Market snapshot: UK stocks welcome Trump's latest tariffs U-turn

The market whipsaw continues, with investors buffeted by conflicting signals which makes any thoughts of equilibrium a distant dream for the time being.

A rare chink of light emerged from the fractious Sino-American relationship leading into the weekend as the White House announced a tariff exemption on smartphones and some other electronic products, boosting shares in the likes of Apple Inc (NASDAQ:AAPL) and NVIDIA Corp (NASDAQ:NVDA). There was also some optimism towards the possibility of a broader deal between the economic powerhouses, although some of this was tempered by comments that other tariffs are on the way.

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This constantly changing rhetoric has left investors, businesses and consumers paralysed, unable to plan with any confidence or certainty. The main US indices endured one of the most volatile weeks on record, and despite ending the week solidly higher, they remain well underwater in the year to date, with losses of 5.5%, 8.8% and 13.4% for the Dow Jones, S&P500 and Nasdaq respectively.

Of late, economic releases have become something of a sideshow, with investors still trying to lock the emerging global puzzle. Most of the reports are also mostly lagging indicators, giving them less relevance in the face of things to come. The latest consumer sentiment numbers were unsurprisingly weak, with inflation expectations also ratcheting up ahead of further releases on prices and retail sales this week.

Bonds also steadied but remain elevated, implying tightening financial conditions which could impact on the housing market, as well as adding another layer of complexity to the Federal Reserve’s next move on interest rates.

The real reason behind the more recent selling of US Treasuries is yet to be confirmed, with speculation ranging from sales to fund margin calls from the larger hedge funds to a swathe of Chinese holdings being liquidated. In any event, the haven status of both bonds and indeed the US dollar is coming into question as investors flock to other currencies and gold.

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The shortened week to come is nonetheless a busy one, most notably for the banks. Some stronger than expected numbers at the tail end of last week will be followed by updates from the likes of The Goldman Sachs Group Inc (NYSE:GS), Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C) and Morgan Stanley (NYSE:MS) where the guidance comments will be scrutinised in equal measure to the profits themselves for any signals of a changing landscape. 

In the meantime, the apparent White House concession drove Asian markets higher overnight, with technology shares across the region being the inevitable beneficiaries. Sentiment was also boosted by the news that Chinese exports rose by 12.4% in March, as companies rushed to get ahead of the tariff implementations, leading to a trade surplus in excess of $100 billion. 

The next move from the authorities will be influenced by any developments on the current US trade war, with the Chinese reportedly ready to react with new countermeasures and economic stimulus as necessary.

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UK markets reflected the relief rally at the open, although ever subject to changing conditions which has seen any initial strength dissipating over recent trading sessions as new global developments emerge. Nonetheless, the spike in early exchanges reduced the losses of the FTSE100 to 1% in the year so far which, while still 9% off the recent record closing high, shows some evidence of continued interest in the UK as an investment destination amid the turmoil elsewhere.

Initial gains were typified by boosts in stocks with a notable exposure to China such as Prudential (LSE:PRU) and Standard Chartered (LSE:STAN), as well as those indirectly connected to US tech, with rises for the likes of Polar Capital Holdings (LSE:POLR) and Scottish Mortgage Ord (LSE:SMT). The banks were also underpinned by the read across from their US counterparts, with Barclays (LSE:BARC) in particular rallying given its own Stateside set of businesses.