Across the pond, Donald Trump has not ruled out the US economy contracting while US stocks are heading toward their worst start to a presidential term since 2009 — weighed down by recession fears and tariff uncertainty.
Reflecting this, the Nasdaq 100 sank up to 4% yesterday, its worst day since 2022, while benchmark Treasury yields have plunged as bets rose of supportive Fed interest rate cuts.
The US Dollar index steadied after suffering its worst week in two years. Both the Pound and Euro remain at 4-month highs.
Meanwhile, UK stocks look cheap and the UK may escape the worst of tariffs likely to hit the wider EU.
Newspage asked experts whether the ongoing trade war and “Trump Slump” could benefit the UK economy and markets? Their views are below.
Tony Redondo, founder at Cosmos Currency Exchange said, “The ‘Trump Slump’ could yield a ‘Brexit dividend’ for the UK.
“The US economy is currently marked by rising recession fears and a huge stock market sell-off amid tariff uncertainty that now sees the tech-based NASDAQ 100 in correction territory and the Dollar down over 4% against the Pound and over 6% against the Euro in the last month.
“All of this is being driven by tariff uncertainty. UK stocks look undervalued, which could boost capital inflows. UK exporters could also gain a competitive edge if the UK escapes major US tariffs while the EU gets hit.
“The Pound may benefit if the Bank of England remains behind the curve in cutting interest rates compared to its chief peers, the Fed and ECB. While risks remain, the UK could benefit selectively from shifting global trade and investment flows in the weeks and months ahead.”
Harry Mills, director at Oku Markets said, “Investors have turned cautious on the US economy due to recent underperforming economic data and President Trump’s volatile approach to trade policy.
“There’s much talk of the United Kingdom being spared Trump’s tariffs due to its $14.5bn (2023) trade deficit with the United States, but that’s only true when using the U.S.’ data; the UK’s data supplied by the ONS shows a substantial ($89bn in 2023) trade surplus in favour of the UK.
“This quirk of economic reporting is thanks to methodological differences in the calculations, with the U.S. including the Crown Dependencies (Jersey, Guernsey, Isle of Man), and some variations in services trade (specifically for financial transactions).
“If the U.S. data are to be believed, and the UK avoids Trump’s tariffs, it may attract more investor confidence compared to its EU peers. However, a stronger pound could limit FTSE 100 gains, as its companies are more globally focused.
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