UK Economy Shrinks, Nvidia Stock in Focus Today.

Morning Stock Market

Mar 14

Markets

The U.K. economy contracted by 0.1% in January, primarily driven by a 0.9% decline in the production sector, contrasting with expectations of a 0.1% growth, which has led to a drop in the British pound against the dollar.
The upcoming Spring Statement on March 26 by Chancellor Rachel Reeves will address fiscal plans that may impact investment and growth, as rising business taxes pose concerns for the economy.
Following the contraction, the Bank of England is anticipated to hold interest rates steady at 4.5% at its next meeting, while geopolitical factors, including U.S. trade tariffs, may also influence U.K. economic conditions.

Wall Street is experiencing a selloff due to President Trump's new tariffs, prompting CEOs to engage with the White House, but leaders remain publicly optimistic, with some acknowledging potential long-term benefits.
While many top business executives express mild concern over the market volatility, they are cautious about criticizing Trump, as corporate America is hesitant to wade into political discussions and prefers to focus on the financial benefits of his administration.
Approximately 80% of CEOs report feeling frustrated with the unpredictability of Trump's policies, and many find themselves apologizing to international partners, indicating a shift in sentiment from previous confidence seen in CEO surveys.

Traders reacted positively to news that a government shutdown appears to be avoided, with stock futures rising across major indices: S&P 500 futures increasing by 0.9%, Nasdaq-100 by 1.2%, and Dow futures up 230 points, or 0.6%.
Despite this rebound, the S&P 500 is down 10.1% from its record high, officially entering correction territory, while the Nasdaq is also in correction, and the Russell 2000 is approaching a bear market with a 19% decline.
UBS advises investors to embrace diversification during this volatile period, favoring U.S. equities, particularly in artificial intelligence and resources, and suggesting asset allocation in bonds, gold, and alternative investments.

Nvidia (NASDAQ:NVDA) faces challenges as it starts 2025 with mixed macro developments and increasing competition, notably from DeepSeek, leading to skepticism about next week's GTC conference and its ability to regain momentum.
Citi analyst Atif Malik sees the stock as attractive given its trading below historical P/E, but notes investor concerns over AI restrictions and tariffs affecting margins, which Nvidia may not address at the conference.
Malik anticipates significant announcements at GTC, including the unveiling of the Blackwell 'Ultra' chip, updates on the next-generation Rubin chip, and insights into future technology like Co-Packaged Optics, while maintaining a bullish outlook with a price target of $163, indicating a 41% upside potential.

BMW's net profits fell by 36.9% to €7.68 billion in 2024, reflecting weak demand in the Chinese market and prompting a 2% drop in shares.
The company anticipates a challenging year ahead due to tariffs impacting its earnings margin, expected to decline from 6.3% to between 5% and 7% in 2025, amidst a competitive environment and geopolitical developments.
CEO Oliver Zipse criticized the relevance of tariffs in today's interconnected markets, suggesting a potential shift towards free trade in the coming 12 to 18 months.

Tesla has expressed concern about potential retaliatory tariffs that may result from President Trump's trade policies, emphasizing the unique exposure of U.S. exporters, including themselves, to such impacts. Tesla's letter to the U.S. Trade Representative highlights the risks faced by U.S. companies due to prior trade actions, exemplified by increased tariffs on electric vehicles in response to U.S. tariffs. Additionally, the automaker urges for a phased approach to any new tariffs, noting challenges in sourcing specific parts domestically and warning that broad-based tariffs could disrupt production, raise consumer prices, and lead to job losses across the automotive supply chain.
Tesla CEO Elon Musk, a known ally of President Trump, is involved in efforts to address government size while advocating for consideration of the downstream impacts of proposed trade actions in the context of U.S. manufacturers.
Automakers, represented by the trade group Autos Drive America, are aligned with Tesla's concerns, highlighting that abrupt changes to tariffs can have immediate and disruptive effects on production and employment within U.S. assembly plants.

US stock markets are experiencing significant selloffs amid fears of recession, with the current economic conditions contrasting sharply with Trump's earlier promises of a robust economy. The labor market is showing signs of instability, highlighted by a rise in unemployment and recent mass layoffs, which could indicate a slowdown in job growth. While Treasury Secretary Bessent is focusing on lowering Treasury yields to stimulate economic growth, Trump's tariff policies and global trade tensions may complicate these efforts and contribute to persistent inflation concerns.
Inflation data shows a slight decrease to 2.6 percent in February, but the potential impact of recently imposed tariffs has not yet fully materialized, raising fears of an uptick in prices. As retaliatory tariffs are introduced by other countries, the possibility of further inflation prompts concerns that the Federal Reserve may face limitations in its ability to respond with interest rate adjustments if necessary. Public skepticism remains high regarding Trump’s economic policies, with many Americans expressing dissatisfaction with his handling of the economy as evidenced by recent polls.