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Good morning and welcome back to FirstFT Americas. We’ll bring you right up to date with events on global stock markets after a nerve-racking day and here’s what else we covering:
US-Ukraine talks get under way in Jeddah
Philippines’ ex-president Rodrigo Duterte arrested in Manila
And the British fintechs trying to crack the US market
Stock markets around the world are calmer this morning after a sell-off yesterday that saw high-growth technology shares tumble as worries about the outlook for the US economy and Donald Trump’s trade policy deepened.
The S&P 500 index closed down 2.7 per cent, after falling 3.1 per cent last week in its worst weekly performance in six months. The tech-focused Nasdaq Composite sank 4 per cent, its worst day in two and a half years. The tech-heavy index is down more than 13 per cent from its December peak, leaving it in correction territory. Futures contracts point to a calmer start on Wall Street, while markets in Europe edged lower on Tuesday morning and Asian markets recovered earlier losses.
US tech stocks — which had driven Wall Street markets higher in the previous two years — were among the biggest laggards, extending a recent rout.
Tesla, the electric-car company headed by Trump ally Elon Musk, plummeted 15.4 per cent. It has now given up all of those post-election gains and has fallen more than 50 per cent since its December high. Chipmaking giant Nvidia, which has been one of the biggest winners from recent investor enthusiasm for artificial intelligence, fell 5.1 per cent.
Financial services companies also fell. Morgan Stanley and Goldman Sachs were down 6.4 per cent and 5 per cent respectively, while shares in private investment groups KKR and Ares shed 6.2 per cent and 8.9 per cent respectively.
“This big sell-off feels ugly, it feels nasty,” said Drew Pettit, an equity strategist at Citigroup. “We were coming off very high sentiment and very high growth expectations. All of this is just recalibrating to the new risks that are in front of us,” he added.
The latest jolt of volatility, which also dragged down markets in Europe and Asia, came after the US president on Sunday declined to rule out a recession or a rise in inflation as he dismissed business concerns over lack of clarity on his tariff plans.
The White House yesterday dismissed the sell-off and doubled down on its economic and trade policies. “We’re seeing a strong divergence between animal spirits of the stock market and what we’re actually seeing unfold from businesses and business leaders, and the latter is obviously more meaningful than the former on what’s in store for the economy in the medium to long term”. Read more on how markets in Asia and Europe are trading today.
Trump and Tesla: The US president yesterday promised to buy a Tesla in a rebuke to “Radical Left Lunatics” who, he said, were “trying to illegally and collusively boycott Tesla”.
Opinion: Financial markets have witnessed a change that is upending many consensus trades. Mohamed El-Erian asks: What is behind the dramatic shift?
For more markets commentary, sign up for our Unhedged newsletter here if you’re a premium subscriber, or upgrade your subscription. Here’s what else we’re watching today:
Congress: The Republican-controlled House of Representatives could vote as early as today on legislation that would avert a weekend government shutdown.
Greenland: Voters go to the polls to elect the 31 members of parliament amid a long-simmering independence debate.
Portugal: The centre-right government of Luís Montenegro faces a confidence vote, triggered by a scandal over his family business.
Results: Department store chain Kohl’s is set to post a fall in fourth-quarter revenue. See our Week Ahead newsletter for the full list.
Five more top stories
1. Officials from the US and Ukraine have kicked off high-stakes talks in the Saudi Arabian coastal city of Jeddah. The talks begin as Moscow’s authorities reported that nearly 100 drones had targeted the Russian capital last night, in one of the biggest drone attacks on the city since Russia’s full-scale invasion in 2022. Keep up with the talks here.
US-Ukraine minerals deal: A major lithium project in Ukraine, backed by US mining company TechMet, could be the first project to benefit from the minerals deal that is close to being finalised.
EU: The European Commission has proposed borrowing €150bn worth of loans against the EU budget for member states to spend on weapons.
2. Former Philippines president Rodrigo Duterte has been detained under an arrest warrant issued by the International Criminal Court over a crackdown on drugs that resulted in the deaths of thousands of mostly poor Filipinos across the south-east Asian country. Duterte, who served as president from 2016 to 2022, oversaw a crackdown on illicit narcotics leading to the deaths of thousands of mostly poor Filipinos. Read the full report here.
3. Argentina’s President Javier Milei has issued an executive decree preapproving a loan agreement from the IMF, signalling the imminent conclusion of a long-awaited deal that is essential to his economic plan. Milei said he needs fresh funds from the IMF, to which Argentina already owes more than $40bn, to replenish the central bank’s scant currency reserves.
4. OpenAI has forged a near-$12bn contract with CoreWeave and will take a stake in the cloud computing provider, boosting the group ahead of its expected $35bn public listing. The ChatGPT maker has signed a five-year deal in which CoreWeave will supply computing power to train and run OpenAI’s artificial intelligence models, said two people with knowledge of the deal.
5. President Donald Trump has said the arrest of a Columbia University graduate for taking part in pro-Palestinian protests was “the first of many to come”, stoking fears of a clampdown on free speech and campus-based activism across the country. Here’s more on the arrest.
Today’s big read
The UK’s two leading digital banks, Revolut and Monzo, are hoping to crack the US market as fintechs are once again attracting investment following a funding drought caused by rising interest rates. But the push across the Atlantic is no easy feat. Here’s why.
We’re also reading and listening to . . .
Chart of the day
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The US’s India trade deficit reached more than $45bn last year — less than half of the “almost $100bn” deficit Donald Trump claimed at the White House, but the 10th largest of America’s trade partners. Trump is pushing Indian prime minister Narendra Modi to lower tariffs. Trade experts say the talks promise to be fraught, especially when it comes to agriculture.
Take a break from the news . . .
The latest fashion shows in Milan and Paris suggest men’s clothing is going through something of a transformation from tight-fitting trousers and jackets to more roomy and baggy shapes — a shift welcomed by market columnist and sartorial correspondent Robert Armstrong.
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Source: Economy - ft.com
