Introduction: BoJ warns of ‘high uncertainties’ from trade war threat
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
These are difficult times for central bankers, as the threat of a global trade war and fears of a US recession grip economies and the markets.
And this morning, the Bank of Japan has put its finger on the problem – policymakers simply can’t predict what will happen next.
Speaking to reporters, BoJ governor Kazuo Ueda explained:
“In the past month or so, there have been rapid changes in the scope and speed of U.S. tariffs. However, there are aspects we may not know even beyond April, so uncertainty remains high.
We will scrutinise how the U.S. trade policy unfolds, how it affects the U.S. and other global economies, and how that all impacts Japan’s economic and price outlook.”
Ueda also cautioned that “overseas uncertainty has heightened sharply lately”, and that it is hard to quantify the risks at this stage.
Ueda was speaking after the BoJ decided to leave Japan’s interest rates on hold at 0.5%, even though Japan’s annual wholesale inflation rate hit 4.0% in February.
In the weeks leading up to today’s meeting, president Trump has imposed 25% tariffs on steel and aluminium imports to the US and pledged to bring in ‘reciprical and sectoral’ tariffs on 2 April, to balance out any inbalances.
But he has also pulled back from his trade war with Canada and Mexico by temporarily delaying tariffs on many goods from the two countries, adding to the trade policy uncertainty.
As the BoJ put it:
“Concerning risks to the outlook, there remain high uncertainties surrounding Japan’s economy and prices including the evolving situation regarding trade and other policies in each jurisdiction.”
Earlier this week, US treasury secretary Scott Bessent indicated that countries will get an opportunity to avoid higher tariffs by reducing their own trade barriers.
But a White House official has indicated that Donald Trump’s intention is still to enact tariffs on 2 April.
The US central bank, the Federal Reserve, will give its view on the situation tonight when it sets monetary policy – it’s not expected to change interest rates though.
The agenda
-
10am GMT: Eurozone inflation report (final estimate) for February
-
11am GMT: US weekly mortgage application data
-
6pm GMT: US Federal Reserve interest rate decision
-
6.30pm GMT: US Federal Reserve press conference
Key events
Shepherd Neame: Budget changes will cost us £2.6m
In a week’s time, we’ll be bracing for Rachel Reeves’s spring statement, which may turn in to more of a mini-budget given speculation of possible spending cuts or tax rises to keep within the chancellor’s fiscal rules.
But businesses are still getting to grips with the chances made in last autumn’s budget, such as the increase in employer national insurance contributions and the higher minimum wage, which both kick in next month.
Shepherd Neame, which claims to be Britain’s oldest brewer, says these “new, and unwelcome, cost increases” will cost it £2.6m, which it plans to absorb through higher prices and cutting out costs.
The Kent-based brewer, maker of Spitfire and Bishops Finger, told the City this morning:
The Company has traded well in the first half and delivered strong profit growth. Like other operators in the sector, we face many cost headwinds that will impact us in the second half, following the recent Budget, notably the increase in national living wage and national insurance from April. We estimate that the annualised impact of these two items is £2.6m, with the incremental costs commencing in April and impacting the final quarter of the 2025 financial year.
We plan to mitigate the majority of these costs over the next 18 months through price increases and cost efficiencies.
Japan’s exports rose at a faster rate last month, suggesting that some customers overseas may have been increasing their orders ahead of a possible trade war.
Exports measured by value rose by 11.4% year-on-year in February, Japan’s Ministry of Finance reported, while imports fell 0.7%
That pulled Japan’s trade balance back into the black, with a surplus of ¥584.5bn.
By region, shipments to the US rose 10.5% by value, though they did slip by 3.3% in terms of volume. Those to China increased 14.1%, probably due to a pick-up in demand after the Lunar New Year holiday ended, while exports to Europe fell 7.7%.
The apparent rebound in the value of X comes at a see-saw moment for Elon Musk’s finances.
The recent slump in the value of Tesla means that his vast stake in the electric car market is no longer his most valuable asset.
Musk’s stake in SpaceX, his private rockets and satellites business, is now the billionaire tycoon’s largest asset for the first time in five years, according to Forbes, which still pegs his net worth at $323bn – more than anyone else in the world.
Elon Musk’s X now valued at $44bn again
The value of X has reportedly rebounded back to the level that Elon Musk paid for the social media platform back in October 2022.
According to the Financial Times, investors valued X at $44bn when they bought a stake in the company earlier this month.
That would be a rebound for Musk and the investors who helped him by Twitter (now renamed) three years ago.
X’s value had tumbled under Musk’s early ownership, with some advertisers cutting their spending on X due to concerns that extreme content on the platform could damage their brands.
At the start of 2024, mutual fund Fidelity revealed it had cut the value of its stake by 71%, which implied X’s value then had fallen to about $12.5bn.
But today, the FT reports that while X’s revenues have dropped since Musk’s takeover, it made an adjusted EBITDA (ie underlying) profit of $1.2bn last year.
They say:
Investors valued the platform at $44bn in a so-called secondary deal earlier this month, in which they exchange existing stakes in the company, according to two people with knowledge of the matter.
X was also working on raising fresh capital in a primary round, which would aim to raise about $2bn through selling new equity and be used to pay off more than $1bn of junior debt that Musk agreed to take on to finance his buyout of the company, then known as Twitter, in 2022, several people briefed on the situation said.
Introduction: BoJ warns of ‘high uncertainties’ from trade war threat
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
These are difficult times for central bankers, as the threat of a global trade war and fears of a US recession grip economies and the markets.
And this morning, the Bank of Japan has put its finger on the problem – policymakers simply can’t predict what will happen next.
Speaking to reporters, BoJ governor Kazuo Ueda explained:
“In the past month or so, there have been rapid changes in the scope and speed of U.S. tariffs. However, there are aspects we may not know even beyond April, so uncertainty remains high.
We will scrutinise how the U.S. trade policy unfolds, how it affects the U.S. and other global economies, and how that all impacts Japan’s economic and price outlook.”
Ueda also cautioned that “overseas uncertainty has heightened sharply lately”, and that it is hard to quantify the risks at this stage.
Ueda was speaking after the BoJ decided to leave Japan’s interest rates on hold at 0.5%, even though Japan’s annual wholesale inflation rate hit 4.0% in February.
In the weeks leading up to today’s meeting, president Trump has imposed 25% tariffs on steel and aluminium imports to the US and pledged to bring in ‘reciprical and sectoral’ tariffs on 2 April, to balance out any inbalances.
But he has also pulled back from his trade war with Canada and Mexico by temporarily delaying tariffs on many goods from the two countries, adding to the trade policy uncertainty.
As the BoJ put it:
“Concerning risks to the outlook, there remain high uncertainties surrounding Japan’s economy and prices including the evolving situation regarding trade and other policies in each jurisdiction.”
Earlier this week, US treasury secretary Scott Bessent indicated that countries will get an opportunity to avoid higher tariffs by reducing their own trade barriers.
But a White House official has indicated that Donald Trump’s intention is still to enact tariffs on 2 April.
The US central bank, the Federal Reserve, will give its view on the situation tonight when it sets monetary policy – it’s not expected to change interest rates though.
The agenda
-
10am GMT: Eurozone inflation report (final estimate) for February
-
11am GMT: US weekly mortgage application data
-
6pm GMT: US Federal Reserve interest rate decision
-
6.30pm GMT: US Federal Reserve press conference
