Growth fears grip markets as US recession worries hurt the dollar – business live | Business

Newsflash: optimism among US small businesses fell last month, as economic uncertainty hurts American firms.

The Small Business Optimism Index, produced by the National Federation of Independent Business (NFIB) fell by 2.1 points in February to 100.7, the second monthly drop in a row.

It’s the fourth month running that optimism has been above the long-term average, but it’s also 4.4 points below its most recent peak of 105.1 in December.

NFIB’s Uncertainty Index rose four points to 104 – the second highest recorded reading.

NFIB chief economist Bill Dunkelberg says:

Uncertainty is high and rising on Main Street and for many reasons. Those small business owners expecting better business conditions in the next six months dropped and the percent viewing the current period as a good time to expand fell, but remains well above where it was in the fall.

Inflation remains a major problem, ranked second behind the top problem, labor quality.

The report alos found that fewer business owners expect the economy to improve, and that many are raising prices – which will fuel concerns that inflationary pressures are building.

Here’s the details:

• The net percent of owners expecting the economy to improve fell ten points from January to a net 37% (seasonally adjusted).

• Twelve percent (seasonally adjusted) of owners reported that it is a good time to expand their business, down five points from January. This is the largest monthly decrease since April 2020.

• Sixteen percent of owners reported that inflation was their single most important problem in operating their business, down two points from January and now just below labor quality as the top issue. The last time it was this low was in October 2021.

• The net percent of owners raising average selling prices rose 10 points from January to a net 32% (seasonally adjusted). This is the largest monthly increase since April 2021, and the third highest in the survey’s history. The percent of owners lowering their prices is 10 points lower than it was one year ago.

• Seasonally adjusted, a net 29% plan price hikes in the next three months, up three points from January and the highest reading in 11 months.

• Labor costs reported as the single most important problem for business owners rose three points to 12%, only one point below the survey’s highest reading of 13% reached in December 2021. The last time labor costs ranked this high was in February 2023.

• The frequency of reports of positive profit trends was a net negative 24% (seasonally adjusted), up one point from January.

New CEO at the FT

Mark Sweney

The parent of the Financial Times has appointed commercial boss Jon Slade as the paper’s new chief executive.

Slade, who has worked at the newspaper for more than 20 years and joined the management board in 2014, currently holds the title of chief commercial officer.

Slade will take over from John Ridding, who is to step down at the end of June after leading the newspaper group for almost two decades.

His current remit covers responsibility for three quarters of FT Group’s annual revenues.

The group’s global profits rose to almost £30m in 2023, according to the most recent publicly available figures, with revenues topping half a billion pounds for the first time.

However, in the UK, pre-tax profits fell from £6.8m to £3.9m year-on-year.

“Jon’s substantial experience has given him a deep understanding of the FT Group, and areas where there is rich territory for future growth,” said Naotoshi Okada, chairman and group chief executive of parent company Nikkei.

Ridding will remain with Japanese media group Nikkei, which pipped Germany’s Axel Springer with an 11th-hour £844m bid to buy the FT in 2015, as a special adviser reporting to Okada.

Ridding, who has been at the FT for 35 years, is also taking the non-executive role of honorary FT chairman.

The FT’s total subscriber base increased to a new record high of 1.4m in 2023, boosted by a 17% rise in paying digital readers.

Growth was primarily driven by corporate subscriptions, which helped offset a 7% decline in print readership.

More than two-thirds of revenues come from digital subscriptions, while other revenue streams include advertising, events at FT Live, research, circulation and its consultancy FT Strategies.

FT’s digital and subscription-based transformation to a global paying audience of 2.9 million people and revenues of £500m for the first time in 2023.

More than two-thirds of its revenues now come from digital subscriptions (both consumer and B2B) while other revenue streams include advertising, events at FT Live, research, circulation and consultancy FT Strategies.

UK housebuilder Persimmon grows profits

Julia Kollewe

UK housebuilders are giving the London stock market some support this morning.

Shares in Persimmon, one of Britain’s biggest housebuilders, rose after it reported better-than-expected profits for 2024.

The shares climbed by 4.4%, but are still down by 11% over the past year.

The builder’s underlying profit before tax increased by 10% to £395m last year, as it completed 7% more homes than in 2023, a total of 10,664. The average selling price rose by 5% to £268,499, roughly £13,000 higher than in 2023. Persimmon took a one-off charge of £34.4m to pay for removing combustible cladding and other fire-related remediation work.

In the current order book, prices are up by 3% compared to last year and sales rates have improved, which means its order book for private homes is 27% ahead of last year at £1.15bn.

Persimmon, which owns the upmarket Charles Church brand, along with brick, tile and timber frame factories, is targeting up to 11,500 completions this year, including more affordable homes. Last year, it delivered 1,589 new homes to housing associations, down from 2,241 the year before, at an average selling price of £161,916, up 6% year-on-year.

Persimmon has been acquiring land worth £1.55bn over the last three years. It has invested in its sales and marketing platforms, resulting in a 34% increase in website visitors and 26% growth in enquiries over last year.

Along with seven other major housebuilders, Persimmon is under investigation by Britain’s competition watchdog for suspected breaches of competition law, namely exchanging competitively sensitive information. That investigation has been extended until May.

Richard Hunter, head of markets at interactive investor, said:

“It is perhaps a little early to be calling a full recovery, but it is also fair to say that some of the previous headwinds are showing signs of turning into tailwinds.

While affordability has been and could yet continue to be an issue, the recent interest rate cut clearly sparked the mortgage market into life, especially for first-time buyers where Persimmon has had a traditionally higher exposure. The imminent changes to stamp duty could also have brought some buying activity forward, although it remains to be seen whether that impacts the numbers on the remainder of the year.”

Swiss bank UBS has warned there is an increased risk that the US economy suffers a downturn, hitting stock markets.

UBS has updated its House View scenario, and now sees a 30% chance of a “stagflationary or cyclical downturn” in the US, up from 25% at the end of last month.

The chances of an upside scenario, in which the US enjoys strong growth and equity makets rally, has been trimmed to 20%, from 25%.

The base case, in which there is growth despite “an aggressive tariff policy,” remains a 50% prospect.

Mark Haefele, chief investment officer at UBS Global Wealth Management, explains:

“In our base case, to which we attach a 50% probability, US economic growth is likely to moderate compared with last year but remain positive.

While we treat the economic data and the words of the Trump administration seriously, enacting and sustaining policies which contribute to a potentially protracted slowdown in the US economy in hope of better growth or economic dynamics in the medium to long term would require a shift from an approach which has so far focused on achieving quick success.”

The euro has climbed over $1.09 against the US dollar, for the first time since Donald Trump’s election victory.

The single currency is up three-quarters of a cent against the dollar to $1.0905, its highest since 6 November, the day after the US presidential election.

The euro has been on a tear in recent weeks.

At the start of February, it slipped to near-parity with the US dollar on fears that Donald Trump would impose painful tariffs on European imports.

But the euro has surged since European leaders backed a huge increase in defence spending which could also spur growth, and support domestic economies.

A European spending splurge could take some pressure off the European Central Bank to keep cutting interest rates.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains:

In the traditional currency space, the USD selloff has somewhat slowed yesterday, but the dovish shift in Fed expectations and hawkish shift in other central bank expectations – like the European Central Bank (ECB) expectations for example on the thinking that the ECB must slow down rate cuts to temper the impact of massive government spending – continue to keep the outlook for the US dollar negative compared to major peers.

London’s stock market is open, and stocks are a little lower.

The FTSE 100 index of blue-chip shares has dropped by 21 points, or 0.25% – a small drop.

Travel and hospitality stocks are leading the fallers, with British Airways owner IAG down 5%, budget airline easyJet off 2.6%, and InterContinental Hotels losing 2.1%.

Japan’s stock market has fallen today, although it’s recovered somewhat from an early tumble.

The Nikkei index has closed down 0.65% today, having earlier hit a six-month low as US recession fears spooked traders in Tokyo. At one stage, it was down 1.7%.

Fears over the economic impact of the Trump White House have hurt the US dollar in recent sessions.

This morning, the dollar is down 0.2% against a basket of major currencies, close to the four-month low it hit last Friday.

The greenback, like the US stock market, has lost all the gains it enjoyed after Trump’s election win.

Initially, investors had bet that Trumpian policies such as tariffs and a clampdown on immigration would be inflationary, leading to higher US interest rates and thus a stronger currrency.

Now, though, attention has turned to risks that growth will be sapped, requiring lower interest rates to stimulate the economy…..

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The Trump Bump has turned into the Trump Slump, as rising fears of a US recession rocked the markets yesterday.

Monday was a dark day on Wall Street, where the S&P 500 fell 2.7%, the Dow Jones dropped 2%, and the tech-heavy Nasdaq dropped 4%, with losses among the major tech companies.

Investors dashed for save-haven assets after the US president refused to rule out that his policies would lead to a recession, or rising prices.

Instead, he told Fox News in an interview aired last weekend that there would be a “period of transition.”…..

The slide means that the jump in asset prices after Trump’s election win last November has been wiped out.

Hopes of a ‘Trump put’ have also taken a knock. This is the hope that the US president might take action to prop up share prices if the markets suffered a sharp decline.

[UPDATED: a put option gives you the opportunity to sell an asset at a particular price].

Michael Brown, senior research strategist at Pepperstone, explains:

I think it’s pretty clear, at this stage, that the idea of a ‘Trump put’ is stone dead – or, at least, that the strike price of said put is much, much lower than had previously been envisaged. Trump’s weekend refusal to rule out a recession this year is just the latest evidence of this, coupled with both Treasury Secretary Bessent, and Commerce Secretary Lutnick, having both ‘rolled the pitch’ for a slowdown in recent weeks.

The Admin are, for now, doubling down on the idea of ‘short term pain, for long term gain’, in the hope that macro headwinds can be blamed on the Biden Admin, and that Trump & Co will be able to claim credit for the economic, and market, turnaround that would likely follow. While I see how this might be politically expedient, juicing the economy just in time for the midterms, it’s rather economically incoherent, particularly for an Oval Office which claims to be more focused on Main Street, than on Wall Street.

After its worst day of the year, Wall Street is expected to open a little higher when trading resumes at 1.30pm GMT.

That might bring some calm to Europe’s markets, after a choppy session in Asia-Pacific markets overnight.

Investors are also poised for the latest US economic data, covering small business confidence and job vacancies, for a healthcheck on American growth.

The agenda