Trump accused of appeasing Putin

Equity markets moved ahead this week, despite several announcements by Donald Trump that could hit world trade. These included a memo instructing staff to develop custom tariffs for individual countries taking into account features such as their existing tariffs, exchange rates and trade balances.

Star-crossed lovers may have been faced with difficult gift decisions this Valentine’s Day as chocolate remained in scarce supply. Stocks of cocoa in warehouses in London and New York plunged to record lows. Soaring prices have hit profits at chocolate makers. In the US, retail chocolate prices are up to a fifth higher this Valentine’s Day than last year, according to Wells Fargo.

The FTSE 100 was +0.5% over the week by mid-session on Friday, with the more UK-focused FTSE 250 trading +0.8%.

Charles Stanley Multi-Asset Funds: an active approach to diversification

Six investment ideas for your ISA

Six essential tips to manage money better

Pound cost ravaging: the ‘stealth’ risk stalking pension investors

Last minute tips for using your ISA allowance

How big should your ISA be?

Economics

On Thursday morning, Rachel Reeves had some good news to get what happened to be her birthday off to a positive start. Confounding gloomy expectations, the UK economy managed to grow in the final three months of 2024, eking out a gain of 0.1% against a consensus view for contraction. Still, it was thin gruel for a Chancellor of the Exchequer staking her own – and the wider Labour government’s – reputation on boosting the country’s economic growth. The news is likely to quash any concern that Britain is teetering on the edge of a recession. However, with tax rises introduced by Ms Reeves in her October Budget due to take effect at the start of April, and uncertainty over the scope and impact of Donald Trump’s trade policies dampening global trade, Britain’s growth is likely to continue to be pedestrian, at least in the near term. Indeed, the Bank of England halved its growth forecast for this year as it cut interest rates to their lowest level for more than 18 months. The economy is now expected to grow by 0.75% in 2025, the central bank said, down from its previous estimate of 1.5%. The UK base rate was cut to 4.5% from 4.75%.

Gross Domestic Product per hour worked in the UK is 18% below that of the US. Why is UK productivity so poor?

UK house prices hit another record high in January, according to Halifax, as first-time buyers are trying to complete deals before an increase in stamp duty in April. The average property price is now £299,138 and the annual growth rate slowed to 3.0%, which is the weakest rate since July 2023.

The US economy also provided an early headache for Donald Trump, after inflation accelerated to 3% in January, its highest rate for six months and above the 2.9% market consensus view. It poses a challenge to US President Donald Trump, who made tackling inflation a centrepiece of his election campaign last year, but has put forward policies, such as higher tariffs on imports, that risk pushing prices up further. The uptick in prices last month was wide-ranging, impacting car insurance, airfare, medicine and other basics.

The world of Donald Trump

• In a surprise announcement, Mr Trump said that he and Russian leader Vladimir Putin had agreed in a phone call to begin talks to end the war in Ukraine. Donald Trump says US, Russian and Ukrainian officials will meet at the Munich Security Conference – but there is no Russian delegation at the conference. Ukraine's President Volodymyr Zelensky is expected to meet US Vice-President JD Vance for talks in Munich on Friday.
• Mr Trump ordered a 25% import tax on all steel and aluminium entering the US, ending previous exemptions for allies including Canada and the European Union (EU) and marking a major expansion of trade barriers. European Commission President Ursula von der Leyen said the move would trigger "firm and proportionate countermeasures" while Prime Minister Justin Trudeau also pledged to "stand up for" Canadian workers and businesses. The UK has taken a different approach and said it will not retaliate against the measures and is expected to seek exemptions from the steel tariffs. The measures will come into force on 12 March.
• President Trump signed a memo that instructed staff to develop custom tariffs for each country around the world, taking into account features such as their existing tariffs, exchange rates, trade balances and other rules. A White House spokesperson said that tariffs imposed by other countries were not necessarily the biggest issue, arguing that the European Union, for example, had other policies the Trump administration said put US exporters at a disadvantage.
• Elon Musk has made several exaggerated or unevidenced claims during an Oval Office event alongside President Trump. In his first major media appearance since starting as the head of the Department of Government Efficiency (Doge), he said his team was seeking to improve transparency in government. He defended false allegations he had spread about US funds being used to send condoms to Gaza. Mr Musk was challenged by a reporter about a recent White House claim that it had stopped $50m worth of condom being sent to the Gaza Strip. The reporter asked whether the condoms were, in reality, going to be sent to Gaza Province in Mozambique. Mr Musk conceded that was true. Elon Musk’s Herculean task.
• Musk appeared to concede that could be the case, and responded: "I'm not sure we should be sending $50m dollars of condoms anywhere… if it went to Mozambique instead of Gaza, I'm like, OK that's not as bad, but still you know why are we doing that?"

• Following a meeting held with Indian Prime Minister Narendra Modi in Washington, Mr Trump announced expanded US military sales to India from 2025, including F-35 jets, along with increased oil and gas exports to narrow the trade deficit. The president halted the enforcement of an anti-corruption law that proscribed the prosecution of Americans accused of bribing foreign officials. The law has been in place for around 50 years and prohibits US firms from trying to retain or win new business with other countries by bribing government figures. “It's going to mean a lot more business for America," Mr Trump said when signing the executive order on Monday.

• Chinese fast-fashion group Shein may delay its massive London initial public offering (IPO) following changes to import tariffs in the US. The Trump administration said it would close the “de minimis” duty exemption in the US and an additional 10% of tariffs would be added on all Chinese goods, ending an import rule that had helped the retailer keep prices low.
• Coca-Cola said it may have to sell more drinks in plastic bottles in the US if President Trump's tariffs end up making aluminium cans more expensive. It comes after Trump ordered a 25% import tax on all steel and aluminium entering the US. The iconic American drinks maker already downgraded its sustainability target of using 50% recycled materials in its packaging by 2030, to using 35% to 40% by 2035.
• French President Emmanuel Macron has described Donald Trump’s return as an “electroshock” that should force Europe to secure its own future as well as Ukraine’s.

Artificial intelligence (AI)

At the Paris AI summit the US and UK refused to sign a declaration calling for policies “ensuring AI is open, inclusive, transparent, ethical, safe, secure and trustworthy”. The summit brought together representatives from more than 100 countries to discuss how to reach a consensus on guiding the development of AI. A UK government spokesperson said the statement had not gone far enough in addressing global governance of AI and the technology’s impact on national security. US vice president Vance, in his first trip abroad as US vice-president, warned against the EU’s regulatory approach, stating that “excessive regulation of the AI sector could kill a transformative industry”.

Sam Altman, the chief executive of ChatGPT-owner OpenAI, said the company was "not for sale" after receiving a $97.4bn (£78.4bn) takeover bid from a consortium of investors led by Elon Musk. Mr Altman co-founded OpenAI with Musk before a public falling out led to Musk's departure.

The UK is to explore the use of Anthropic's AI chatbot Claude for public services. Claude will be used to improve how people interact with public information and services. Anthropic, a rival to ChatGPT owner OpenAI and backed by Google and Amazon has signed a memorandum of understanding with the UK government for the collaboration.

Companies

Energy giant BP has said it will "fundamentally reset" its strategy as profits dropped sharply last year. The company is scheduled to hold a capital markets day in the City on 26 February and is expected to scale back much of its green strategy and pledge to focus more on oil and gas. Expectations are for management to cut its previous $10bn commitment to renewables by 2030 by up to half.

Shell’s earnings beat market forecasts slightly in the fourth quarter, but a series of one-off charges meant net income failed to meet the City’s expectations. By division, all segments delivered lower earnings quarter-on-quarter, with upstream businesses marginally missing consensus expectations and the downstream business missed consensus expectations by 33%.

Blue Origin, the rocket company owned by Amazon founder Jeff Bezos, is laying off about 1,400 employees, or approximately 10% of its workforce. In a memo to staff, chief executive Dave Limp said the job cuts are part of a plan to trim managerial ranks and focus resources on ramping up rocket launches.

Shares in holiday giant Tui slumped after management reported a slowdown in airline bookings for the summer season. The Frankfurt-listed company, which delisted from the London Stock Exchange last June, said summer bookings in its airline division were up just 2% in the last three months of 2024 compared to the prior year, a sharp deceleration from 7% growth in the prior quarter. Shares in easyJet and Ryanair fell following the news.

Shares in engineering services company Wood Group fell on Friday, after it flagged weaker-than-expected fourth-quarter trading in an update. It said actions taken in the fourth quarter to mitigate weaker-than-expected trading included cancelling employee bonuses and actively managing working capital.

NatWest reported a rise in annual profits after its loan book grew, margins improved and defaults remained low, despite the UK economy faltering in the second half of last year. The lender on Friday announced net income of £4.8bn for 2024, up from £4.6bn the previous year. Its net interest margin – the difference between the interest received on loans and the interest paid on deposits – rose slightly to 2.19%, from 2.18% in the third quarter, thanks to its so-called structural hedge that offsets the waning benefits of falling rates.

US-listed information provider S&P Global’s fourth-quarter results were strong, with revenue and earnings beating market expectations. The outperformance was driven by its Ratings and Indices businesses. The Ratings segment continues to grow strongly, supported by healthy debt issuance trends. Positively, Market Intelligence did not disappoint this quarter and profitability improved quarter on quarter. Full-year 2025 guidance was stronger than consensus expectations and further strategic growth investments are to be made to continue to capitalise on AI, private market and energy transition opportunities.