Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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London Quick Take - 7 August - Trump isn’t chickening out, US tech doesn’t care, Bank of England to cut
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Key Points
- Trump threatens 100% tariffs on semiconductors
- Apple gains 5% after increasing US investment by $100bn
- WPP shares slump on earnings
- Bank of England expected to cut rates today
No Taco: Trump hit India with an extra 25% tariff for its purchase of Russian oil, and 100% tariffs on semiconductor imports, unless firms commit to moving production to the US.
Apple CEO Tim Cook was by the President’s side for the announcement. Apple shares ripped higher as it committed to invest another $100bn in the US, on top of its $500bn commitment already announced. Tariff risk reduced but does it boost sales, or lower costs? Apple has already warned of $1.1bn in tariff costs in the September quarter, but moving production to the US will clearly hit margins. Carve-outs will help Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC), which have made sure to commit many billions of dollars to US manufacturing. The broad reciprocal tariffs announced last week are now in place.
Amazon also rose 4% as tech stocks rallied to lift Wall Street, with the S&P 500 up 0.73% to 6,345 and the Nasdaq Composite climbing 1.21%. The S&P 500 has filled the Thu/Fri gap and is back above its 20-day moving average. Small caps fell with the Russell 2k down 0.2%.
The new tariffs on India mean it will be paying 50% on imports to the US. Not a massive deal for the economy – about 2% of GDP is exports to the US – but the wider implication is obvious – Trump is not shying away from further ratcheting of tariffs if he feels it’s required.
In Europe on Thursday, Frankfurt and Paris are higher while London is lower. The FTSE 100 slid about 0.3% early doors due chiefly to a chunk of ex-divis, with AZN accounting for 5pts alone. Reckitt took over 2pts off the index while RELX, BT, Barclays and Rolls each shaved about 1.5pts off. Hikma led the actual fallers, shipping about 8% after profits plunged 25%. WPP was the next worst, down over 4% on weak results.
The Bank of England meeting today is expected to bring a 25 basis rate cut, but perhaps more important is any word on slowing pace of bond sales (QT), which could be a dovish tilt. Sterling has put in a shift versus the weaker USD over the last few sessions, posting a new 6-day high above 1.3370 overnight. Against the stronger euro it’s another matter with sterling battling resistance at 0.8735. Preview here.
Apple CEO Tim Cook was by the President’s side for the announcement. Apple shares ripped higher as it committed to invest another $100bn in the US, on top of its $500bn commitment already announced. Tariff risk reduced but does it boost sales, or lower costs? Apple has already warned of $1.1bn in tariff costs in the September quarter, but moving production to the US will clearly hit margins. Carve-outs will help Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC), which have made sure to commit many billions of dollars to US manufacturing. The broad reciprocal tariffs announced last week are now in place.
Amazon also rose 4% as tech stocks rallied to lift Wall Street, with the S&P 500 up 0.73% to 6,345 and the Nasdaq Composite climbing 1.21%. The S&P 500 has filled the Thu/Fri gap and is back above its 20-day moving average. Small caps fell with the Russell 2k down 0.2%.
The new tariffs on India mean it will be paying 50% on imports to the US. Not a massive deal for the economy – about 2% of GDP is exports to the US – but the wider implication is obvious – Trump is not shying away from further ratcheting of tariffs if he feels it’s required.
In Europe on Thursday, Frankfurt and Paris are higher while London is lower. The FTSE 100 slid about 0.3% early doors due chiefly to a chunk of ex-divis, with AZN accounting for 5pts alone. Reckitt took over 2pts off the index while RELX, BT, Barclays and Rolls each shaved about 1.5pts off. Hikma led the actual fallers, shipping about 8% after profits plunged 25%. WPP was the next worst, down over 4% on weak results.
The Bank of England meeting today is expected to bring a 25 basis rate cut, but perhaps more important is any word on slowing pace of bond sales (QT), which could be a dovish tilt. Sterling has put in a shift versus the weaker USD over the last few sessions, posting a new 6-day high above 1.3370 overnight. Against the stronger euro it’s another matter with sterling battling resistance at 0.8735. Preview here.
WPP - no good news, results certainly offer no improvement from the July update. Shares down –4% and now 50% in the last 6 months. Today’s interims come after the stock sunk to a 16-year low following a massive profit warning last month. It’s battling huge structural storms in the ad industry. In July it warned first-half like-for-like revenue would fall between 4.2% and 4.5% as Q2 fell further behind last year than Q1. WPP confirmed today that Q2 revenues less pass-through costs was down 12.6%, leaving H1 revenues on that basis down 4.3%. Full-year revenue is still guided to fall 3% to 5%, from a previous forecast of a decline of no more than 2%.
Disney beat and raised but shares fell. Parks look good and it swung to profits from its streaming business. It raised the full-year EPS forecast to $5.85, up from its May forecast of $5.75, but a sharp decline in its linear TV business dragged on sentiment.
Uber announced a $20bn share buyback but also fell. Revenues rose 18%, monthly active users rose 15%, net income rose by a third to $1.4bn, and the company lifted its gross bookings guidance for the current quarter ahead of expectations. Shares have rallied a lot this year and maybe just a case of all the good news baked in and investors can’t shrug off feeling that consumer softness in the US will be a factor whatever CEO Dara Khosrowshahi says.
McDonald’s sales returned to growth with global same-store sales up 3.8% vs the 2.6% expected.
Novo Nordisk can’t catch a break – tough to make a call on this while the plug is still out of the bath....new CEO comes in but compounded copycat problem remains, Trump is threatening tariffs of 250% on pharmaceutical sector and its next-generation obesity drug candidate, CagriSema, is not delivering the trial results its needs to.
Disney beat and raised but shares fell. Parks look good and it swung to profits from its streaming business. It raised the full-year EPS forecast to $5.85, up from its May forecast of $5.75, but a sharp decline in its linear TV business dragged on sentiment.
Uber announced a $20bn share buyback but also fell. Revenues rose 18%, monthly active users rose 15%, net income rose by a third to $1.4bn, and the company lifted its gross bookings guidance for the current quarter ahead of expectations. Shares have rallied a lot this year and maybe just a case of all the good news baked in and investors can’t shrug off feeling that consumer softness in the US will be a factor whatever CEO Dara Khosrowshahi says.
McDonald’s sales returned to growth with global same-store sales up 3.8% vs the 2.6% expected.
Novo Nordisk can’t catch a break – tough to make a call on this while the plug is still out of the bath....new CEO comes in but compounded copycat problem remains, Trump is threatening tariffs of 250% on pharmaceutical sector and its next-generation obesity drug candidate, CagriSema, is not delivering the trial results its needs to.
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