European Stocks Rally, Hermes Earnings in Focus

European stock markets continued their strong run, with the STOXX 600 hitting record highs daily this week, while Germany's DAX led with a 14% year-to-date gain. Investors are watching Hermes’ earnings to gauge the luxury sector's resilience amid slowing Chinese demand, following strong results from Burberry and Richemont. Meanwhile, Trump’s directive on tariffs avoided immediate new duties, easing market concerns, and US inflation data signalled stability within the Fed’s target range.

Equities

The FTSE 100 fell 0.5%, marking its worst session in nearly two weeks after a strong run of record highs. Consumer goods giant Unilever dropped 5.6% after announcing that its ice cream business, including Ben & Jerry’s, will be listed in Amsterdam rather than London or New York.

British American Tobacco fell 8.8%, its steepest decline since March 2020, following a £6.2 billion legal charge related to a Canadian lawsuit. Barclays slipped 4.7% after hitting its highest level since 2011 on Wednesday, as investors reacted to its 2024 results and 2025 outlook.

BP gained investor attention after activist fund Elliott Management took a 5% stake in the company. Meanwhile, Coca Cola HBC rose 7.4% after its full-year results beat expectations, and housebuilder Vistry climbed 4.3% after Abrams Capital increased its stake to 10.2%.

The FTSE 250 index edged up 0.2%, helped by gains in the aerospace and defence sector, which rose 1.5% after Jefferies described any potential dip from a possible Ukraine-RUSa ceasefire as a buying opportunity.

In the US, the S&P 500 climbed 1.04% to 6,115.07, its biggest one-day gain since mid-January, while the Nasdaq rose 1.50% to 19,945.64 and the Dow Jones added 0.77% to 44,711.43. The White House unveiled plans for reciprocal tariffs on US trading partners, with implementation expected within weeks.

Tesla jumped 5.9%, Nvidia rose 3.2%, and Apple gained 2%, helping push the S&P 500 close to its all-time high. The number of new jobless claims in the US fell, while Treasury yields dropped sharply, reinforcing expectations that inflation is moderating. Among corporate movers, Trade Desk tumbled 33% after issuing a weak first-quarter revenue forecast.

MGM Resorts surged 17% after delivering better-than-expected fourth-quarter profit and revenue. Chevron rose 0.6% after announcing plans to cut up to 20% of its global workforce by 2026.

Forex & Commodities

The US dollar fell 0.61% to 107.25, its lowest level since late January, after US producer price data suggested that core PCE inflation, the Federal Reserve’s preferred measure, may be lower than expected when released later this month. The euro rose 0.58% to $1.0442, benefiting from optimism over potential RUSa-Ukraine peace talks. Sterling gained 0.8% to $1.2541 after UK GDP data showed the economy grew 0.1% in the final quarter of 2024. The Japanese yen strengthened 1.05% to 152.8 per dollar.

Gold edged up 0.1% to $2,932.81 per ounce, on track for a seventh consecutive weekly gain, after reaching a record high of $2,942.70 earlier in the week. US gold futures rose 0.5% to $2,960.40. Investors remain focussed on concerns over Trump’s proposed reciprocal tariffs, which could lead to trade tensions. Other precious metals also gained, with silver rising 1.9% to $32.97 per ounce, platinum up 0.8% to $1,002.95, and palladium adding 0.7% to $1,000.82.

Oil prices rose, set to snap a three-week losing streak, as traders assessed the impact of Trump’s tariff plans, which are now expected to be delayed until at least April. Brent crude gained 0.3% to $75.25 a barrel, while West Texas Intermediate crude rose 0.2% to $71.45. Weekly gains stood at 0.6% and 0.5%, respectively. US energy demand increased, with JPMorgan reporting global consumption at 103.4 million barrels per day, up 1.4 million bpd year-on-year. European gas prices surged, increasing the likelihood of a shift towards oil consumption.