Unlike Halfords, which reported a £23m hit from tax rises in the budget this morning, Compass Group, Europe’s biggest catering company, talks about the “opportunity rather than threats” this brings to its business.
Dominic Blakemore, the Compass chief executive, told analysts and investors that the “cost and complexity” of the increase in national insurance contributions for employers will pile pressure on many UK companies, and may prompt them to outsource catering to save money.
“The NIC rate increase increases cost for everyone. We see an opportunity in first-time outsourcing.”
He argues that Compass, given its size and presence in other countries, can manage those cost rises more efficiently. The company employs 55,000 people in the UK, and 580,000 globally.
His comments came as the catering group reported a 10% rise in revenues to $42bn in the year to 30 September, while underlying profit before tax rose to $2.7bn from $2.4bn.
German minister: Europe must talk to US to avert potential trade war
Robert Habeck, Germany’s economy minister, has said that Donald Trump’s announcements about tariffs on products from China, Mexico and Canada should be taken seriously.
A number of analysts have said that markets should view the US president-elect’s proposed tariffs more positively, given he has threatened a hike of as much as 60% on Chinese imports if the country doesn’t agree with his policies.
However, Habeck said that Europe and Germany need to seek urgent talks with the US to head off a potential trade war and stand united.
European markets and listed companies operating in sectors including automotive and alcohol are a “sea of red” this morning as investors react to the impact of Trump’s announcements, and the possibility other countries could be targeted with tariffs next.
Shares in European brewers have been hit by Donald Trump’s threats to introduce aa 25% tariff on products from Mexico and Canada
Trump, who posted the policy announcement on his social media site Truth Social, has also said that Chinese imports will be hit with a 10% tariff when he officially takes over at the White House on 20 January.
Budweiser and Stella Artois maker AB Inbev and Heineken, which both have operations in Mexico, fell 2.3% and 2.2% respectively.
Guinness maker Diageo, which also has operations in Mexico, was the biggest faller down 2.5%.
Meanwhile, Campari fell 2.3%, Remy Cointreau slid almost 2%, Pernod Ricard fell 1.7% and Carlsberg dropped by just over 1%.
Kathleen Brooks, research director at XTB, said that European stocks are a “sea of red” this morning following Trump’s policy-by-social media announcement.
She pointed out that London’s FTSE 100 has proved to be the most resilient of the European markets as the UK is “expected to be shielded from the worst of Trump’s tariff plans”.
Mohit Kumar, in the global economics team at Jefferies, sees the move by Trump as an “opening move for negotiations” given he has threatened that tariffs on Chinese imports could go up to 60%.
Our view remains that tariffs will eventually not end up as bad as feared, but we will see increased uncertainty over the coming months. Waking up to check the tweets for any policy announcements could become the norm. Tariffs will further support the view of US over rest of the world from an investment perspective.
Halfords could raise prices for car servicing and repair to help it cope with a £23m cost increase after the autumn budget, and called for more business support from the government.
The cycling and motoring retailer, which has more than 12,000 employees, reported on Tuesday that the budget measures add £23m of direct labour costs, of which £9m was already included in its planning assumptions.
Key event
Fears of a potential global trade war has fuelled a sell-off of European automotive stocks.
Shares in Stellantis, the owner of brands including Fiat, Chrysler, Peugeot and Vauxhall, have been hit the hardest falling almost 6% in early trading.
Germany’s Volkswagen fell 2.7%, Mercedes-Benz tumbled 2.2%, BMW dropped 2.4%, and luxury brand Porsche fell 2.3%.
Marc Ostwald, chief economist and global strategist at ADM Investor Services, said that markets will have to “reattune” to Trump’s “frequently erratic” approach to policymaking.
Trump’s promise overnight to implement tariffs immediately on taking office in January were no great surprise, though the fact that he is taking initial aim at Mexico and Canada as much as China may have surprised some, though it is in line with his narrative during the election.
Still it serves as a reminder that markets will have to reattune themselves to his frequently erratic approach to policymaking, and his likely hefty reliance on executive orders where possible to circumvent the legislature.
Updated
European stocks fall amid Trump tariff fears
European stock markets have fallen at the start of trading as investors worry about the ramifications of Trump’s international tariff threats, with the pan-European STOXX 600 index down 0.5%.
The FTSE 100 index of blue-chip stocks in London fell by 0.3% in early trading, while Germany’s DAX fell 0.5%. In France, the CAC 40 share index dropped 0.8%
Chris Turner, global head of markets at ING, published a note saying that Europe will not be “breathing a sigh of relief” despite not being targeted by Trump in his first round of tariffs.
That Europe was not mentioned in Trump’s first tariff post could perhaps be welcome news on the continent.
Yet local policymakers will remain fearful that it will just be a matter of time before Trump turns his attention to the European auto sector or tariffs more broadly. In any case, the threat of further tariffs on China shows the direction of travel on world trade, which is bearish for the euro.
Updated
Copper prices have fallen, weighed down by a stronger US dollar and US President-elect Donald Trump’s pledge to levy more tariffs on Chinese products.
Three-month copper on the London Metal Exchange (LME) was down 0.6% at $8,990.50 per metric ton by 7am, while the most-traded January copper contract on the Shanghai Futures Exchange (SHFE) closed down 0.3% to 73,740 yuan ($10,162.48) a ton, Reuters reported.
Updated
Investor Bill Ackman said that markets should be up as Trump is usinng the threat of tariffs as a weapon to achieve wider US economic goals.
“To be clear, according to Trump the 25% tariffs will not be implemented, or if implemented will be removed, once Mexico and Canada stop the flow of illegal immigrants and fentanyl into the U.S,” he posted on X. “In other words, @realDonaldTrump is going to use tariffs as a weapon to achieve economic and political outcomes which are in the best interest of America, fulfilling his America first policy. This is a great way for Trump to effect foreign policy changes even before he takes office.”
Markets should be up not down on this news, properly understood. https://t.co/o8mCK7Grdl
— Bill Ackman (@BillAckman) November 26, 2024
Updated
Introduction: Dollar gains and stocks drop on Trump tariff threats
Good morning, and welcome to our coverage of business, the financial markets and the world economy.
Donald Trump has kicked-off his long feared plan for new tariffs sending shockwaves through the markets.
The US dollar rose and shares dipped after Donald Trump said he will impose additional tariffs on products coming into the US from China, Mexico and Canada.
Posting on his social media site Truth Social, Trump said that when he becomes president on January 20th he will “sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders.”
The levy on products from Mexico and Canada – and 10% on Chinese imports – saw the dollar rise almost 2% against the Mexican peso and hit a four and a half year high against the Canadian dollar.
The US currency also rose to its highest level since July against China’s yuan as markets reacted to Trump’s comments.
Most Asian equities declined with share benchmarks in Japan, Australia and South Korea all dropping.
The news on tariffs reversed a 0.6% fall in the dollar index on Monday, following Trump’s nomination of hedge fund manager Scott Bessent as Treasury secretary, an appointment investors took as a sign that the president-elect’s policies may be moderated.
Stephen Innes, managing partner, SPI Asset Manager, said:
In a striking return to hardline policies, President-elect Trump has dramatically escalated tensions with a brash promise to impose a sweeping 25% tariff on all imports from Canada and Mexico the moment he reassumes office. This bold declaration shatters any lingering hopes that the new Treasury Secretary, Scott Bessent, might usher in an era of moderation. Initially hailed as a beacon of stability, Bessent’s influence now seems overshadowed by a resurgence of Trump’s uncompromising “America First” doctrine, which starkly excludes even the closest of allies from its protective embrace.
The agenda
9am: FCA to release consumer research on crypto assets, and its crypto ‘roadmap’
10.00am: The EFRA Committee will hold an evidence session to scrutinise the work of Ofwat
11.15am: UK Treasury minister expected to speak at TheCityUK National Conference in Birmingham
2:30pm: Business and Trade select committee session with UK business secretary Jonathan Reynolds
Updated
