Market snapshot: some FTSE fatigue in evidence

A softer-than-expected inflation reading led to some tentative bargain hunting among the beleaguered mega cap tech stocks, where beaten down names such as NVIDIA Corp (NASDAQ:NVDA) and Tesla Inc (NASDAQ:TSLA) attracted some buying interest.

However, despite a jump of around 7% for both, Nvidia shares remain down by 16% in the year to date and Tesla by 35%, showing the scars of what has been a testing period. Indeed, although the Nasdaq index enjoyed a brief relief rally, it has fallen by 8.6% so far this year, with the other main indices of the Dow Jones and S&P500 also in the red by 2.8% and 4.8% respectively, with the latter having briefly entered correction territory earlier this week.

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However, the Trump tariff trauma will remain close to the surface, with the impact of the trade wars unlikely to become apparent for some time, while the previous harmony of globalisation - which heralded an era of low inflation - fades into the distance. Bravado may win elections, but in the longer term the market is a weighing machine and not a voting machine and actions will speak louder than words.

The release of the Consumer Price Index was positively received by investors who have been starved of positive news over the recent past. Prices rose by 2.8% year on year in February, down from 3% the previous month, and against expectations of a 2.9% rise. Core CPI which excludes more volatile inputs such as energy and food, rose by 0.2% on the month, annualised to 3.1%, both of which were below estimates.

The reading provides a brief respite for the Federal Reserve, although stagflation fears have certainly not been extinguished by one economic print in isolation. Indeed, the current round of aggressive tariff measures will not only almost certainly lead to inflationary pressures, but also the increasing likelihood of consumers and business reining in spending until the outcome is clearer.

As such, the current damage which is being wrought in light of this uncertainty would not be easily erased even if some of the tariff actions were to be dialled back over the coming months, while the imminent raft of retaliatory measures will add more fuel to the fire in the meantime.

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The Chinese economy had been showing signs of revival, not least of which was due to stimulus measures and an apparent easing of restrictions on businesses from the main authorities. However, the latest round of tariffs has poured cold water on the idea of the region as one regaining its balance, with the hub of the current trade disputes revolving around the US/China relationship, which is proving to be a headwind for both markets.

The FTSE100 has more recently also been showing some signs of investor fatigue, although the benefit of international buying interest nonetheless leaves the index ahead by 4.5% in the year to date. In contrast to many of its global peers, the economy has so far sidestepped the tariff traumas, while the relative lack of exposure to the technology sector has insulated some of the index constituents.

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In early trade, investor apathy was largely in evidence, while the technical Thursday headwind of stocks being marked ex-dividend resulted in those affected, such as NatWest Group (LSE:NWG), Endeavour Mining (LSE:EDV) and Entain (LSE:ENT).

Meanwhile, the UK economy will face its latest test tomorrow on the release of the GDP figures, with the overhang of the Budget measures potentially beginning to gain traction. Such concerns have kept a lid on the more domestic index, with the FTSE250 lower by 4% so far this year.