Trump in tariff shock

A sudden shift in US tariff policy and the rising risk of US military action against Iran resulted in nervousness in markets over the week. The US Supreme Court struck down President Trump’s tariff framework, prompting the White House to impose emergency 15% global tariffs, a move that injected fresh uncertainty into trade policy and sent the dollar lower. Safe‑haven assets surged, with gold jumping more than 2% and silver over 5%, as markets also reacted to rising military risk in the Middle East following the expiry of a US deadline for Iran to return to nuclear talks and reports of naval positioning ahead of a potential strike. These fuelled volatility across commodity markets and reinforced concerns about global growth momentum. 

Nevertheless, the FTSE 100 was up 2.0% over the week by mid-session on Friday, with the more UK-focused FTSE 250 trading 0.4% ahead.

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Economics 

Bank of England governor Andrew Bailey and chief economist Huw Pill offered contrasting yet complementary signals in their latest testimony to the Treasury Committee, highlighting both progress on inflation and lingering concerns over domestic price pressures. Mr Bailey struck a cautiously optimistic tone, telling MPs that inflation was returning towards the central bank’s 2% target and that interest‑rate cuts later in the year were now a “genuinely open question”, though he stressed he would not pre‑commit ahead of upcoming meetings. He noted that goods inflation had softened but warned that services inflation remained more persistent than desired, keeping policymakers alert to upside risks. Mr Pill, meanwhile, emphasised the need for continued caution, arguing that the disinflation process “is not yet complete” and that earlier policymaking may have focused too heavily on hitting the target at a precise moment rather than securing durable price stability. Both men acknowledged that progress had been made but Mr Pill stressed that underlying inflation, which he estimated at 2.5%–3%, still required vigilance. 

US consumer confidence edged higher, with the Conference Board’s headline index rising 2.2 points to 91.2 in February, helped by slightly improved perceptions of the labour market and a modest easing of earlier pessimism about future economic conditions. However, the underlying picture remains mixed: the present‑situation index slipped, signalling consumers feel current business conditions are softening, while the expectations index climbed but stayed well below 80 – a threshold historically associated with elevated recession risk. Households continued to cite inflation, high prices and political uncertainty as major concerns, even as plans to buy big‑ticket items improved. Taken together, the data suggests that while consumers are proving more resilient than feared after January’s slump, their caution about the months ahead could weigh on spending and keep the Federal Reserve attentive to signs of cooling demand.

UK consumer confidence slipped in February, with GfK’s long‑running index falling three points to –19, its lowest reading in three months, as rising unemployment and weak wage growth deepened household anxiety about personal finances. The drop was driven largely by a four‑point deterioration in how people view their financial situation, both over the past year and the year ahead, while the major purchase index also fell four points to –14, signalling a fresh reluctance to commit to big‑ticket spending. Although inflation has eased, consumers remain squeezed by rising prices and are increasingly prioritising essentials over discretionary buying, with the separate Savings Index tumbling seven points to 21.

Geopolitics

Markets were jolted after the US Supreme Court struck down President Trump’s reciprocal tariff framework, prompting the White House to issue a rapid countermeasure: a unilateral increase in global tariffs from 10% to 15% for 150 days under a different legal authority. This created a sudden policy vacuum and deep uncertainty over US trade governance, sending investors into safe‑haven assets and pushing gold and silver sharply higher. 

A US “deadline” for Iran to return to nuclear talks expired. Washington moved carrier groups closer to Iran and signalled that a US‑Israeli strike was under consideration if diplomacy failed. This contributed to a surge in safe‑haven flows and concerns about potential disruption to Middle Eastern energy supply, adding to volatility across commodities and global equities. 

Companies

US chip group Nvidia delivered another set of record‑shattering full‑year results, with revenue soaring 65% to $215.9bn as the global scramble for artificial intelligence computing power intensified. The chipmaker’s data‑centre division remained the engine of its explosive growth, generating $194bn over the year – up 68% – fuelled by insatiable demand for its Blackwell‑based AI systems and surging investment from hyperscalers and governments. Gross margins climbed above 71%, underscoring Nvidia’s extraordinary pricing power amid the AI boom. Chief executive Jensen Huang declared that the “agentic AI inflection point has arrived”, with enterprises racing to build the compute infrastructure underpinning the next wave of automation and machine intelligence. Nvidia also returned $41bn to shareholders through buybacks and dividends, signalling confidence in continued growth.

Convatec posted a solid full‑year performance, with revenue rising 6.5% to about $2.44bn, supported by broad‑based organic growth across all business categories and strong contributions from new product launches. The medical devices company also lifted its medium‑term organic revenue growth target to 6–8% from 2027, pointing to a richer innovation pipeline and strategic investments that it says will accelerate growth. 

Croda’s 2025 sales were up 6.6%, driven by strong growth in its Consumer Care and Life Sciences divisions. Management emphasised early progress in its transformation plan, citing improving second‑half cash flow, falling debt ratios and rising demand across its higher‑growth portfolio. Looking ahead, Croda expects organic sales growth of 3–6% in 2026 and is targeting an adjusted operating margin above 20% by 2028.

Standard Chartered reported a strong full‑year performance. The bank highlighted robust momentum across Wealth Solutions, Global Banking and Global Markets, alongside resilient balance‑sheet growth. Shareholder returns were sharply higher, with a 65% increase in the full‑year dividend per share and a new $1.5bn share buyback. Management said the group has delivered its three‑year plan a year early and entered 2026 with strong strategic momentum and supportive trading conditions. 

St James’s Place delivered a robust full‑year performance, supported by strong inflows and record funds under management of £220bn. The wealth manager highlighted continued progress on its cost‑efficiency programme, successful implementation of a simplified charging structure, and advances in its ongoing service evidence review, which generated additional provision releases. Management said the firm is well‑positioned for future growth, citing strengthened client retention and sustained demand for personalised financial advice. 

Hiscox delivered record full‑year results, posting a third consecutive year of record profits as insurance contract written premiums climbed nearly 6% to $4.98bn. The specialty insurer reported its best underwriting margin in a decade, supported by strong performances across Retail, London Market and Reinsurance. Shareholders were rewarded with a 20% increase in the final dividend and a new $300m share buyback, bringing total capital returns over three years to more than $1.1bn. 

Hammerson delivered a strong full‑year performance, with net rental income rising 23% to £180m and the value of its retail‑led property portfolio jumping 33% to £3.5bn. This was driven by active asset management, record leasing and buoyant footfall across its UK, French and Irish destinations. The group increased its full‑year dividend by 6% to 16.5p and said it enters 2026 with clear visibility on income, supported by very high occupancy and rising sales

Diageo reported a mixed set of interim results, with net sales down 4% to $10.46bn and organic net sales falling 2.8% amid weaker demand in North America and China, particularly in US spirits and Chinese white spirits. New chief executive Sir Dave Lewis cut the interim dividend to 20 cents and introduced a revised payout policy to create headroom for investment and deleveraging, while reaffirming a focus on cost efficiencies through the company’s Accelerate programme. Diageo also highlighted the planned $2.3bn sale of its stake in East African Breweries as part of efforts to strengthen the balance sheet. 

London Stock Exchange Group reported a strong full‑year performance. The group highlighted broad‑based growth across data and analytics, FTSE Russell, risk intelligence and markets, alongside major customer wins, including £1.9bn worth of long‑term data contracts signed in the fourth quarter. Chief executive David Schwimmer said investment in product innovation, AI‑driven data capabilities and system transformation is delivering operating leverage, with earnings growth significantly outpacing revenue gains. Shareholder returns accelerated, with £2.1bn of buybacks completed in 2025 and a 15% dividend increase, and the company announced plans for a further £3bn in buybacks over the coming 12 months. 

British Airways owner IAG delivered a record set of full‑year results, with revenue up 3.5% to €33.2bn and operating profit before exceptional items rising 13.1% to €5.02bn, driven by strong operational performance, improved punctuality and higher customer satisfaction. Adjusted earnings per share jumped 22.4%, operating margins expanded to 15.1%, and free cash flow remained robust at €3.1bn. The group continued to strengthen its balance sheet, cutting net leverage to 0.8x, while investing €3.4bn in new aircraft, customer service and digital upgrades. Reflecting its confidence, IAG increased its dividend by 8.9% and announced a further €1.5bn return of excess cash, including an expanded share buyback. Chief executive Luis Gallego said compelling market dynamics and IAG’s transformation programme position the airline group for further success in 2026.

Rolls‑Royce reported a markedly stronger full‑year performance, driven by its transformation programme, improved civil aerospace margins and robust aftermarket demand. The group ended the year with £1.9bn in net cash, enabling the reinstatement of dividends and the launch of a £7bn–£9bn share buyback across 2026–28. Chief executive Tufan Erginbilgiç said the company is now achieving outcomes “not possible before” its overhaul, as stronger contractual margins, higher engine durability targets and a 20% expansion of the order book underscore rapid operational gains. 

Hikma delivered a solid full‑year performance, supported by strong momentum in its Branded and Hikma Rx businesses and growth across all geographies. Margins remained resilient despite operational challenges in Injectables, where tougher competition and a shifting product mix weighed on profitability, prompting the company to step up investment in manufacturing, R&D and commercial capabilities. The group announced a 5% increase in its total dividend and unveiled a $250m share buyback for 2026, reflecting confidence in future cash generation.

Melrose delivered a robust full‑year performance, amid strong demand across its engines and defence businesses. Management announced a new £175m share buyback and raised the final dividend by 20% to 4.8p, taking the total payout to 7.2p. Looking ahead, Melrose forecast continued momentum in 2026, guiding for revenue of £3.75bn–£3.95bn and adjusted operating profit of £700m–£750m as production ramps up and aftermarket revenues grow.