Market report: Hopes of more targeted tariffs help boost investor sentiment
Susannah Streeter, head of money and markets, Hargreaves Lansdown: ‘’The FTSE 100 is upbeat at the start of the week, rising amid more positive sentiment as hopes wash around about the potential for US tariffs to be more targeted. President Trump’s latest deadline for ‘reciprocal’ tariffs to be re-imposed on trading partners Canada and Mexico looms on April 2. But expectations are growing that they could be tweaked and be more focused on specific goods and sectors, instead of swathes of duties triggered in a blanket fashion. Investors are also awaiting closely watched economic snapshots, with PMI data set to indicate the strength of manufacturing sectors around the world.
Oil prices have risen slightly with Brent Crude trading above $72 a barrel, reflecting creeping optimism about the potential for a ceasefire in Ukraine. Russian and US officials are expected to meet later to further discussions about the conditions for any deal. Reports that China could supply troops for the ‘coalition of the willing’ peacekeeping force appears to have added to positivity that the conflict could be brought to an end. However, ongoing concerns about the impact of US trade policy on global growth and energy demand is set to keep a lid on prices. Traders are also keeping an eye on OPEC production plans and the impact of recent fresh sanctions on Iran which.
Bargain hunters are expected to be out sniffing around the US market after recent falls, with the S&P 500 set to open in positive territory. But there are trip hazards around. There is still much uncertainty swirling about the breadth and impact of tariffs. The extent to which the US could play hardball will be underlined at a meeting called by the US Trade Representative at the International Trade Commission today. The hearing will consider plans to impose up a fine of up to $1.5 million on every Chinese manufactured ship which docks at a US port, or even on ships from a fleet which contains Chinese made vessels. This is designed to weaken China as the world’s top shipbuilding nation, given that it has secured more than 62% of all new ship orders globally. Trump wants to see more ships built in the US but a significant shift up in production will take years. Instead, the policy would push up port fees dramatically for not just US importers but exporters too, with concerns that it will knock demand for commodities like coal and LNG, making US goods uncompetitive. Its adding to worries that US companies and consumer will bear the brunt of a US trade policy designed to bolster American economy but instead look set to make it weaker.
Given the extent of threats on still the table for tariffs, duties and fines for trading partners around the world, it’s not surprising that gold prices remain elevated near record levels. Investors are looking for ways to diversify and shelter their money amid the uncertain climate. Bitcoin has also nudged higher amid another hint of support from the Trump administration. A senior White House official indicated that the US could use some of its gold reserves to buy bitcoin. While any details are yet to be put on the table, it seems to have helped lift sentiment. However crypto is still sensitive to gyrations on stock markets and is likely to stay highly volatile as investors assess the ebbs and flows in trade policy. There is also concern swirling about new malware circulating that can put crypto wallets at risk of devastating hacks.’’