UK markets are cautiously optimistic today as trade negotiations with the US over steel tariffs edge toward a breakthrough.
The UK government is reportedly close to securing the removal of 25% steel tariffs, with compromises involving ethanol and beef import quotas.
Expect the deal to be subject to further discussion when UK Business Secretary travels to Washington on 24th July and when President Trump and the Prime Minister meet in Aberdeen at the end of the month.
Pharma threat
However, President Trump has threatened to impose tariffs on pharmaceuticals as soon as the end of the month as he steps up pressure on big pharma to shift manufacturing and investment to the US.
The president’s latest remarks follow a threat last week to impose pharma import tariffs of as much as 200%, but would first give companies up to 18 months to move more production back to the US. Trump’s campaign to onshore more manufacturing to the US has led to volatility in pharma share prices this year and raised concerns about investment and jobs being sucked away from Europe and the UK.
Tariff deal with Indonesia
Meanwhile, Donald Trump said the US had reached a trade deal with Indonesia that would result in goods from the south-east Asian nation to the US being hit with a 19% tariff and Jakarta buying American energy and Boeing jets.
The preliminary deal is the first since Trump last week sent letters to the more than 20 trading partners informing them of the US tariff levels on their exports if they do not reach an agreement by August 1.
The US president threatened Jakarta with a 32% levy in last week’s letter, but said on Tuesday he thought the latest arrangement - under which America will pay zero tariffs on exports to Indonesia - was “a good deal for both parties”. Trump told reporters he had spoken to his Indonesian counterpart, Prabowo Subianto, and that the deal with Jakarta would give the US “full access to Indonesia, everything”.
Unexpected inflation rise
Domestically, The UK's inflation rate has risen to 3.6% in the year to June, up from 3.4% in May, according to the Office for National Statistics - higher than economists had expected.
The unexpected inflation jump was mainly driven by motor fuel costs - which did not fall as much as they did this time last year - and food price inflation, which rose for the third month in a row.
Despite the rise, the Bank of England is "still widely expected to cut interest rates”.
FTSE 100
The UK's flagship share index, the FTSE 100, was up 25 points at 8,958 shortly after opening this morning.
Brent crude oil futures were down 0.35% at $68.42 a barrel.
Companies reporting today
BHP Group - Q4 Operations Update
Diploma - Q3 Trading Statement
Dunelm Group - Q4 Trading Statement
easyJet* - Q3 Results
Frasers - Full Year Results
Netflix* - Q2 Results
Ocado Group* - Half Year Results
PepsiCo* - Q2 Results
QinetiQ Group - Q1 Trading Statement
TSMC* - Q2 Results
Volvo - Q2 Results