HL commentary as it happens

How investors should deal with volatility

During periods of volatility, it’s essential for investors to stay calm and maintain a focus on long-term goals. Instead of making impulsive decisions, it’s wise to regularly review your portfolio, keeping it well-diversified across various geographies and asset classes to effectively manage risk. History has shown time and again that markets reward those who keep a cool head and think with a long-term horizon, now is no different.

Oil prices find a floor

Brent oil prices are up nearly 1% in early trading, finding some footing after a three-session selloff that pushed prices to their lowest in nearly four years. Despite some green this morning, downward pressure doesn’t look to be going away anytime soon.

Gold price rise after closing in on a four-week low

Gold is back in the good books again, after falling to a near four-week low in what looked like some profit-taking after its recent rally. The underlying demand drivers haven’t gone away, with investors looking to the rare metal as a way to shelter from some of the volatility plaguing equity markets.

US markets stage an intra-day rebound, volatility remains high

Yesterday was a wild ride for US markets, opening sharply down before staging an intra-day recovery, with the tech-heavy Nasdaq closing in the green. Futures indicate a positive open this morning, but volatility remains the only certainty at this point. Company earnings are just around the corner, which may provide a welcome distraction. However, management teams are facing a tough patch, with difficult decisions ahead on how to navigate the tariff storm. Expect a lot of cautiousness, and possibly even a lack of quarterly guidance in some cases, as uncertainty takes centre stage. In times like these, investors are reminded of the importance of diversification and maintaining a long-term perspective.

European markets open higher, Japan surges on trade optimism

Investors are waking up to a positive sight for once, with markets opening higher across a broad range of European indices and the FTSE 100 up 0.9% at the open. However, this should hardly be seen as the end of the trouble, especially with President Trump showing no signs of easing his stance on perceived trade imbalances, having doubled down on China. Still, there is a glimmer of hope, as Japanese markets are up nearly 6% following news that trade talks will begin in a few days. The sooner deals are reached, the quicker companies and investors can gain some clarity on the lay of the land.

Gold falls for third trading session, with margin calls likely to have prompted investors to sell to free up cash

In times of high economic and geopolitical uncertainty, gold often is seen as a safe haven, but it’s fallen for the third session – away from record highs, as more investors book profits and plough into cash. Margin calls from brokers is likely to have exacerbated some of the market movements. Investors using more risky margin accounts can borrow money to invest, but falls in asset prices are prompting demands they deposit more money, as the value of assets used as collateral falls.

Wall Street braces for further turmoil, with futures trades indicating another 5.8% fall for the tech-heavy Nasdaq

The tech-stock turmoil looks set to rampage for another day on Wall Street. The bears are already out in force across the Nasdaq, and futures indicate another steep fall for the index. The halcyon days of cheap manufacturing and easy markets appear to be over. With, as yet, no indications of a rolling back of tariffs, investors are reassessing earnings estimates denting valuations. This will have a knock-on effect on US consumer confidence which has already fallen sharply. For investors in the UK, it's important to keep your eye on the long-term rather than reacting to short-term market movements. Over time, markets have recovered from difficult times like this, so it's important not to make any knee-jerk reactions.

Indices in Asia nurse painful losses, with the Hang Seng down 13% and Japan’s Nikkei down around 8%

The shocking turn of US policy and China’s determined retaliatory action led to a rout in Asian markets, with Hong Kong’s Hang Seng and Japan’s Nikkei nursing painful losses. Banking shares experienced double digit declines during the session. Banks are seen as barometers for economic health, and given the steep losses, red lights are flashing about a looming global recession. These warnings are also showing up in the bond markets. Falling treasury yields are an indication that the chance of recession is increasingly being priced in. Oil prices are also continuing to slide, as traders assess that demand for energy will drop back sharply, given the ominous signs for global trade. Market movements like this will feel unsettling, but even big bumps in the road like this are part and parcel of investing. Sticking with your investment strategy ensures you will benefit when the markets recover.

FTSE 100 drops more than 5% in early trade as tariffs continue to roil markets

The big flight to cash continues as investors seek a shelter for their money amid the tariff storm. Trump has dashed hopes for an easing of policy by calling tariffs ‘medicine’ and investors are absorbing the implications of this bitter pill for the global economy. The FTSE 100 has opened deep in the red, falling more than 5% in early trade, as pessimism spreads about the outlook for world trade. While the biggest fall this century was the pandemic induced 10.8% drop on 12 March 2020, the losses in recent days are steep, an indication of the fear spreading about the implications of the White House approach. A sea of red on markets will inevitably be troubling for investors, but it’s important not to panic, and look at long-term investment horizons. History has shown that markets recover from times of crisis and high uncertainty, so the key is to keep calm and carry on.

3-year low for Brent Crude

Brent crude prices are holding at around $69,5 per barrel following a 6% dive yesterday. The three-year lows are a result of not just demand fears in the face of mounting trade restrictions but also the impending daily increase in output of over 400,000 barrels per day planned by eight key OPEC+ nations next week.

US treasury yields at 7-month highs

US Treasury yields are at their lowest level since October, reflecting concerns that an escalation of trade duties could trigger a recession. US jobs data out later today is expected to show non-farm payroll additions of 140,000 in March and a steady unemployment rate of 4.1%. Markets are likely to be sensitive to a material miss in either direction.

But already there are signs that America’s trading partners are willing to bend in a bid to drive import tax levels downwards. EU trade commissioner Maroš Šefčovič is holding talks with US officials today. A cut to tariffs on American cars, as well as increased spending on US energy and defence goods, are thought to be on the table. The tariff scores on the board today are very unlikely to remain the status quo in the weeks and months to come. That said, trying to time the market is a dangerous game. Presidents come and go and there’s overwhelming data to support outperformance of equities over other asset classes.

FTSE 100 and European futures down

Despite months of sabre-rattling by Donald Trump, markets appear to have been unprepared for the depth and breadth of tariffs announced by the White House. The FTSE 100 is set to open down a touch further, after US stocks suffered their worst day in five years. The tech-heavy Nasdaq saw the worst of it, falling nearly 6%, but there were hefty drops amongst the banks, industrials and energy sectors. Traditional defensive havens offered some refuge with gains seen in consumer staples and utilities.

Asian markets were broadly down overnight with Japan seeing the most acute falls. The Nikkei dropped nearly 4% with Japanese Premier, Shigeru Ishiba, labelling the 24% tariff on US exports as a ‘national crisis’. Trade minister Yoji Muto promised a bold and speedy response but with annual Japanese exports to the US of $143bn nearly 80% higher than imports from America, he’ll be bargaining from a position of weakness.

Oil prices fall on global growth concerns

Oil prices have sunk as markets adjust to the impact of sweeping tariffs, which are expected to weigh heavily on global growth. Adding to the sombre mood, US crude inventories unexpectedly surged last week, defying forecasts of a 2-million-barrel drawdown.

Gold sees fresh demand as investors take risk off the table

It’s hard to find many winners, but gold prices continued to rally as investors flocked to safer assets, reaching a fresh all-time high in the aftermath of Trump’s announcement, before pulling back a touch this morning. There’s a lot of debate about whether gold adds real value to a portfolio in the long run, but investors are clearly leaning in to take some shorter-term risk off the table.

Markets react to Trump's tariffs announcement

Trump’s bold attempt to reshape international trade has sent shockwaves through global markets. The effects of ‘Liberation Day’ are being felt far and wide, with Asian markets down overnight, European stocks under pressure in early trading, and US futures pointing to a big drop later today. With tariffs reaching levels unseen in over a century, the US is poised to rake in an additional $600bn in tariff revenue in an optimistic scenario, or put that another way, that’d be a $600bn added cost for businesses or consumers to stomach.

While economists scramble to predict the impact on inflation and global growth, businesses around the world are getting their first real look at what a tariff-heavy US trade policy means, and this may just be the beginning of a fresh round of tariff drama. Each country now faces the option of negotiating from this starting point, which, in theory, represents the worst-case scenario. A carrot has been dangled, but if countries opt for the stick, retaliation could mean things get worse before they get better. That doesn’t make it any easier for businesses to make clear-cut decisions about major investments in their supply chains, so we can expect volatility to stick around for the foreseeable future.

The UK, meanwhile, may seem to have fared better than some, but its deep ties to the global economy make a slowdown in growth almost unavoidable and the FTSE 100 has been caught up in the global market sell-off. The government is taking a pragmatic approach, hoping for a trade deal that could ease some of the tariff burden. However, with uncertainty looming large, where we go from here is hard to call and markets rarely respond well to uncertainty.