Market report: Hezbollah ceasefire, hopes for US trade negotiations and car-maker woes
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “Investors are still piecing through the potential ramifications of Trump’s punishing tariff plans for the global economy. The FTSE 100 is set for a flat start to trading, as investors show wariness about the implications for worldwide trade but remain hopeful that the worst scenarios may not materialise. There is speculation that the bruising duties Donald Trump has outlined are his gauntlet thrown down to spark the start of negotiations rather than a considered policy map. Stocks on Wall Street reached fresh ground, as investors shrugged off concerns that his plans will spark new trade wars around the world, expecting in reality the measures will be toned down significantly.
The Fed’s Open Market Committee minutes leave the door open for another small interest rate cut in December, which also helped buoy sentiment. Members have one eye on weaker jobs numbers and the other on inflationary risks. Caution is the name of the game at the Fed, amid economic uncertainty. The upcoming consumer price data and employment snapshots for November will be key data points to watch.
An easing of geopolitical tensions in the Middle East appears to have helped risk appetite, thanks to the ceasefire agreed between Israel and Hezbollah. The pause in hostilities, brokered by the US is expected to last 60 days. But before the ceasefire coming into effect early this morning, there were fresh attacks, indicating just how difficult it may be to find a long-term solution to the crisis. Oil prices have steadied around $73 a barrel, as a calmer situation takes hold. Traders also have an eye on the OPEC+ meeting beginning on Sunday amid speculation that the cartel will delay a planned production increase.
Carmakers are stuck in the mud, with profits squeezed by cautious consumers and strict state targets for EV sales. Stellantis is the latest company to restructure production given the inclement environment and is proposing to close its Vauxhall factory in Luton, which has been rolling out cars for 120 years. There had been hopes the government would announce plans on Monday to ease the requirements that EVs must make up 22% of a firm’s car sales and 10% of their van sales this year. A concrete proposal wasn’t presented, but Business Secretary Jonathan Reynolds indicated changes would be made. A lack of consumer incentives and slower rollouts than hoped of ultra-fast chargers are not helping EV sales. Amid this policy void, manufacturers are being forced to take mitigating action to find efficiencies.
Aston Martin might be known for its association with James Bond, but there’s no secret agent in sight to pull it out of its latest scrape. Instead, it’s gone cap in hand to investors to raise money by issuing new shares after posting another profit warning, just months after flagging difficulties in September. The company has hit another troublesome speed bump, with production slowed down by supply chain issues, affecting deliveries of its super-high end Valiant models. This is coming on top of a deceleration of demand in China, a crucial market for the luxury car maker.”
