London Quick Take - 24 April

Key Notes:

• Headline risk still elevated with messy, conflicted messaging on tariffs still driving price action 
• FTSE 100 trades flat to negative after closing gap to April 2nd dip to within about 200pts 
• Companies see limited impact from tariffs 
• Sterling pushes back against two-day dollar ramp 

The FTSE 100 saw a muted open on Thursday as some of the pullback later in the previous session on Wall Street pointed to continued uncertainty over tariffs and the state of the macro outlook. Shares in London were flat in early trade, but have now virtually closed the gap from ‘liberation day’. The FTSE 100 index rose 0.9% to close at 8,403.18 on Wednesday, while the FTSE 250 rose 1.27%. Some breaking news at send time pushed stocks lower across the board - DAX -0.8%, CAC -.86%, FTSE 100 -0.2% with China saying there are no ongoing trade talks with the US. Companies reporting this morning are pretty sanguine about tariffs - the key is not the active trader moves we have seen over the last three weeks but once it really starts to affect passive flows. So far this is fine.

We saw Wall Street push aggressively higher on Wednesday but close well off the highs. The Dow ended the session up more than 400pts but about 800pts below the session high. The S&P 500 tried to break 5,500 but this level now looks like offering firm resistance. The broad market rose 1.67% for the day, while the Nasdaq climbed 2.5% and the Vix ‘fear gauge’ was down below 30. Futures are lower this morning with e-mini S&P 500 futs down half a percent at 5,373.50. Texas Instruments - something of an industrial and tech bellwether with about 150k customers - beat and raised guidance.

Wall Street rallied on reports the US would slash China tariffs, though this was rowed back by another report saying this was contingent on Chinese talks...still trading headlines with no real steer. The WSJ said the US was willing to lower tariffs on China, sending shares to highs of the day, but this was swiftly rebuked to the extent the WH says it’s dependent on China. Treasury secretary Bessent said a deal with China could take years.  A tonne of noise. Lots of constructive stuff being touted on tariffs - but market was never really pricing full extreme left tail risk, and it’s always being undercut by conflicting noises… but we can sense a direction of travel away from using nuclear option on tariffs to rolling in the tanks piecemeal.  There were also reports of easing of tariffs on automakers...so much noise. Meanwhile the EU’s trade surplus with the US jumped to €23.6bn from €14.8bn a year earlier. Trump won’t be happy. 

Elsewhere in UK news, BoE chief economist Huw Pill said they could intervene if markets start to malfunction. We are alive to the potential and able to deal with it, he said. Chancellor Rachel Reeves is in Washington to carve out a trade deal for the U.K. BRC says UK consumer confidence fell to a record low due to the threat of a trade war (what about tax hikes?). this goes hand in glove with the weak services PMI yesterday.

Sterling has pushed back against the dollar tide this morning with GBPUSD bouncing off support around the 1.3240 having retreated sharply in the last two days from 1.3424, tapping out at the resistance at September’s high – which at the time was its best level in two and a half years. Before this week the dollar had been oversold so this looks more like a dollar-driven move over the last three days. Let's see what trade talks deliver.

Companies 

 UK stocks are reporting today in volume, main theme: companies are keeping calm and carrying on amid the tariff noise. 

Unilever reaffirmed full year guidance, still expects underlying sales growth of 3-5%, sees tariffs as managed.It reported underlying sales growth of 3.0%, with volume growth of 1.3% and price of 1.7%, though turnover was lower due to disposals. Ice cream business separation remains on track and buybacks continue. It was a positive update on the whole but nothing to set the pulses racing. Still need to see more from new CEO Fernando Fernandez I guess. Shares remain +5% for the year to date. 

Hikma said it’s well positioned for macro uncertainty , reaffirmed guidance. It expects group revenue to grow in the range of 4% to 6% and for core operating profit to be in the range of $730 million to $770 million in 2025. Group core operating profit growth, which is around 4% at the midpoint of guidance, will be weighted to the second half, the company said. Hikma says it is monitoring the evolving tariff backdrop and will look to remain agile in responding to both opportunities and impacts where possible, but have not reflected an impact from tariffs in its full year outlook. The worry for Hikma might be a dedicated tariff for the pharmaceutical industry, reflected in the fact the shares are down 5% this year. 
Anglo American says it’s had a strong start to the year despite the 15% drop in copper output. Copper production was 168,900 tonnes, reflecting higher production from Peru as a result of higher grades, offset by planned lower production in Chile, which resulted in a 15% decrease year-on-year. Iron ore production increased by 2% to 15.4 million tonnes, primarily driven by a strong first quarter performance from Minas-Rio. Diamond production down 11% on ongoing depressed demand  

Jupiter Fund Management said group assets under management (AUM) decreased by £1.0bn over the quarter to close at £44.3bn, driven by net outflows of £0.5bn and negative market movements of £0.5bn. It noted that recent market ructions saw client sentiment negatively hit.

Since the reported period it’s seen “significant moves across many global markets” and its “investment strategies are performing as we would expect in this environment” - eek. 

But well done to the clients, whose “positioning has remained disciplined and consistent with long-term investing”, and the company said it has “not seen any material change in client sentiment or flow activity to date since period end”. 

The market presents a more favourable environment for “high conviction, truly active management” to evidence its value proposition.  

“We also see early-stage evidence of asset owners and other investors looking to reallocate away from the US and towards other markets, such as the UK, Europe and Asia Pacific”. 

This chimes with the broad macro theme of sell US...

Senior stuck to guidance, with the high tech engineeering firm saying the impact of tariffs was limited and manageable, though it remains mindful of the potential broader macro impact on sectors in which it operates. The company said trading in the first quarter was in line. Group revenue grew by 3% compared to prior year on a constant currency basis.  Aerospace revenue grew by 4% driven by growth in civil aerospace.  Flexonics revenue was similar to prior year, with continued strong performance in downstream oil & gas offsetting the anticipated lower sales to upstream oil and gas customers. 

RELX also said it has started the year well across all four of its business areas, and said the full year outlook is unchanged: 

In other news.... 

BP jumped on Elliott raising its stake to more than 5% (and so had to declare it officially)...rumours of a takeover are doing the rounds but that would be brave to say the least in this environment. Could it be a takeover target?

Apple was fined $571mn, Meta fined $228mn for breaches of the Digital Markets Act (DMA). The EU doesn’t need tariffs, it can regulate the hell out of US tech firms and hasn’t even had to resort to the ACI (anti-coercion instrument). 

Boeing rallied as production rose 60% and losses narrowed from a year ago as it continues recovery from a raft of problems. 

US earnings run down :

Texas Instrument - industrial/tech bellwether - beat and raised guidance 

Chipotle - revenue missed - consumer weakness - same store sales contracted first time since 2020, and missed for third quarter. 

Las Vegas Sands - beat on strong Singapore business, questions over China demand. 

Whirlpool - reaffirmed guidance despite China tariffs…says Asian manufacturers have had unfair advantage - made in America trade. Shares –32% YTD. 

IBM - earnings beat, margins improved, shares down 7% after-hours, reaffirmed guidance, managing tariffs. Defensive trade +11% this year despite broader tech selloff. 

Lam Research - chip name beat, guidance at high end of expectations, shares rose after-hours. 

ServiceNow - another beat, strong pipeline, guidance ahead of expectations - customers investing in AI on expected slower revenue growth, want efficiency with workflow processing. Next chapter in AI trade – shares up 10% after-hours. 

Today sees Alphabet, Intel Bristol-Myers, PepsiCo and Procter & Gamble report earnings. Alphabet is key - ad revenues and AI investment.

And finally, how high can gold go? Gold pulled back as risk came back on, with spot retreating from its $3,500 blow-off top to retest $3,300. Talk now is of consolidation after such a strong move to the upside, but longer term we may not be done yet. Paul Tudor Jones wrote in 2020: “A simple metric based on the ratio of the value of gold above ground to global M1 suggests gold could rally to $2,400 before it reaches valuations consistent with the lowest of the last three peaks in this valuation metric and $6,700 if we went back to the 1980 extremes.