Introduction: Growth fears grip markets
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The Trump Bump has turned into the Trump Slump, as rising fears of a US recession rocked the markets yesterday.
Monday was a dark day on Wall Street, where the S&P 500 fell 2.7%, the Dow Jones dropped 2%, and the tech-heavy Nasdaq dropped 4%, with losses among the major tech companies.
Investors dashed for save-haven assets after the US president refused to rule out that his policies would lead to a recession, or rising prices.
Instead, he told Fox News in an interview aired last weekend that there would be a “period of transition.”…..
The slide means that the jump in asset prices after Trump’s election win last November has been wiped out.
Hopes of a ‘Trump put’ have also taken a knock. This is the hope that the US president might take action to prop up share prices if the markets suffered a sharp decline.
[UPDATED: a put option gives you the opportunity to sell an asset at a particular price].
Michael Brown, senior research strategist at Pepperstone, explains:
I think it’s pretty clear, at this stage, that the idea of a ‘Trump put’ is stone dead – or, at least, that the strike price of said put is much, much lower than had previously been envisaged. Trump’s weekend refusal to rule out a recession this year is just the latest evidence of this, coupled with both Treasury Secretary Bessent, and Commerce Secretary Lutnick, having both ‘rolled the pitch’ for a slowdown in recent weeks.
The Admin are, for now, doubling down on the idea of ‘short term pain, for long term gain’, in the hope that macro headwinds can be blamed on the Biden Admin, and that Trump & Co will be able to claim credit for the economic, and market, turnaround that would likely follow. While I see how this might be politically expedient, juicing the economy just in time for the midterms, it’s rather economically incoherent, particularly for an Oval Office which claims to be more focused on Main Street, than on Wall Street.
After its worst day of the year, Wall Street is expected to open a little higher when trading resumes at 1.30pm GMT.
That might bring some calm to Europe’s markets, after a choppy session in Asia-Pacific markets overnight.
Investors are also poised for the latest US economic data, covering small business confidence and job vacancies, for a healthcheck on American growth.
The agenda
Key events
Citigroup downgrades its stance on U.S. stocks after bearish signals are triggered
In a blow to Wall Street, Citigroup has downgraded its stance on U.S. stocks.
Citigroup has cut its rating on U.S. equities to neutral from an overweight, or bullish, stance since October 2023.
In our call of the day, a team of Citi strategists led by Dirk Willer said it’s now clear that “U.S. exceptionalism is at least pausing.” Alongside that shift, they upgraded China stocks to overweight, which in balance, now leaves their overall global equity view at neutral.
Willer and the team explained that two of their bearish signals have now been triggered for U.S. stocks. One was the S&P 500 breaking its 200-day moving average “at a time when the market is/has been extended.”
The second signal was triggered when four of seven “generals,” referring to the major technology stocks that have been leading the market higher for the past two years, fade for at least five days, said the strategists.
Yesterday’s sell-off is a wake-up call that markets are struggling with policy uncertainty, recession fears, and stretched valuations in tech, reports Kate Leaman, chief market analyst at AvaTrade, adding:
Investors will be watching for Trump’s next moves on trade and economic policy – clarity could calm markets, while more ambiguity may fuel volatility. Right now, it’s all about sentiment – and the mood on Wall Street has turned decisively bearish.”
Gold, a classic safe-haven, is a little higher today.
The spot price of gold is up 0.8% at $2,912.41 per ounce, towards the record highs set in February.
Ruben Ferreira, head of Portuguese Operations at investment platform FlowCommunity, says gold is being lifted by concerns over the US economy.
Gold prices rebounded on Tuesday, driven by a weaker U.S. dollar and increased safe-haven demand. The shift in sentiment came amid growing concerns about a potential economic slowdown in the U.S., especially after President Donald Trump stated that the economy was going through a “transitional period”. Trump didn’t rule out that his policies could cause a recession, affecting market sentiment.
At the same time, recent data showed a potential slowdown in the labor market, boosting demand for safe-haven assets. Additionally, the market is awaiting inflation data including the CPI and PPI. Softer-than-expected figures could push the Fed to adopt a more dovish tone and consider cutting interest rates sooner, which could support gold.
Here’s our news story about the pick-up in the euro, and European markets, today:
Wall Street is set to edge a little higher, after its biggest selloff of the year so far.
Reuters has the details:
Dow E-minis were up 134 points, or 0.32%, S&P 500 E-minis were up 23 points, or 0.41% and Nasdaq 100 E-minis were up 105.75 points, or 0.54%.
Futures tracking the domestically focused Russell 2000 index rose 1%.
Trump’s “stop-go policies” will hit the US within a horizon of three quarters, predicts economics professor Professor Costas Milas, of the University of Liverpool’s. Management School.
He tells us:
There is no doubt that the US economy will be hit by Trump’s stop-go policies that create and sustain uncertainty. The chart below plots US growth together with a simple weighted average of (a) US economic policy growth (from: https://www.policyuncertainty.com/us_monthly.html) and (b) trade policy uncertainty growth
The two variables move in opposite direction (their contemporaneous correlation is -0.20) with US uncertainty hitting US growth most some three quarters later.
All these, without taking into account the inflationary impact of Trump’s tariffs which, in turn, will hit aggregate US demand further…
Asset manager aberdeeen reckons there’s an increased risk that Donald Trump imposes “aggressive” trade policies that cause significant disruption.
Following an update to their “Trump scenarios”, Lizzy Galbraith, political economist at aberdeen, explains:
“President Trump’s rapid pace of executive actions, especially on trade, has led us to update our scenarios in several important respects.
We now see the US weighted average tariff rate going higher still to 9.1%. We assume a reciprocal tariff to be implemented, albeit with various carve-outs; higher blanket tariffs on China; and more sector-specific tariffs, including on the EU, Canada and Mexico.
Moreover, the risk of an even more disruptive trade policy has increased. Our ‘Trump unleashed’ scenario assumes reciprocal tariffs are consistently applied and include non-tariff trade barriers, while USMCA fully breaks down.
This results in the US average tariff reaching 22%, above 1930s peaks.
Here are aberdeen’s Trump scenarios:
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Trump 2.0 (50% probability) remains our base case, in which Trump acts on his policy priorities but stops short of fully implementing campaign pledges. We now expect more in the way of tariffs, pushing the US average weighted tariff higher.
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Trump unleashed (35% probability) sees the president and Congress deliver more aggressive policy changes. Non-tariff elements of the reciprocal tariff policy are emphasised making concessions harder to achieve.
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Trump delivers for markets (15% probability) involves the president focussing on the market-friendly aspects of his agenda, with many of the more aggressive announcements on trade and foreign policy proving to be just negotiating postures.
US small business confidence drops
Newsflash: optimism among US small businesses fell last month, as economic uncertainty hurts American firms.
The Small Business Optimism Index, produced by the National Federation of Independent Business (NFIB) fell by 2.1 points in February to 100.7, the second monthly drop in a row.
It’s the fourth month running that optimism has been above the long-term average, but it’s also 4.4 points below its most recent peak of 105.1 in December.
NFIB’s Uncertainty Index rose four points to 104 – the second highest recorded reading.
NFIB chief economist Bill Dunkelberg says:
Uncertainty is high and rising on Main Street and for many reasons. Those small business owners expecting better business conditions in the next six months dropped and the percent viewing the current period as a good time to expand fell, but remains well above where it was in the fall.
Inflation remains a major problem, ranked second behind the top problem, labor quality.
The report alos found that fewer business owners expect the economy to improve, and that many are raising prices – which will fuel concerns that inflationary pressures are building.
Here’s the details:
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The net percent of owners expecting the economy to improve fell ten points from January to a net 37% (seasonally adjusted).
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Twelve percent (seasonally adjusted) of owners reported that it is a good time to expand their business, down five points from January. This is the largest monthly decrease since April 2020.
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Sixteen percent of owners reported that inflation was their single most important problem in operating their business, down two points from January and now just below labor quality as the top issue. The last time it was this low was in October 2021.
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The net percent of owners raising average selling prices rose 10 points from January to a net 32% (seasonally adjusted). This is the largest monthly increase since April 2021, and the third highest in the survey’s history. The percent of owners lowering their prices is 10 points lower than it was one year ago.
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Seasonally adjusted, a net 29% plan price hikes in the next three months, up three points from January and the highest reading in 11 months.
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Labor costs reported as the single most important problem for business owners rose three points to 12%, only one point below the survey’s highest reading of 13% reached in December 2021. The last time labor costs ranked this high was in February 2023.
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The frequency of reports of positive profit trends was a net negative 24% (seasonally adjusted), up one point from January.
New CEO at the FT
Mark Sweney
The parent of the Financial Times has appointed commercial boss Jon Slade as the paper’s new chief executive.
Slade, who has worked at the newspaper for more than 20 years and joined the management board in 2014, currently holds the title of chief commercial officer.
Slade will take over from John Ridding, who is to step down at the end of June after leading the newspaper group for almost two decades.
His current remit covers responsibility for three quarters of FT Group’s annual revenues.
The group’s global profits rose to almost £30m in 2023, according to the most recent publicly available figures, with revenues topping half a billion pounds for the first time.
However, in the UK, pre-tax profits fell from £6.8m to £3.9m year-on-year.
“Jon’s substantial experience has given him a deep understanding of the FT Group, and areas where there is rich territory for future growth,” said Naotoshi Okada, chairman and group chief executive of parent company Nikkei.
Ridding will remain with Japanese media group Nikkei, which pipped Germany’s Axel Springer with an 11th-hour £844m bid to buy the FT in 2015, as a special adviser reporting to Okada.
Ridding, who has been at the FT for 35 years, is also taking the non-executive role of honorary FT chairman.
The FT’s total subscriber base increased to a new record high of 1.4m in 2023, boosted by a 17% rise in paying digital readers.
Growth was primarily driven by corporate subscriptions, which helped offset a 7% decline in print readership.
More than two-thirds of revenues come from digital subscriptions, while other revenue streams include advertising, events at FT Live, research, circulation and its consultancy FT Strategies.
FT’s digital and subscription-based transformation to a global paying audience of 2.9 million people and revenues of £500m for the first time in 2023.
More than two-thirds of its revenues now come from digital subscriptions (both consumer and B2B) while other revenue streams include advertising, events at FT Live, research, circulation and consultancy FT Strategies.
Yesterday was a tough one for Tesla – shares in the electric carmaker tumbled by 15%, it’s biggest one-day drop since 2020.
Its value has now halved since mid-December, on concerns that some buyers may be put off the brand by Elon Musk’s activities.
But it has won one new customer – DJ Trump of Pennsylvania Avenue.
The US president announced last night he will buy a “brand new Tesla” today as “a show of confidence and support” for Musk, who he calls a “truly great American”.
With the dollar ailing, how high could the euro go?
Vasileios Gkionakis, senior economist and strategist at Aviva Investors, suggests the euro could hit $1.15 (up from $1.09 today) “much sooner” than the end of this year.
Gkionakis cites three factors:
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The unwinding of the Trump/tariff trade.
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A seismic shift in Germany’s fiscal stance and EU-wide policy changes.
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The ECB’s “hawkish cut” [last week] signaling a shift in monetary conditions.
And explains:
The first one remains an open question, and my belief has always been that for EUR gains to sustain and extend beyond current levels, the EU would have to avoid a full trade war with the US. If likely tariffs are targeted and/or subject to negotiations (by the EU offering to reduce some of the duties it imposes on US products and/or commit to some increase in the volumes of specific US goods that it imports) then this condition would be satisfied; nonetheless, it remains to be seen.
On the second one – as I have written previously – I view it as a monumental shift that boosts growth expectations as well as term premia (hence, higher EA yields) but also sets the second precedent (following NGEU) that when push comes to shove, Europe gets its act together and cracks on with structural changes: in sum, this is a sentiment/confidence shift and outright currency-positive.
Lastly, the ECB’s acknowledgement that monetary policy is now meaningfully less restrictive together with President Lagarde’s lack of confidence to signal commitment to further cuts has resulted in (a long overdue…) rerating higher of short rate expectations.
UBS’s ‘bull case’ for the US economy (see earlier post) was partly based on a scenario where the US corporate tax rate is cut to 20% or lower.
Bloomberg are reporting that pressure is mounting on Donald Trump to speed up his main proposal for juicing the economy: a sweeping tax bill.
They say:
Trump’s team is starting to warn of short-term pain as they pursue a drastic overhaul of trade and public spending. Tax cuts, which put more cash in consumer pocketbooks, could help soften the blow. Allies would ideally like to pass a bill by July, though there are plenty of hurdles.
Pressure mounts on Trump to speed up his biggest economic proposal — a sweeping tax measure — after his tariff policies send markets into a tailspin https://t.co/94x48TXjpK
— Bloomberg (@business) March 11, 2025
UK housebuilder Persimmon grows profits
Julia Kollewe
UK housebuilders are giving the London stock market some support this morning.
Shares in Persimmon, one of Britain’s biggest housebuilders, rose after it reported better-than-expected profits for 2024.
The shares climbed by 4.4%, but are still down by 11% over the past year.
The builder’s underlying profit before tax increased by 10% to £395m last year, as it completed 7% more homes than in 2023, a total of 10,664. The average selling price rose by 5% to £268,499, roughly £13,000 higher than in 2023. Persimmon took a one-off charge of £34.4m to pay for removing combustible cladding and other fire-related remediation work.
In the current order book, prices are up by 3% compared to last year and sales rates have improved, which means its order book for private homes is 27% ahead of last year at £1.15bn.
Persimmon, which owns the upmarket Charles Church brand, along with brick, tile and timber frame factories, is targeting up to 11,500 completions this year, including more affordable homes. Last year, it delivered 1,589 new homes to housing associations, down from 2,241 the year before, at an average selling price of £161,916, up 6% year-on-year.
Persimmon has been acquiring land worth £1.55bn over the last three years. It has invested in its sales and marketing platforms, resulting in a 34% increase in website visitors and 26% growth in enquiries over last year.
Along with seven other major housebuilders, Persimmon is under investigation by Britain’s competition watchdog for suspected breaches of competition law, namely exchanging competitively sensitive information. That investigation has been extended until May.
Richard Hunter, head of markets at interactive investor, said:
“It is perhaps a little early to be calling a full recovery, but it is also fair to say that some of the previous headwinds are showing signs of turning into tailwinds.
While affordability has been and could yet continue to be an issue, the recent interest rate cut clearly sparked the mortgage market into life, especially for first-time buyers where Persimmon has had a traditionally higher exposure. The imminent changes to stamp duty could also have brought some buying activity forward, although it remains to be seen whether that impacts the numbers on the remainder of the year.”
The sell-off that swept markets yesterday, and onto Asia-Pacific trading floors earlier today, appears to be abating.
The pan-European Stoxx 600 index is now flat, while the UK’s FTSE 100 index is only down 7 points (-0.08%).
Matt Britzman, senior equity analyst at Hargreaves Lansdown, says:
“UK markets have managed to find some footing after yesterday’s global market selloff, with the FTSE 100 broadly flat at the open.
Markets are jittery and volatility seems like the only certainty while the White House pushes hard to usher in a new era, seemingly happy for stock markets to be collateral damage.
