Market Report: calm before the storm as markets brace for Trump’s ‘liberation day’
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “UK markets have kicked off April on the front foot, after a poor start to the week saw the FTSE 100 lose 0.9% yesterday. In the absence of any major company results, it’s the White House that’s driving markets at the minute, with the unknown impact of tariffs bleeding volatility into global markets. Still, the FTSE 100 wrapped up the first quarter with a solid 5% gain, outshining US markets as investors turn to the UK’s relatively undervalued stocks for their defensive appeal in these choppy times.
It’s crunch time for UK banks as the supreme court starts hearings this week, looking into motor finance mis-selling and whether car dealers and lenders unlawfully hid commissions from consumers. There’s a lot on the line, especially Lloyds which was the most exposed of the major UK banks. It’ll likely be a few months before the outcome is known, but some estimates suggest it could cost Lloyds around £6bn if it’s forced to refund all motor finance commissions. It’s already set aside £1.2bn, with analysts expecting to see a further £1.3bn in charges, suggesting a total cost of around £2.5bn. That means there’s hope that any remedy will be a proportion of the total commissions – but the reality is, it’s an unknown that’s likely to weigh on sentiment for some time yet.
UK house prices rose nearly 4% from last year, according to the Nationwide House Price Index, though growth paused month-to-month and there could be softness to come as buyers accelerated purchases to sidestep expected tax hikes. Despite this short-term slowdown, conditions look promising for a rebound as the year progresses, driven by a strong job market, increasing take-home pay, and the potential for cheaper loans if interest rates come down. UK housebuilders are building momentum, with depressed valuations offering some good entry points for quality names in the sector, and attractive fundamentals on a long-term view.
A miserable March has capped off one of the worst quarters for the S&P 500 since 2022 as investors continue to face uncertainty around Trump’s tariff plans, and the unknown impact on both inflation and economic growth. Volatility has been the key theme over the past few months and yesterday’s session was no different, with the S&P 500 clawing back early losses to finish higher on the day as defensive names lead the way. Investors will be hoping that Trumps so called ‘liberation day’ tomorrow will give some tariff clarity, but that may be wishful thinking. Volatility looks set to continue in the near term, but if White House fuelled uncertainty turns out to be temporary, this could still be a good time to pick up quality names at a discount.
Brent crude oil futures surged to around $74.9 per barrel, riding a two-day wave of increases that pushed prices to their highest in over a month. The uptick reflects growing unease about possible supply interruptions, fuelled by President Trump’s bold warnings aimed at Russia and Iran.“