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Positive Sentiment Boosts European Stock Markets and Dollar.
In early trading, the UK’s FTSE 100 index experienced a rise of 40 points, equivalent to a 0.5% increase, reaching 8,175. Similarly, Italy’s FTSE MiB saw a gain of 0.76%, while France’s CAC index inched up by 0.1%.
The dollar, which has recently faced selling pressure, rebounded slightly this morning, appreciating by 0.2% against a basket of major currencies. The pound sterling showed a marginal gain of 0.1% against the dollar, while the euro experienced a slight dip of 0.1%.
Gold, often considered a safe-haven asset during periods of economic uncertainty, is again on the upswing, increasing by 0.4% to trade at $3,222 per ounce.
Crude oil prices have also seen an uptick, with both Brent crude and US crude, the two primary global benchmarks, each climbing by approximately 0.7%, reaching $65.35 and $62 per barrel, respectively.
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Crucial Supplies for British Steel Secured Amidst Resilient UK Wage Growth
Welcome to our live business blog, providing real-time updates on financial markets, the global economy, and key business developments. Today’s focus includes critical raw materials for British Steel and the latest UK wage growth figures.
Government Action to Support British Steel Operations
The UK government has intervened to ensure the continued operation of British Steel’s Scunthorpe plant. Essential raw materials, procured by the government, are being transported to the site today to maintain the blast furnaces’ activity. Ministers have assumed oversight of British Steel and are urgently working to deliver vital supplies, including coking coal and iron ore, to the plant.
Jonathan Reynolds, the Business Secretary, is scheduled to visit Immingham port in North Lincolnshire to oversee the unloading of supplies from two incoming vessels and their subsequent transport to the British Steel facility.
According to the Department for Business and Trade, these materials, sourced from the United States, are sufficient to sustain furnace operations for several weeks. The department confirmed that the procurement was funded from existing budgetary allocations.
UK Wage Growth Shows Slight Increase
Recent data indicates a marginal increase in regular UK wage growth, primarily driven by public sector pay enhancements. Meanwhile, the unemployment rate has remained stable, and job vacancies have decreased.
The Office for National Statistics’ latest labor market overview reveals that average weekly earnings, excluding bonuses, increased by 5.9% in the December-to-February period compared to the previous year. This is a slight uptick from the 5.8% growth recorded in the three months leading to January. Economists had projected a 6% expansion. Including bonuses, overall wage growth remained steady at 5.6%.
The Bank of England closely monitors wage growth as a key indicator of inflationary pressures within the labor market. These figures are crucial in assessing whether there is sufficient easing to warrant further reductions in interest rates. Policymakers are also carefully evaluating the potential economic repercussions of recently implemented tariffs.
The UK unemployment rate held steady at 4.4%. Simultaneously, the number of individuals on company payrolls decreased by 78,000 between February and March.
Job vacancies across the UK have declined below pre-pandemic levels for the first time since spring 2021. There was a reduction of 26,000 vacancies in the quarter, bringing the total to 781,000 between January and March.
Tariff Discussions and Market Reactions
In trade policy news, US Vice President JD Vance suggested a strong possibility of a favorable trade agreement between the United States and the UK, citing President Trump’s affinity for the UK and its monarchy.
Additionally, reports emerged last night of the Trump administration initiating investigations into pharmaceutical and semiconductor imports. This move is seen as a precursor to potentially imposing tariffs on these sectors based on national security considerations.
Market sentiment, however, was buoyed by the exclusion of smartphones and laptops from the latest round of US tariffs on Chinese goods, although President Trump indicated this exemption is temporary. Further positive reaction followed the US President’s announcement of exploring potential temporary exemptions for tariffs on imported vehicles and automotive parts. This measure is intended to provide automakers with additional time to establish manufacturing facilities within the US.
Speaking to reporters at the Oval Office, President Trump stated:
“I’m considering measures to assist car manufacturers during this transition. They are currently sourcing components from Canada, Mexico, and other regions, and they require some time to shift production to the United States.”
Global Market Performance
The pan-European Stoxx Europe 600 index demonstrated strong upward movement yesterday, rallying by 2.7%, while the UK market also saw substantial gains, increasing by 2.1%. On Wall Street, the S&P 500 concluded the day 0.8% higher, although the technology-focused Nasdaq Composite only maintained 0.6% of its earlier significant gains.
This morning, stock futures are indicating a largely stable to slightly negative outlook.
Asian markets presented a mixed performance. Japan’s Nikkei index advanced by 0.8%, and South Korea’s Kospi index rose by 0.9%, driven by robust gains in automotive stocks such as Toyota (up 3.7%) and Honda (up 3.6%). Conversely, Hong Kong’s Hang Seng index edged down by 0.16%, and Chinese stock markets also experienced declines, with Shanghai down by 0.1% and Shenzhen by 0.5%.
Analysts at Deutsche Bank commented:
“Market stability has persisted over the past 24 hours, with the S&P 500 achieving consecutive gains for the first time since reciprocal tariffs were announced on April 2nd.”
“While the recovery of equities is noteworthy, the rebound in the bond market is arguably of greater relief to investors. This development has alleviated concerns regarding potential serious financial instability.”
“Investor apprehension had been heightened, as evidenced by last week’s significant 49.5 basis point surge in the 10-year Treasury yield, the largest weekly increase since 2001, with yields climbing daily throughout the week.”
However, this trend began to reverse yesterday, as the 10-year Treasury yield decreased by nearly 12 basis points to 4.37%. This morning, it has further declined by 2.3 basis points to 4.35%.
Upcoming Economic Agenda
Key economic data releases scheduled for today include:
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9:00 am BST: Germany ZEW economic sentiment survey
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9:00 am BST: Eurozone industrial production figures for February