncertainty, such as Trump’s tariff plans, and the backdrop of rising defence spending across the continent, as nations adjust to a more dangerous geopolitical environment.

“Defence expenditure is going up not just in the Baltic states and Poland; it has gone up in Lebanon, in Armenia, in Kyrgyz Republic, in Greece, in Tunisia,” she said.

“It’s a broad-based disappearance of the peace dividend that we enjoyed over the last decade – and this has implications for long-term growth.

“If defence expenditure is viewed as a necessity, and if you can’t cut social expenditure because it’s politically impossible, then what you’re going to cut is education, R&D, investment in infrastructure – meaning all the things that build foundations for long-term growth,” she said.

Analysing the potential impact of Trump’s tariffs, taking a 10% across-the-board levy as an example, the EBRD said most countries in its area of operation would not be hit hard directly because their exports to the US are limited.

But the indirect impact could be much larger: its analysis suggests for every 1% hit to German GDP growth because of tariffs, EBRD economies would contract by 0.8%. “That’s an average figure. It would be somewhat higher for countries like Turkey, Hungary and Slovakia,” Javorcik said.

Source: TheGuardian

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Owen Li

Forex

Economic

USD/CAD trades sideways around 1.4335 while the Canadian Dollar strengthens as Trump provides another month-long extension for tariffs on Canada and Mexico.

The US Dollar steadies as Trump reiterates tariff threats on the Eurozone.

Investors await the US PCE inflation and the Canadian GDP data, scheduled for Friday.

The USD/CAD pair trades flat around 1.4335 in European trading hours on Thursday. The Loonie pair consolidates as the impact of steadiness in the US Dollar (USD) has been offset by the upbeat Canadian Dollar (CAD).

Canadian Dollar PRICE Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.05%	-0.04%	0.54%	-0.08%	-0.01%	0.18%	0.43%
EUR	-0.05%		-0.09%	0.50%	-0.12%	-0.05%	0.13%	0.38%
GBP	0.04%	0.09%		0.61%	-0.03%	0.04%	0.22%	0.48%
JPY	-0.54%	-0.50%	-0.61%		-0.62%	-0.56%	-0.40%	-0.12%
CAD	0.08%	0.12%	0.03%	0.62%		0.08%	0.26%	0.51%
AUD	0.01%	0.05%	-0.04%	0.56%	-0.08%		0.18%	0.45%
NZD	-0.18%	-0.13%	-0.22%	0.40%	-0.26%	-0.18%		0.26%
CHF	-0.43%	-0.38%	-0.48%	0.12%	-0.51%	-0.45%	-0.26%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 106.70 as United States (US) President Donald Trump has reiterated fears of tariffs on the Eurozone. On Wednesday, Trump said that he will be announcing 25% tariffs on “cars and other things” from Eurozone “very soon”. Such a scenario would escalate global trade war tensions and will weigh on economic growth across the globe. President Trump’s tariff threats have improved the safe-haven demand of the US Dollar.

Market participants are also cautious ahead of the US Personal Consumption Expenditure Price Index (PCE) data for January, which will be released on Friday. The US PCE inflation data is expected to influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook. According to the CME FedWatch tool, traders are confident that the Fed will keep interest rates in their current range of 4.25%-4.50% in the March and May policy meetings.

Meanwhile, the CAD outperforms its peers as Donald Trump kept tariff plans for Canada and Mexico on hold for another month and provided a new deadline of April 2. Earlier, the deadline for slapping levies by the US on its North American allies was March 4, which was postponed after they agreed to tighten border securities to restrict flow of fentanyl and undocumented immigrants into the economy.

On the economic front, investors await the Canadian Gross Domestic Product (GDP) data for the December month and the last quarter of the previous data, which will be released on Friday. The Canadian economy is expected to have grown by 0.3% and 1.9% in December and in the October-December period of 2024 on an annualized basis, respectively.

Source: FXSTREET

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Owen Li

Economic

Commodity

COMEX copper futures surged after President Donald Trump ordered the US Commerce Department to investigate possible import tariffs on copper, ING’s commodity analysts Warren Patterson and Ewa Manthey notes.

Copper prices on the LME and COMEX continue to diverge

"The department has up to 270 days to report back to Trump. Copper prices on the LME and COMEX continue to diverge. LME copper is up around 8% year-to-date, while prices on COMEX have surged around 14%."

"Renewed tariff threats saw the COMEX-LME arbitrage spread widen back towards $900/t. There’s additional upside risk for copper in New York if tariffs are applied. The spread risks a pullback if tariffs fall short of expectations."

"The US produces around 5% of global copper mining output. Its reserves are also at around 5% of the total, according to the US Geological Survey (USGS). The country’s production has been on a downtrend -- dropping about 20% over the last decade, according to USGS. Meanwhile, the US imports roughly 45% of copper needs. It might be challenging to fill that gap with domestic production."

Source: FXSTREET

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Alex

Economic

Forex

Current US Dollar (USD) price movements are likely part of a range trading phase vs Chinese Yuan (CNH), probably between 7.2530 and 7.2750. In the longer run, downward momentum has largely faded; USD is expected to trade in a 7.2400/7.2900 range for the time being, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum has largely faded

24-HOUR VIEW: "Yesterday, when USD was at 7.2500, we noted 'a slight increase in downward momentum.' We added, USD 'could edge lower, but there are a pair of strong support levels at 7.2420 and 7.2350.' Our view did not materialise, as USD traded between 7.2481 and 7.2678, closing at 7.2660. The current price movements are likely part of a range trading phase, probably between 7.2530 and 7.2750."

1-3 WEEKS VIEW: "Our most recent narrative was from two days ago (25 Feb, spot at 7.2550), wherein 'the failure to hold below 7.2300 has diminished the likelihood of further decline.' Yesterday, USD edged to a high of 7.2678. While our ‘strong resistance’ level at 7.2705 has not been clearly breached yet, downward momentum has largely faded. USD has likely entered a range trading phase and is expected to trade between 7.2400 and 7.2900 for the time being."

Source: FXSTREET

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Warren Takunda

Economic

US President Donald Trump has said he is planning to hit goods made in the European Union with tariffs of 25%, claiming the bloc was created to "screw the United States".

"We'll be announcing it very soon," he told reporters at an appearance with members of his cabinet. "It'll be 25% generally speaking and that will be on cars and all other things."

The European Union said it would react "firmly and immediately against unjustified tariffs".

Trump's appearance sparked questions about his trade plans, as he also appeared to raise the possibility that looming tariffs on imports from Mexico and Canada, set to come into force on 4 March, might be postponed again.

An administration official later said the deadline remained in place, with the president planning to review Mexico and Canada actions related to border security over the coming days.

Trump made clear on Wednesday that trade with Europe also remained in his sights, repeating his criticism of European policies, which he said put American exporters of food products and cars at a disadvantage.

"The European Union was formed to screw the United States - that's the purpose of it and they've done a good job of it," he said. "But now I'm president."

The EU rejected the president's claims, saying the creation of a regional market had made doing business in Europe easier for American firms.

"It has been a boon for the United States," a spokesperson for the commission said. "We're ready to partner if you play by the rules. But we will also protect our consumers and businesses at every turn. They expect no less from us."

What are tariffs and why is Trump using them?

Tariffs are a tax on imports that is collected by the government and paid for by the companies bringing in the goods.

Trump has vowed to use the levies to boost US manufacturing, raise money and push other countries to change policies he opposes.

But there are concerns such measures could fuel inflation, with warnings that Americans could face higher prices for goods as businesses may choose to pass on some or all of the cost of tariffs to customers.

Since taking office, he has raised tariffs of 10% on goods from China and taken steps to hit other imports with duties, including directing his staff to develop recommendations for custom "reciprocal" tariffs for each country.

But he has also suspended some of those plans, leaving many businesses and analysts guessing as to whether he is prepared to carry out his threats.

"The 25% threat that he threw out today is in line with the high end of the range that he previously indicated," said Tobin Marcus, head of US policy and politics at Wolfe Research.

"It's a number that's concerning - certainly should be concerning - for the trans-Atlantic trade relationship, but not totally out of the blue."

'Worried, not afraid'

Antonin Finkelnburg, of the Federation of German Wholesale, Foreign Trade and Services which represents businesses, told the BBC that a 25% tariff on EU goods entering the US would created a "difficult" but "not an impossible" situation for Germany's economy.

"We are worried but we shouldn't be afraid," he told the BBC's Today programme.

Germany's car industry's products are popular in the US.

Mr Finkelnburg said many German car manufacturers were "already producing in the American market, so they wouldn't be directly affected by the tariffs", but said tariffs would still drive up prices.

"The car parts that are manufactured in to those cars are crossing the borders of Mexico and Canada several times so that already is driving the prices up," he added.

Earlier this month, Trump ordered 25% tariffs on goods from Mexico and Canada, America's top two trading partners. But he suspended the duties before they went into effect until 4 March, to allow for talks on border security.

On Monday, Trump said he expected tariffs of 25% on goods from Mexico and Canada to come into effect "on schedule".

At Wednesday's meeting, when asked for an update, he said the 25% tariffs on Mexico and Canada would go into effect on 2 April.

That is the same day that the Commerce Department is supposed to deliver its wider recommendations for "reciprocal" tariffs.

Commerce Secretary Howard Lutnick told reporters that "the overall is April 2" , distinguishing between tariffs tied to concerns about drug trafficking and migration from Mexico and Canada.

The Dow Jones Industrial Average, S&P 500 and Nasdaq all headed lower in mid-day trade, while the peso and Canadian dollar gained.

Source: BBC

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London Pre-Open: Stocks to Slump After Heavy US, Asian Losses

Source: Sharecast

February 28th Financial News

[Quick Facts]

[News Details]

[Today's Focus]

Ukraine’s Economy Could Grow by 5% Next Year if Hostilities End, EBRD Says

Source: TheGuardian

USD/CAD Flattens While Trump Postpones Tariff Plans For Canada And Mexico Again

Source: FXSTREET

US Copper Surges on Tariff Risks

Source: FXSTREET

USD/CNH: Price Movements are Likely Part of a Range Trading Phase

Source: FXSTREET

Trump Says 25% Tariffs on EU Will Be Announced Soon

What are tariffs and why is Trump using them?

'Worried, not afraid'

Source: BBC

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