Join Kathleen Brooks NOW as she gives you the latest details about market moves now that some US tariffs have been paused. Find out if the market rally will last.
The relief rally in markets has spread to Europe. Markets are a sea of green, however, there has been some easing in the rally, particularly for the UK. The FTSE 100 opened higher by 6% earlier this morning and is now trading UP 4%. European markets are also fading earlier gains, the Eurostoxx index is higher by 5.4%. After an historic rally on Wednesday night for US stocks, US stock index futures are now in the red, suggesting that tailwinds from the tariff threat remain.
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Create account Try a demo Download mobile app Download mobile appFrom a stock perspective, these four companies stand out:
1, Nvidia: its stock price rose by 18% on Wednesday after the announcement of a pause on tariffs. The stock is down 3.5% in the pre-market today, which could weigh on the overall US blue chip index. However, we think that the pause is good news for Nvidia, since Taiwan, Nvidia’s manufacturing hub, is now less exposed to US tariffs in the medium term.
2, Amazon: The online retailer announced on Wednesday that it was pausing imports of Chinese goods due to the tariffs. Since many Amazon products originate in China, it remains caught in the cross hairs of the trade war between China and the US. However, Amazon has a strong, global business, which is why its stock price rallied by nearly 12% on Wednesday, as a lower chance of a global recession is positive for a consumer goods company like Amazon. Its share price is also lower in the pre-market.
3, Mercedez Benz Group: The German car marker is higher by 5.6% on Thursday, even though 25% tariff rates are still in place for car exports to the US. This is a relief rally after the 20% decline in Mercedez’s share price in the past month. We do not think that the stock will completely reverse all recent losses, as US tariffs remain a major threat to the earnings potential for European car makers.
4, Tesco: the UK grocer is bucking the global trend and is down by 6.3% on Thursday. The company issued a profit warning this morning, due to higher costs and more price conscious UK consumers. Not even a larger share buyback could protect the share price today. This tells us two things: 1, now that tariffs are paused, the focus will shift to company-specific factors that will also start to drive stock prices in the coming days and months. 2, earnings misses will be punished by investors, which makes Q1 earnings season crucial for the direction of markets.
This is not quite the calm after the storm, as investors are still affected by intense political policy risk in the US. Equity markets are discounting recession risks on Tuesday, however, there is still a risk premium associated with financial assets. This is why the US stock market recovery rally has stalled, the gold price is higher, and bond markets are treading a very cautious path. We expect this to continue for some time.
Join Kathleen and find out all about the pause of tariffs and what it means for the markets.
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