(Alliance News) - London's FTSE 100 is called to open in the red on Tuesday, with simmering trade war worries set to weigh on the blue-chip index again.
"And just like that, the US-China trade war has begun," SPI Asset Management analyst Stephen Innes summarised.
"Investors who bet on a sustained rebound are getting a harsh reminder—tariff threats may fade temporarily, but they never truly disappear. The latest escalation is snuffing out optimism, fuelling a flight to safety, and keeping markets trapped in a cycle of volatility-driven whiplash."
China said Tuesday it would impose tariffs of 15% on imports of coal and liquefied natural gas from the US, in retaliation for Washington's 10% levies on Chinese goods.
Alongside its tariffs, China announced a probe into Alphabet's Google, and added San Diego-based biotech firm Illumina to a list of "unreliable entities".
Beijing's finance ministry also unveiled 10% tariffs on imports from the US of crude oil, agricultural machinery, large-displacement vehicles and pickup trucks.
But US President Donald Trump delayed the start of tariffs on Mexico and Canada for a month Monday after the US neighbours struck last-minute deals to tighten border measures against the flow of migrants and the drug fentanyl.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called down 0.2% at 8,570.86
----------
Hang Seng: up 2.6% at 20,749.74
Nikkei 225: up 0.7% at 38,798.37
S&P/ASX 200: down 0.1% at 8,374.00
----------
DJIA: closed down 122.75 points, 0.3%, at 44,421.91
S&P 500: closed down 0.8% at 5,994.57
Nasdaq Composite: closed down 1.2% at 19,391.96
----------
EUR: flat at USD1.0307 (USD1.0307)
GBP: flat at USD1.2412 (USD1.2414)
USD: higher at JPY155.32 (JPY154.61)
GOLD: lower at USD2,809.93 per ounce (USD2,819.29)
(Brent): lower at USD75.15 a barrel (USD75.65)
(changes since previous London equities close)
----------
ECONOMICS
----------
Tuesday's key economic events still to come:
15:00 GMT US factory orders
----------
China said Tuesday it would slap tariffs on imports of US energy, vehicles and equipment, firing a return salvo in an escalating trade war between the world's two biggest economies. US President Donald Trump on Saturday announced sweeping measures against major trade partners including Canada and Mexico, with goods from China facing an additional 10% tariff on top of the duties they already endure. Just minutes after those tariffs came into effect, Beijing said it would impose levies of 15% on imports of coal and liquefied natural gas from the US. On Tuesday it unveiled 10% tariffs on imports of crude oil, agricultural machinery, big-engined vehicles, and pickup trucks.
----------
Alongside its tariffs, China announced a probe into Alphabet's Google as well as adding US fashion group PVH – which owns Tommy Hilfiger and Calvin Klein – and biotech firm Illumina to a list of "unreliable entities". Beijing also unveiled fresh export controls on rare metals and chemicals including tungsten, tellurium, bismuth, and molybdenum, used in a range of industrial appliances. Trump has said his tariffs aimed to punish countries for failing to halt flows of illegal migrants and drugs including fentanyl into the US.
----------
Keir Starmer has said the UK will "stay resolute" in its commitment to working with both the US and the EU as he insisted that Britain is "not choosing between" them. The UK prime minister also said he has been clear that both relationships "are important to us", when asked if he would be willing to water down the UK's reset with the European bloc to keep Washington on side. The prospect of a trade war with the US has loomed over the prime minister's trip to Brussels, after comments overnight from President Donald Trump that he is poised to expand his tariff regime to both the UK and the EU, but added that he thinks a deal can be done with Britain. Speaking at a press conference in the Belgian capital on Monday afternoon alongside Nato Secretary General Mark Rutte, Starmer said the UK will "stay resolute" in its commitment to working with both the EU and the US because to do so is in the best interests of both Britain and global security. "It's really important that we work with both and we don't see it as an either-or," the prime minister said. "It is in the best interests of the UK, but also the best interest I think in terms of global security and defence, that we continue to work both with the US and with Europe on these vital issues." In response to an earlier question, the PM had said that the UK is "not choosing between" the EU and the US and pressed the importance of both relationships, telling reporters he has "always been clear that both are important to us". The meeting with Rutte came ahead of the PM meeting EU leaders at a dinner on Monday evening.
----------
Starmer will host his Danish counterpart for a working dinner in Downing Street on Tuesday evening. The UK prime minister and Denmark's premier Mette Frederiksen are expected to discuss European security as well as the issue of migration at the meeting. The dinner comes amid a diplomatic row between Denmark and the US over Trump's claims that he wants to acquire Greenland. Frederiksen has insisted the autonomous Danish territory is not for sale, but the US president has repeatedly expressed an interest in taking control of the island. Downing Street would not be drawn over whether Britain would support the US or Denmark in a dispute over the territory when asked by journalists on Monday.
The prime minister's official spokesman said he was "not going to get into hypothetical situations", but that the long-standing position on Denmark and Greenland is "well understood". Frederiksen has called for a "collective and robust response" within the EU should the president press ahead with his threats to take over the territory. Starmer has insisted that Britain can work with both the new administration in Washington and its European partners without choosing between them. Speaking ahead of a meeting with the EU's 27 leaders in Brussels on Monday, he said it was not an "either-or" decision to both keep Trump onside and seek closer ties with the bloc. As well as the issue of Greenland, the looming prospect of a trade war between the EU and US largely overshadowed the prime minister's trip to Belgium.
----------
BROKER RATING CHANGES
----------
JPMorgan places Barratt Redrow on 'positive catalyst watch'
----------
RBC raises SSP Group to 'sector perform' (outperform) - price target 200 pence
----------
COMPANIES - FTSE 100
----------
Diageo reported a decline in half-year earnings, hurt by "unfavourable" foreign exchange developments, and the brewer and distiller also said the speed of a recovery in some key markets has been slower than expected. The firm also reported it has made "considerable contingency planning" in recent months in regard to potential US tariffs, which it said will may affect its tequila portfolio and Canadian whisky. "Given our extensive supply chain and broad and advantaged portfolio, there are a number of possible actions to help mitigate the potential impact including pricing and promotion management, inventory management, supply chain optimisation and re-allocation of investments. Some of these actions can be implemented rapidly and others will take time. We will continue to be agile and respond with speed as key details are confirmed," Diageo added. Diageo reported pretax profit of USD2.77 billion in the six months to December 31, a fall of 9.9% from USD3.08 billion. The Guinness owner said sales were largely flat at USD15.18 billion, while net sales fell 0.6% to USD10.90 billion from USD10.96 billion. Net sales exclude excise duties. It put the net sales fall down to "unfavourable foreign exchange", but noted net sales rose on an organic basis. Diageo Chief Executive Debra Crew said: "Our fiscal 25 first half results marked a return to growth, delivering organic net sales growth of 1% despite a challenging industry backdrop as consumers continue to navigate through inflationary pressures. Growth in four of our five regions was supported by market share gains. Notably, in North America, we outperformed the market with high quality share growth and positive organic net sales growth." Crew added: "While the pace of recovery has been slower in several key markets, we remain confident of favourable long-term industry fundamentals and more importantly in our ability to outperform the market. Spirits remains an attractive sector with a long runway for growth, as we expect to continue to gain share." Diageo maintained its interim dividend at 40.50 cents per share. Diageo said that before the impact of tariffs, it would have expected to "build on the momentum seen in the first half". It would have "expected to deliver a sequential improvement in organic net sales growth compared with the first half". "The confirmation at the weekend of the implementation of tariffs in the US could however impact this building momentum. We still expect to continue to deliver strong market share performance," it added. Diageo continued: "Before taking into consideration the potential impact of tariffs we had expected a slight decline in organic operating profit in the second half of [financial] 25 compared with the prior year, broadly in line with the decline in the first half, reflecting higher staff costs, and continued strategic investments including in digital and US route-to-market. Clearly the implementation of tariffs could further impact this and when we can more accurately assess the impact we will update as appropriate."
----------
Vodafone hailed an acceleration in service revenue growth during its third-quarter, amid a "step-up in the UK". The telecommunications firm, however, said trade in Germany was hurt by a TV law change. Total revenue in the third-quarter to December 31 increased 5.0% to EUR9.81 billion from EUR9.35 billion a year prior. Service revenue alone advanced 5.2% on-year on an organic basis, picking up speed from a 4.2% advance in the second-quarter. Organic service revenue in the UK rose 3.3% in the third-quarter, after a 1.2% rise in second. In Germany, however, it fell 6.4%, "primarily due to the impact of the TV law change". A law change in Germany last year saw the end of bulk TV contracting in multi dwelling units. Elsewhere, Vodafone hailed a "strong performance" in Turkey and Africa. "We are continuing to invest in the turnaround of our German business and we are starting to see improving customer trends, although conditions have become more challenging in the mobile market," CEO Margherita Della Valle said. "During the quarter, we completed the sale of Italy for EUR8 billion and received regulatory approval for Vodafone's merger with Three in the UK. When the UK merger completes in the next few months, we will have fully executed Vodafone's reshaping for growth. We are on track to grow in line with our full year guidance for this year, which we reiterate today, and are looking forward to a stronger Vodafone in the years ahead." Vodafone still expects adjusted earnings before interest, tax, depreciation and amortisation after leases of EUR11 billion for the full-year. It achieved an adjusted Ebitda after leases of EUR11.02 billion in financial 2024. The firm also announced it will kick off a EUR480 million share buyback, the final tranche of a EUR2 billion programme.
----------
Activist investor Elliott Management has snapped up a stake in Smiths Group, ahead of the engineering firm's break-up, the Financial Times reported on Monday. The FT, citing people familiar with the matter, reported that Elliott has built a stake of over GBP300 million, which at current prices, equates to around 4%. Elliott supports the Smiths plan to sell or demerge two of its units, the FT reported.
----------
COMPANIES - FTSE 250
----------
Housebuilder Crest Nicholson reported annual results were in line with guidance, though it still said the year was "very tough and disappointing". Revenue in the year to October 31 fell 6.0% to GBP618.2 million from GBP657.5 million. It swung to a pretax loss of GBP143.7 million, from profit of GBP23.1 million. Crest Nicholson announced a 1.2 pence per share final dividend, down 90% from 11.5p a year prior. The total dividend for the year was 2.2p per share, down 87% from 17.0p. "I am pleased to report that we delivered FY24 results in line with guidance issued at the start of my tenure and finished the year with better than expected net debt. Nevertheless, this has been a very tough and disappointing year for the business," CEO Martyn Clark said. "I have undertaken a comprehensive review to understand the business, which has included obtaining both internal and external perspectives. This has allowed me to identify the market opportunity and craft a strategy that will allow us to maximise that opportunity and optimise the company for sustainable growth with an appropriately scaled cost base that will enhance profitability and consistent shareholder value creation. I look forward to updating you in March 2025 with the findings, which will help formulate our strategic focus for the year and beyond and our pathways to achieve our strategic goals." Clark said the company now has "greater clarity relating to legacy issues with necessary provisions in place". The CEO added: "While economic and political challenges persist, I am cautiously optimistic about the year ahead. We see pent-up demand from customers seeking high-quality, well-designed homes in desirable locations. As a housebuilder with a strong land bank and brand, Crest Nicholson is well-positioned to meet this demand. Early indicators, including increased customer interest and enquiries and sales rates in January, are encouraging, though we remain mindful of macroeconomic uncertainty and the pace of interest rate reductions and the impact this may have on 2025 profitability which remains below long term averages." Crest said the "slower than anticipated pace of interest rate reductions" is weighing on housing market activity. For the new year, it expects pretax profit between GBP28 million and GBP38 million.
----------
OTHER COMPANIES
----------
YouGov said it delivered "modest" half-year growth, and the research and data analytics firm announced its CEO Steve Hatch will step down. Stephan Shakespeare, currently non-executive chair, will take on the role of interim CEO with immediate effect. Hatch stepped down by mutual agreement, YouGov said. "The board will commence a recruitment process to appoint a new CEO. Stephan previously held the position of CEO for over 10 years until July 2023 and is taking on the role on an interim basis to ensure continued execution of the strategic plan, support an orderly transition and allow adequate time to recruit the right candidate for the CEO position," YouGov added. Deborah Davis has been made interim non-executive chair. For the half-year ended January 31, YouGov announced "modest growth on an underlying basis". It added: "Our Data Products division has returned to low-single-digit growth on an underlying basis, owing to stable renewal rates and good performance within our media agencies sector. Our Research division also saw low-single-digit growth on an underlying basis1 during the period, as continued momentum in the technology sector and strong growth with academic institutions was offset by declines in government spending during elections and sustained weakness in the gaming sector." It expects modest year-on-year revenue growth on a reported basis over the course of the second-half.
----------
UBS raised its annual dividend as the Zurich-based bank reported a strong finish to 2024, a year once again dominated by the integration of former cross-town rival Credit Suisse. Total revenue in the final three months of 2024 rose 7.2% to USD11.64 billion from USD10.86 billion a year prior. As a result, UBS swung to an operating profit of USD1.05 billion in the quarter from a loss of USD751 million a year before and to a net profit of USD770 million from a loss of USD279 million. In the year as a whole, revenue rose by 19% to USD48.61 billion from USD40.83 billion in 2023. However, a USD27.26 billion credit for negative goodwill was recorded in 2023 and not repeated in 2024. As a result, operating profit dropped to USD6.82 billion from USD28.26 billion, and net profit fell to USD5.09 billion from USD27.37 billion in 2023.
----------
MultiChoice and Canal+ SA have reached an agreement on a new structure to comply with foreign ownership of broadcasting assets and empowerment rules in South Africa. Canal+ early in June last year improved its offer for MultiChoice Group to ZAR125 per share, a 67% premium to MultiChoice Group's closing price of ZAR75 before Canal+ first approached MultiChoice Group investors on February 1 last year. The French group formally made the offer early in April. Canal+'s mandatory offer to MultiChoice Group shareholders opened early in June last year and closes on April 25 this year. In a joint statement on Tuesday, MultiChoice Group and Canal+ said they had concluded their discussions over the structure of MultiChoice Group after the takeover. This proposed structure ensures that the MultiChoice acquisition complies with foreign control regulations and maintain MultiChoice Group's broad-based black economic empowerment credentials, the two said. Canal+ and MultiChoice Group said MultiChoice's empowerment partner, Phuthuma Nathi, has given in-principle support for the new structure.
----------
By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
Copyright 2025 Alliance News Ltd. All Rights Reserved.
