Trump is keeping investors on their toes, and the markets are volatile. The TPP weekend wrap.

Trump is keeping us all on our toes.

The FTSE gained this week after a positive meeting between President Trump and Sir Keir Starmer. This meeting has since been rather upstaged, but we’re going to talk about it anyway.

At the top of the economic agenda were strengthening hopes for a UK-US trade deal, after US president Donald Trump signalled that additional tariffs on trans-Atlantic exports might not be necessary if an agreement was reached.

Speaking at the White House following discussions with UK prime minister Keir Starmer, Trump said negotiations could be concluded “very quickly” and described Starmer as a “tough negotiator”.

The US president, who had previously threatened a 25% tariff on EU exports, suggested that the UK’s trade position could be resolved, calling a deal “terrific for both countries”.

“Kier Starmer’s appearance in the White House appears to have gone as well as it could, with the president seemingly open to a favourable trade deal that will avoid tariffs on UK exports to the US,” said Joshua Mahony, chief market analyst at Scope Markets.

“This should come to no surprise given the trade deficit the UK currently holds with the US, standing in stark contrast to the surplus enjoyed by the European Union.”

In the UK housing market, property prices rose more than expected in February, with lender Nationwide reporting a 0.4% monthly increase, ahead of forecasts for a 0.2% rise.

On an annual basis, prices grew 3.9%, slightly slower than January’s 4.1% increase.

The average UK house price climbed to £270,493 from £268,213 in the previous month.

Nationwide chief economist Robert Gardner said housing market activity had remained resilient in recent months, despite ongoing affordability challenges.

“Indeed, the second half of 2024 saw a noticeable pick up in total housing transactions, which were up 14% compared with the same period in 2023,” he said.

“However, taking 2024 as a whole, transactions were still modestly (6%) lower than the levels prevailing before the pandemic struck in 2019.

Europe

The pan-European STOXX Europe 600 Index ended 0.60% higher, posting its longest streak of weekly gains since August 2012. Encouraging company results and gains in defence stocks helped to overcome uncertainty about U.S. trade policy. Major stock indexes were mixed. Germany’s DAX rose 1.18%, while Italy’s FTSE MIB added 0.61%. France’s CAC 40 Index, however, fell 0.53%.

Preliminary data from Germany, France, and Italy for February painted a mixed picture for inflation. Inflation held steady at 2.8% in Germany, coming in above a consensus estimate of 2.7%. Annual consumer price growth in Italy was unchanged at 1.7%, which was below expectations. In France, the rate fell to a four-year low of 0.9% from 1.8%.

Meanwhile, final estimates of gross domestic product confirmed that German’s economy contracted 0.2% in the fourth quarter of last year and that France’s economy shrank 0.1%.

The minutes of the European Central Bank’s (ECB’s) January meeting indicated that policymakers were confident that inflation was heading back to the 2% target but also called out “there was some evidence suggesting a shift in the balance of risks to the upside since December.” Some rate setters argued for “greater caution” on the size and pace of further interest rate cuts. Still, a survey conducted showed that in January consumer perceptions of inflation for the year and three years ahead eased, suggesting that inflation expectations are well anchored.

The conservative alliance of the Christian Democratic Union of Germany (CDU) and the Christian Social Union in Bavaria (CSU), led by Friedrich Merz, won the national election in Germany with 28.52% of the vote, falling short of an overall majority. The far-right Alternative for Germany came second with 20.8%. The CDU/CSU bloc has begun exploratory talks with the defeated Social Democratic Party on the formation of a coalition government.

The US

Most U.S. stock indexes declined for the second consecutive week, although the Dow Jones Industrial Average finished 0.95% higher, adding to its year-to-date outperformance versus the other major indexes. Growth stocks significantly underperformed, and the Nasdaq Composite recorded its worst weekly drop since early September as tech stocks, particularly the so-called Magnificent Seven, declined amid ongoing regulatory uncertainty and concerns that the multiyear artificial intelligence-fuelled rally could be losing steam (shares of NVIDIA fell 8.48% on Thursday following the chipmaker’s highly anticipated earnings report). Tariff fears also continued to be a drag on equities as President Donald Trump reiterated plans to impose new levies on several trade partners by March 4.

The highlight of the week’s economic calendar arguably came from the Labor Department’s release of its core personal consumption expenditures (PCE) price index on Friday morning. The Federal Reserve’s preferred inflation gauge showed prices rising by 0.3% in January, largely in line with expectations. On a year-over-year basis, prices rose 2.6%, down from December’s reading of 2.9% but still above the Fed’s long-term target of 2%. The report also noted that while personal incomes rose 0.9% in January, spending contracted, a sign that consumers may be exercising caution in the face of persistent inflation and uncertainty.

In other economic news, the Commerce Department reported that the U.S. economy grew at an annualized rate of 2.3% in the fourth quarter of 2024, buoyed by resilient consumer spending, which advanced 4.2% during the period. Both readings were unchanged from a prior estimate. For the full year, U.S. gross domestic product (GDP) increased 2.8%.

Meanwhile, the Labor Department reported on Thursday that applications for U.S. unemployment benefits for the week ended February 22 rose by 22,000 to 242,000, the highest level since October. The four-week moving average increased by 8,500 to 224,000. The advance number for seasonally adjusted insured unemployment—also known as continuing jobless claims—was 1.86 million, a decrease of 5,000 from the prior week.

Asia

Japan’s stock markets retreated over the week, with the Nikkei 225 Index falling 4.18% and the broader TOPIX Index down 1.99%. Domestic chip- and artificial intelligence-related stocks led the declines amid a sell-off in the U.S. technology space. Concerns also grew about how an escalation of tariffs by the U.S., including an additional 10% duty on Chinese imports, could impact the outlook for Japan’s economy and the path of further monetary policy normalization by the Bank of Japan (BoJ).

The yield on the 10-year JGB fell to 1.37%, from 1.43% at the end of the previous week, trending down on a soft domestic inflation print. The Tokyo-area core consumer price index, a leading indicator of nationwide price trends, showed that consumer inflation increased 2.2% year on year in February, below forecasts of 2.3% and down from 2.5% in January. Much of the slowdown was due to the resumption of government subsidies to offset energy costs.

Mainland Chinese stock markets fell for the week after the U.S. ratcheted up measures targeting China’s economy. The onshore benchmark CSI 300 Index slid 2.22% and the Shanghai Composite Index declined 1.72% in local currency terms, according to FactSet. In Hong Kong, the benchmark Hang Seng Index shed 2.28%.

Most of the week’s declines occurred on Friday, a day after President Trump announced an additional 10% levy on Chinese imports effective March 4, along with 25% tariffs on Canada and Mexico. The Trump administration previously imposed a 10% tariff on all Chinese products that went into effect February 4. In response, China will “counter with all necessary measures to defend its legitimate rights and interests,” a Ministry of Commerce spokesperson said.

The latest tariff threat came days after the Trump administration issued a memo instructing the Committee on Foreign Investment in the U.S. to curb Chinese spending on strategic sectors like technology and energy. The U.S. also plans to tighten restrictions on U.S. semiconductor technology exports to China and to lean on Japan and the Netherlands to step up their restrictions on China’s chip industry, Bloomberg reported, citing unnamed officials.

The Week Ahead

A spate of announcements internationally promises to bring a busy week ahead, culminating in US job market figures on Friday.

First though, UK lending figures from the Bank of England on Monday will be in focus, incorporating mortgage approval data for January.

Expectations are for 65,700 approvals over the month, against an expectation-beating 66,500 in December, in part as buyers rush through deals before April’s stamp duty hike.

Across the Channel, Monday will also see inflation figures released from the Eurozone, before the European Central Bank’s interest rate decision on Friday.

Another cut, which would mark the sixth since last June, is expected from the central bank on a moderation in inflation through February.

US non-farm payrolls and unemployment data for February will then dominate later on Friday, offering further clarity on Federal Reserve cuts as Trump tariffs cloud the picture.

Some 143,000 jobs had been added to the US economy in January, against the 175,000 expected, as unemployment fell to 4.0%.

The addition of 180,000 jobs and an unchanged unemployment reading have been forecast this time around.

“This outcome would help reinforce current market pricing that the Fed will keep rates on hold until mid-year, before delivering two [...] cuts in the second half,” IG analysts said.

ITV, Melrose, Reckitt, Greggs, Flutter and Abrdn are among a string of firms teeing up a busy week ahead.

After Bunzl kicks off proceedings on Monday, a packed Tuesday will see Abrdn, Greggs and Flutter all feature.

Estate agent Foxtons will then draw focus on Wednesday, before another busy day on Thursday.

Melrose, ITV, and Reckitt will be among those to update, as Hewlett Packard, Costco, JD.com and Broadcom cap off the week in the US.

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Beating benchmarks:

Will March be another month of beating benchmarks on TPP?

We aim to do this for your portfolio in three different ways.

Our most basic strategy is our slightly leveraged tracker. They follow their benchmark up and down. They're designed not just to beat their benchmarks, but by 1.5 times per annum net of fees.

That's our most basic approach, and as a long term growth tool, they are very hard to beat.

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We expect these will outperform our leveraged trackers, but alongside our tracker type products they form the foundations of a TPP portfolio.

Finally, for those wiling to take on a little extra risk we have our 'equity long/short' active strategies. They aim to take advantage of any opportunity they spot. They buy markets, they sell them, they initiate spreads.

Although we expect all three approaches to beat their benchmarks, collectively they work very well together.

Beating benchmarks isn't easy, we just make it look like it is at times!!!

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If you're an investor frustrated with your portfolio and are looking for a little more from your investments then reach out to our team.  We'd love to ascertain whether we can assist.

If you're a client of ours, then here is to a brilliant March of beating benchmarks.

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Disclaimer: The views expressed in this article are the author’s own and should not be considered in rendering any legal, business or financial advice.

Past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to the corresponding past performance.

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