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HL commentary as it happens
Thursday 17th April
Brent crude firm at $66.20, US dollar claws back some lost ground
Oil markets are firmer today, with Brent Crude futures showing a rise of 39 cents to $66.22, while the dollar has clawed back a little of its recent losses to stand at $1.323 against sterling, with the greenback making gains across the board against other major currencies.
Powell highlights inflation risk
Federal Reserve Chairman, Jerome Powell, unnerved markets last night, warning of the potential impacts of current policy actions upon inflation and growth in the USA. He indicated that the Fed would probably put its anti-inflation mandate ahead of the target to see full employment in the USA if price pressures ticked higher. That led to selling on Wall Street, with the tech sector bearing the brunt.
Trump claims “Big progress” in trade talks with Japan
Tariffs continue to make the headlines, with Donald Trump claiming that “big progress” had been made in talks with Japanese negotiators, aimed at lowering the hefty tariffs that the US will otherwise impose in under three months’ time. No details were given. Japan has strong links with the major US defence contractors and some US commentators are suggesting that tariff concessions may be granted if Japan ups its spending on US arms. Asian markets took the news as a reason to recover some of the previous session’s losses, with Japan’s Nikkei index posting gains of over 1%.
Investors will have to become accustomed to information deficits under this most transactional of Presidents. Trump’s tactics so far have been to claim that injustices have been inflicted upon America and that punishments will be delivered, unless the offending nations bring something shiny to the table. With negotiations happening behind closed doors, investors are left guessing. But with most of the Reciprocal Tariffs stayed for three months, the window of uncertainty is not that long.
Wednesday 16th April
Minerals could be next for tariffs
The US also announced a probe into the trading of critical minerals and rare earths to see if levies needed to be introduced. In the current environment, few would bet that the probe will conclude that no, they do not.
Asian markets slide after US toughens its stance on sale of AI chips into China
Asian markets were pressured overnight after the US placed additional curbs on the ability to ship advanced silicon chips into China. Technology companies in Asia led the declines, with Chinese tech companies listed in Hong Kong tumbling by over 4%. Japan’s Topix Index dropped over 1% before paring losses, whilst the Hang Seng index in HK fell by 2.2%. Shares in Korea and Taiwan also declined.
Tuesday 15th April
Brent holds steady at $65
Crude oil has taken a bashing of late and today looks to be holding steady at around $65.2 for Brent crude futures. Oil faces something of a perfect storm currently, with trade wars raising the spectre of reduced demand for oil, just as production restraint within OPEC seems to be breaking down, pushing more oil onto the markets.
Dollar slips again
President Trump has often said that he wants a weaker dollar, because it could help US exporters to win business and it looks like he is getting his way. The greenback has slipped further and is now trading at $1.32 to the pound, compared to $1.22 when Trump took office in January. It’s the same story against the euro, with a $ now worth just 0.88 euros, having been close to parity back in mid-January. With tariffs taking effect against a weakening currency backdrop, the Federal Reserve's task of managing inflation while supporting US employment is not getting any easier.
Asian markets rally on hopes of tariff exemptions
Futures markets were suggesting a steady start to trading in London and Europe after Asian markets rallied overnight. Sentiment was boosted after US President, Donald Trump suggested that he might pause the introduction of some of his proposed tariffs affecting the automobile sector. Japanese car makers were among the leading risers in Tokyo. European investors picked up the baton too, with the prices of BMW, Mercedes and Renault all rising in early European trading. With no firm numbers on the table, these moves are pure guesswork, but with autos seen as one of the worst impacted sectors in the trade war initiated by the US, investors are taking whatever comfort they can find in President Trump’s comments.