Daily Commentary

MarketMinder’s View: UK GDP rose 0.1% q/q in Q4, short of expectations for 0.2% growth, as business investment dropped -2.7% and consumer spending grew just 0.2%. While the article acknowledges the UK’s annual expansion picked up from 2024 (from 1.1% to 1.3% in 2025), it also frets over GDP’s apparent sputtering in the second half. “However, economic output was then hit by the cyber-attack on Britain’s biggest carmaker, Jaguar Land Rover, which depressed vehicle production and led to the minimal growth in the third quarter. Speculation around the autumn budget appears to have further hindered growth in the final three months.” As one interviewed expert here puts it, “Businesses had a particularly bleak quarter as the dark cloud of uncertainty caused by the budget and higher costs severely curtailed trade and investment plans.” But hold on. Sure, services output didn’t grow in Q4, but on a monthly basis, the only decline occurred in October, as Budget speculation mounted. Services grew 0.1% m/m in November and accelerated to 0.3% in December—revealing that as clarity came, falling uncertainty helped headwinds on growth fade in the UK’s largest economic sector. This is yet another case of the UK’s economic resilience and reality not being as poor as many believe—a bullish factor.

MarketMinder’s View: Is there anything more European than a summit held at a moated castle built by Teutonic knights in the 13^th century? The headline here is that EU leaders agreed to move forward with a “Buy European” policy. “The EU is open to the once-taboo policy of European preference, namely favouring European companies in strategic sectors such as clean tech. Long promoted by France, ‘Buy European’ could mean imposing requirements on governments to prioritise locally manufactured goods in public contracts.” In a vacuum, governments’ choosing winners and losers isn’t a positive, in our view. The market-driven private sector tends to allocate capital more efficiently than elected or appointed officials seeking to please their constituents. But philosophy aside, many of the quotes and comments shared here illustrate why investors shouldn’t take “Buy European” to the bank just yet. While French Prime Minister Emmanuel Macron pushed for European preference for certain sectors (e.g., steel and defense), German Chancellor Friedrich Merz has pushed a deregulation agenda and more trade deals. European Commission Ursula von der Leyen toed the line, calling European preference a “necessary instrument” but also acknowledging any proposal must “… be in line with our international obligations.” So while it is worth keeping an eye on potential policies coming down the pike, wait for details and don’t act on pure speculation. But from a market perspective, it is also worth remembering that the US government has long employed “buy American” policies in selected sectors and, whatever you think of the effectiveness of the policy, it hasn’t shown much material effect on stocks. So don’t overrate wherever this heads in Europe.

MarketMinder’s View: Please keep in mind MarketMinder is nonpartisan, preferring no party, politician or policy over any other. Our sole focus is on the market ramifications of potential political actions. Is US President Donald Trump about to scrap the signature trade deal from his first term—the US-Mexico-Canada Agreement (USMCA, which revamped NAFTA)? According to the ever-so-reliable anonymous sources, “The president has asked aides why he shouldn’t withdraw from the agreement, which he signed during his first term, though he has stopped short of flatly signaling that he will do so ... An official in US Trade Representative Jamieson Greer’s office said that a rubber-stamp of the 2019 terms was not in the national interest and the administration intended to keep Trump’s options open and negotiate to address issues that had been identified.” As the article explains, this is a matter worth watching given the North American trade pact covers around $2 trillion in goods and services—with plenty of vested domestic interests. For instance, the prospect of higher tariffs and costs may make it even more difficult for Republican lawmakers fighting to keep their seat in this year’s midterm election. That said, threatening to walk away from a deal is a time-honored negotiation tactic to extract concessions. “It’s unclear if Trump will threaten publicly to leave or formally give the warning. It’s possible if he did so, he may use it as leverage to reach a more favorable deal rather than follow through on pulling the US out of the agreement.” Bear in mind that USMCA is up for review in July, at which point the parties will debate whether to extend it past its 2036 sunset, amend it or let it expire. Threatening to walk could well be a way to try to win concessions in exchange for a renewal. Regardless, none of this will sneak up on markets, so while trade uncertainty bears watching, staying calm is vital.