Market Report: US recession fears send investors running for cover
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “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.
February’s UK retail scene wasn’t exactly a blockbuster romance, but Valentine’s Day tossed in a sweet little sales twist with jewellery and fragrances selling well. BRC data showed total industry sales up 1.1%, driven by a 2.3% increase in food, though February volumes are expected to be negative, while non-food sales remained flat year-over-year. Shoppers were happy cozying up with their screens as online buys took the lead and poor weather kept the spring wardrobe refresh on the backburner for now, with fashion sales the weakest category. February is typically a quiet month, sandwiched between post-Christmas sales and the arrival of spring, making it tough to draw too many conclusions – but ‘cautious consumer’ seems about right.
Debenhams is back with a reboot, four years after being scooped out of the bargain bin. Boohoo is reviving the iconic brand after saving it from the brink of extinction in 2021. But it’s more than just reigniting the flame; the Debenhams brand will now be leveraged at the group level, with Boohoo becoming Debenhams Group. It’s no secret that Boohoo has been struggling, and a name change doesn’t change the fact that sales are falling, down 16% in the brief trading update tucked away at the bottom of today’s release. Reviving the group’s youth fashion brands is a key challenge, and it’s not clear that bringing back a legacy brand name will do much to help.
US markets have finally faced a harsh reality that the Trump administration’s investor-friendly narrative was nothing more than a fantasy. They’re now pricing in a very real chance that the president’s carrot and stick approach to global politics will push the US into a recession. All this uncertainty has sparked a major market selloff, led by once high-flying tech stocks, with the Nasdaq down 4% and officially in correction territory after losing 10% since its December peak. Although futures point to a pretty flat start with only very small gains, the trading session is set to be wracked by ongoing uncertainty.
The Trump bump is gone, and perhaps the most worrying aspect of the current market is the absence of any real catalyst in the near term to turn things around. That said, as we mark the 25-year anniversary since the dot-com bubble’s peak this week, this feels like a different kind of trouble. While valuations were lofty after the US election, they weren’t entirely out of reach. Now, we find ourselves with a risk-off sentiment driven almost entirely by the actions of the White House. It may not seem like it, but that’s actually a much better position to be in. If the US can steer clear of a significant recession, risk taking could come back to life without too much damage done to some of the major underlying growth themes, namely AI.
Brent oil futures climbed to $69.30 in early trading, despite concerns that US tariffs could hurt economic growth and reduce oil demand. While President Trump delayed tariffs on major oil suppliers like Canada and Mexico, fears of a global slowdown persist, especially with China’s economic struggles and deflationary pressures. Meanwhile, Russia’s deputy prime minister confirmed that OPEC+ plans to increase oil production in April but warned the move could be reversed.“