Trump reignites tariff concerns

Fresh tariff announcements from US president Donald Trump, doubts over progress in Middle East peace talks, and a steady drumbeat of central bank watchfulness all combined to reinforce a sense that macro risks are still firmly in play. While headline data – from PMIs to labour market indicators – continued to point to modest expansion rather than outright slowdown, investors remain wary of how policy decisions, particularly from Washington, could reshape the near-term outlook.

Against this backdrop, corporate earnings offered a more-constructive counterweight, with strong results from technology and AI-linked companies highlighting the continued resilience of structural growth themes. However, the reaction to many updates was mixed, underscoring the high bar for performance in current markets. 

The FTSE 100 was 0.2% lower over the week by mid‑session on Friday, with the more UK‑focused FTSE 250 also trading 0.2% lower. Here are the latest articles this week:

• Preparing for an exit: a quick guide for business owners
• How to build financial security during a cost-of-living squeeze
• What's the best way to invest for retirement?
• Inheritance tax – Britain’s “most-hated” tax is often misunderstood
• 10 things to think about as you sell your business with deferred compensation

Middle East

Prospects for Middle East peace talks remain highly fragile, with diplomacy advancing fitfully against a backdrop of military flare-ups, deep mistrust, and conflicting narratives, as Washington insists negotiations with Iran are moving forward even while Tehran rejects key terms. The gap between rhetoric and reality has fuelled scepticism about whether any durable agreement is within reach, particularly given unresolved flashpoints such as Iran’s nuclear programme and control of the Strait of Hormuz. At the same time, pressure is building on US president Donald Trump as the mid-term elections approach, with rising energy prices and the economic fallout from the conflict increasingly shaping domestic political risks and constraining his room for manoeuvre, even as he publicly insists these considerations do not affect policy. Investors and analysts are openly wary of Trump’s unpredictability, noting a pattern of shifting positions that has made markets cautious about taking his signals at face value and reluctant to price in any definitive diplomatic breakthrough. Taken together, the outlook is one of uneasy stalemate.

Iran conflict market update: cautious grounds for reassurance

Donald Trump and trade

US president Donald Trump unveiled a fresh wave of tariff measures, proposing duties of around 10%-12.5% on imports from some 60 trading partners, including the UK, EU, China, and Japan, as part of an effort to rebuild his trade agenda after earlier levies were struck down by courts. The new plan, framed around enforcement of bans on forced labour in supply chains, would hit many of America’s largest trading partners, with higher rates for countries deemed non-compliant. Separate tweaks to metals tariffs aim to bolster domestic industry and encourage use of US-produced materials. The reaction has been mixed to negative: allies have pushed back diplomatically and begun assessing retaliatory options, while businesses warned of rising costs and renewed complexity for global supply chains. Economists and investors remain sceptical, highlighting the stop-start nature of Trump’s trade policy and warning that tariffs risk stoking inflation, slowing growth, and ultimately being borne by US consumers rather than foreign exporters. Markets have also been cautious, with the latest moves reinforcing concerns about policy unpredictability and the broader economic drag from protectionism, even as Trump insists the measures are necessary to level the playing field for American workers. 

Economics

This week’s batch of S&P Global purchasing managers’ index (PMI) surveys painted a picture of a global economy still expanding but losing momentum and becoming increasingly uneven, with the headline global composite PMI holding around 51.8 to signal modest growth overall. The detail showed a widening divergence: manufacturing activity remained relatively strong – in some cases hitting multi-year highs as farms boosted output and stockpiled inventories – while services growth softened or stalled in several major economies, including parts of Europe and Japan. At the same time, the surveys highlighted intensifying cost pressures linked to higher energy prices, supply chain disruption, and geopolitical tensions, pushing up input prices and raising concerns about persistent inflation. The significance is that PMIs, as leading indicators, suggest global growth is continuing but at a subdued and fragile pace, with resilience in industry offset by weakness in consumer-facing sectors and rising inflation risks complicating the outlook for central banks and policymakers. 

The latest US Job Openings and Labor Turnover Survey for April delivered a mixed but telling snapshot of the labour market, with job openings jumping by 731,000 to 7.6 million – the highest level in nearly two years – even as hiring fell by 419,000 to 5.1 million and overall turnover remained subdued. Quits, a key gauge of worker confidence, slipped to around 3.0 million with the rate at 1.9%, near its lowest since 2020, while layoffs stayed low and largely unchanged, underscoring a “low-hire, low-fire” environment.

The Federal Reserve’s latest Beige Book painted a picture of a US economy still expanding only modestly but facing intensifying inflation pressures and a cooling labour market. Most of the central bank’s 12 regions reported slight-to-moderate growth alongside largely flat employment. Price pressures were a dominant theme, rising at a “moderate-to-strong” pace across most districts and increasingly driven by higher energy and transport costs linked to geopolitical tensions, which squeezed business margins and weighed on consumer demand. The report also highlighted an uneven economy, with manufacturing relatively resilient – supported by data centre and AI-related investment – while consumer spending showed signs of strain, particularly among lower- and middle-income households. The Beige Book itself is a qualitative survey of business conditions compiled from anecdotal reports across regional Fed banks and published ahead of policy meetings; its significance lies in offering policymakers a real-time, ground-level read on growth, inflation, and labour trends that complements official data and helps shape interest-rate decisions. 

Company news

Who wins when the consumer gets choosier? Squeezed incomes and rising costs are reshaping spending. Charles Stanley’s Equity Research Team highlights the implications for investors in consumer-facing companies here.

FTSE Russell’s latest quarterly reshuffle delivered a relatively busy round of changes reflecting volatile UK equity markets. Shares in Aberdeen, Computacenter, and Investec were promoted to the FTSE 100 while Berkeley Group, Rightmove, and Mondi were all relegated to the FTSE 250. The accompanying moves in the mid-cap index were broader, with a string of additions and deletions highlighting churn below the top tier and continued rotation in investment trusts and smaller companies. 

Early signs of a recovery are emerging in the UK housebuilding sector, with developers pointing to stabilising demand and improved buyer confidence after a prolonged downturn, helped by easing mortgage rates and a more-predictable interest rate outlook. Trading updates and industry commentary suggest reservation rates are beginning to pick up and pricing is firming, even if affordability constraints continue to weigh on volumes, while build cost inflation has moderated and margins are showing tentative signs of repair. What next for the UK housebuilding sector?

Anthropic’s confidential IPO filing marks a pivotal moment for the artificial intelligence (AI) industry, with the maker of the Claude chatbot taking its first formal step towards what could be one of the largest listings on record, while revealing little on pricing or timing but signalling explosive growth and huge investor appetite. The company, now valued at roughly $965bn after a recent $65bn funding round, said its annualised revenue has surged to about $47bn on the back of rapid enterprise adoption, putting it ahead of rival OpenAI in both scale and momentum. The filing underscores the extraordinary capital intensity of the sector, with Anthropic and its peers still burning significant cash even as they race towards profitability. 

Shares in easyJet surged after US investment firm Castlelake revealed it is in the early stages of considering a potential takeover bid for the UK budget airline, though no formal approach has been made yet. The carrier has played down the development as “highly opportunistic”, noting that its share price has been temporarily depressed by geopolitical tensions, higher jet fuel costs, and weaker travel demand linked to the Iran conflict. Analysts say the interest highlights easyJet’s appeal as a relatively cheap entry point into Europe’s low-cost aviation market, given its valuable airport slots and fleet, but stress there is no certainty a deal will materialise, with Castlelake facing a late‑June deadline to either make a firm offer or walk away. The episode has reignited broader speculation about consolidation in the sector, even as investors weigh the execution risks and regulatory hurdles associated with any potential acquisition. 

Nvidia is making a bold push into the personal computer market, unveiling its first fully integrated PC processors in a move that challenges the long-standing dominance of Intel and AMD and signals a new phase in the “AI PC” era. The company’s Arm-based N1X chip – combining CPU, graphics, and AI capabilities into a single system – will power a new generation of laptops from manufacturers including Microsoft, Dell, and HP, marking Nvidia’s shift from supplying components to becoming a full platform provider. The strategy reflects a broader industry transition towards on-device AI, where local processing rather than cloud computing becomes central to everyday use, from productivity to gaming. For Nvidia, the opportunity is significant: it is targeting a PC processor market estimated at around $200bn while leveraging its leadership in AI chips to extend its reach from data centres to consumer devices. If successful, the move could reshape the competitive landscape, offering thinner, more-efficient AI-powered machines and positioning Nvidia at the heart of the next generation of personal computing. 

HP reported a solid set of fiscal second-quarter results, beating expectations as revenue rose 9% year on year to $14.4bn and adjusted earnings per share climbed to $0.86, driven by strong demand for higher-value, AI-enabled personal computers. Growth was led by the personal systems division, where revenue jumped 13% on higher commercial demand and rising average selling prices, even as overall unit volumes declined, while the printing business remained flat and margins faced pressure from costs. The company highlighted increasing traction in AI PCs, now making up a rapidly growing share of shipments, but warned that higher memory and component costs would weigh on profitability and trimmed the top end of its full-year outlook. 

Broadcom reported a strong first quarter, with revenue rising 29% year on year to a record $19.3bn and adjusted earnings per share of $2.05, both ahead of expectations. This was driven largely by surging demand for AI chips, where revenue more than doubled to $8.4bn. The group also issued upbeat guidance, forecasting about $22bn in second-quarter revenue and rapid continued AI growth, alongside a $10bn buyback programme. Markets initially responded positively to the results and outlook, with the shares rising about 5% in extended trading after the release.

Palo Alto Networks delivered a standout set of third-quarter results, beating market expectations as revenue jumped 31% year-on-year to $3bn and adjusted earnings per share came in at $0.85, driven by surging demand for AI-driven cybersecurity solutions. Growth was broad-based, with next-generation security annual recurring revenue rising 60% to about $8.1bn and strong momentum in cloud, network, and AI security platforms, alongside contributions from recent acquisitions. The company also lifted its full-year outlook, signalling confidence in continued expansion as enterprises ramp up spending to secure AI deployments.

CrowdStrike delivered a strong but somewhat mixed set of first-quarter results, with revenue rising about 20% year-on-year to $1.1bn and annual recurring revenue climbing 22% to $4.4bn, underlining robust demand for its subscription-based cybersecurity platform. Growth was driven by continued adoption of its AI-powered Falcon platform and strong customer retention, with margins and cash generation remaining solid. However, profitability came under pressure, as costs rose and one-off charges weighed on results, while earnings growth slowed compared with prior periods. Despite beating expectations on key metrics, the market reaction was cautious, with the shares falling after weaker-than-expected revenue guidance, highlighting investor sensitivity to any signs of slowing growth even as long-term demand for AI-driven cybersecurity remains strong. 

British American Tobacco’s interim trading update struck a largely steady but cautious tone, with the group saying it remains on track to meet full-year guidance, albeit at the lower end of its targets. It noted strong growth in “new category” smokeless products offsets ongoing declines in traditional cigarettes. The company upgraded expectations for its vaping and nicotine pouch portfolio – led by Vuse and Velo – to mid-teens revenue growth, underlining the accelerating shift towards reduced-risk products, while reaffirming solid performance in its key US market. However, global cigarette volumes are now expected to fall more sharply, with broader group growth constrained by macroeconomic and regional headwinds. Investors reacted coolly, with shares falling as the strength of the smokeless pivot was offset by pressure on the core business and the absence of an upgrade to overall guidance.

Inditex delivered a solid first-quarter performance, with revenue rising 5.8% year-on-year to €8.75bn (up 8.8% in constant currency) and net profit increasing 5.4% to about €1.4bn, as strong demand for its spring/summer collections drove growth across stores and online channels. Profitability also improved, with gross margin expanding to 61.2% and operating earnings climbing at a faster pace than sales, reflecting tight cost control and the strength of its agile supply chain model. Momentum carried into the early second quarter, with sales accelerating by 11.5% in constant currency, beating expectations and signalling a strong start to the summer trading period.