Weekly Market Update - 10th February 2025: Tariff Talks and UK Rate Cuts

Last week’s performance – major stock markets

An interest rate reduction in the UK and more tariff threats from the US were the top stories of last week. China, Europe and the UK performed well however Japan and the US struggled to deliver positive returns over the week.

Key stories from last week

US stocks opened sharply lower to start the week in response to the prior Friday’s announcement from President Donald Trump stating that the U.S. would be implementing 25% tariffs on imports from Mexico and Canada, along with 10% levies on Chinese imports, as of February 1. However, by the end of the day Monday, Trump had agreed to postpone tariffs on Mexico and Canada for 30 days, which provided some relief and seemed to help stocks recover some of their early losses by the end of the week. 

Despite expressing opposition to Trump’s announcements and being prepared to respond with her own set of measures, Mexican President Claudia Sheinbaum has been cooperative overall. Following a phone call on Monday—which she classified as “good” and Trump as “very friendly”—Sheinbaum offered an additional 10,000 troops to defend the U.S.-Mexico border and combat drug trafficking with a focus on fentanyl. In exchange, Trump postponed tariffs until March 3, allowing time for the U.S. Secretaries of State, Treasury, and Commerce to negotiate with Mexican officials to achieve a “deal.” 

Sheinbaum should continue to be cooperative, though there are some red lines that she won’t cross. For example, Sheinbaum has repeated multiple times that Mexico will not forgo its sovereignty and independence. She has also been clear that any tariffs implemented by the U.S. will have to be reciprocated 1-for-1, thus significantly increasing the odds of a full-blown trade war should Trump follow through with his threats. As a result, Sheinbaum has called for the U.S. and Mexico to work together. She has also signalled the importance of the North American trade union in competing against China, attempting to align with another one of Trump’s priorities.

Lets Keep in Touch

To learn more about personal finance, sign up to our monthly newsletter

Content provided by Omnis Investments. 

*Source: Bloomberg. All performance measured in local currency.

Issued by Omnis Investments Limited. This update reflects Omnis’ view at the time of writing and is subject to change. The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Past performance should not be considered as a guide to future performance.

The Omnis Managed Investments ICVC and the Omnis Portfolio Investments ICVC are authorised Investment Companies with Variable Capital. The authorised corporate director of the Omnis Managed Investments ICVC and the Omnis Portfolio Investments ICVC is Omnis Investments Limited (Registered Address: Auckland House, Lydiard Fields, Swindon SN5 8UB) which is authorised and regulated by the Financial Conduct Authority.