How US tariffs could filter through global stock markets

The prospect for trade tariffs is one of the main policy implications that investors are focused on following the election of Donald Trump as US president. His policy proposals include across-the-board tariffs on imports.

European indices, along with China and other emerging markets, tend to be highly sensitive to trade restrictions, according to Goldman Sachs Research. The bank’s economists have also downgraded their forecasts for European GDP growth, reflecting the increase in trade uncertainty and the prospect of increased tariffs. By contrast, US stocks are typically less volatile relative to the broader stock market when it comes to changes in world trade.

In Europe, equity markets in Nordic countries and Germany tend to be the most vulnerable to tariffs. UK equities have defensive characteristics and the country's economy is services oriented, making it somewhat less sensitive to changes in trade. Goldman Sachs Research finds that Swiss stocks tend to be insulated to global trade because their products are technologically advanced and difficult to replace.

Machinery and equipment, pharmaceuticals, and chemicals are the Europe products with the largest shares of exports to the US, according to Goldman Sachs Research. Stock market sectors like healthcare, which are considered defensive and have high margins, tend to be less prone to swings from trade uncertainty.

 

UK sees further slowdown of salary growth in October

There were further declines in both permanent and temporary placements in the UK during October, according to October’s KPMG and REC UK Report on Jobs survey, compiled by S&P Global. Rates of decline were the steepest since March, amid reports of reduced demand and hiring freezes at firms. Some recruitment consultants reported that the late October government Budget had led to uncertainty and reduced activity.

While firms signalled willingness to pay higher salaries to suitable candidates, permanent salary growth softened in October to its lowest level since early 2021. Temp rates also rose only modestly, although growth was the best since June. Noticeably, higher staff availability amid a reduced number of vacancies was also seen during October.

The report signalled a further decline in permanent placements during October, extending the current period of contraction to over two years. The rate of contraction also accelerated, reaching its steepest since March.

There were reports of recruitment freezes at firms amid ongoing business uncertainty ahead of the late October government Budget. Similar factors led to the steepest reduction in temp billings for seven months.

Permanent pay growth sustained its recent downturn in October, falling to its lowest level since February 2021. Although some firms were willing to raise starting salaries for high quality candidates, increased staff availability and reduced demand for workers weighed on growth. Temp rates meanwhile increased following little change in September, but the rate of growth was modest and well below the survey’s historical trend level.

Demand for staff continued to decline during October, falling for a twelfth successive month. The rate of contraction also picked up, reaching its steepest since the start of 2021. Once again, declines in vacancies were common for both permanent and temporary staff workers.

The overall availability of staff continued to increase steeply during October. Lower demand for workers and reports of redundancies underpinned the twentieth successive monthly rise in availability. The increase in temps was notable in being the sharpest recorded by the survey since December 2020.

“With many of the tax rises announced in last week’s Budget impacting businesses, the expectation from some chief execs is that this could further dampen hiring as companies grapple with absorbing any extra costs,” commented Jon Holt, Group Chief Executive and UK Senior Partner KPMG. “However, with the Office for Budget Responsibility forecasting a rise in productivity and a Budget that signalled more long-term policy making, businesses may feel that this all brings some degree of certainty.”

 

ICC advances push to drive global trade sustainability across all sectors

The International Chamber of Commerce (ICC) has introduced the third wave of the Principles for Sustainable Trade, incorporating feedback from over 30 banks and corporates. The updated principles build on previous versions, offering greater flexibility alongside actionable guidance for assessing trade sustainability across all sectors.

Wave 3 includes the enhanced guidelines for trade finance through the newly released Principles for Sustainable Trade Finance. These provide industry-tailored guidance on the use of proceeds that fits within the wider Principles for Sustainable Trade, with a strong focus on aligning trade transactions with both environmental and socioeconomic sustainability goals.

The Principles for Sustainable Trade cover four key components:

• Use of proceeds.
• Buyer.
• Seller.
• Distribution.

This allows for comprehensive sustainability assessments in line with established frameworks such as the Loan Market Association Green Loan Principles.

Now sector-agnostic, the Principles for Sustainable Trade offer simplified, high-level principles that banks and corporates can easily integrate, with optional granular guidance on how to operationalise the principles. Significant updates, such as improved assessments for the use of proceeds and distribution, reflect feedback from the Wave 2 Pilot.

The Principles for Sustainable Trade aim to support global efforts to meet the Paris Agreement targets, decarbonising trade activities, and advancing the United Nations Sustainable Development Goals.

ICC will run a pilot following the launch of Wave 3 of the Principles for Sustainable Trade where it will be tested on real transactions and for leading trade practitioners to provide their feedback. This collaborative approach will ensure that the principles remain practical, scalable, and reflective of industry needs. In addition, ICC is launching a survey designed to gather further insights and feedback from industry professionals.

 

NatWest and Capco look to navigate the future of payments

NatWest has partnered with Capco, a global management and technology consultancy, to ensure a smooth transition for its systems and clients as the financial industry moves to adopt ISO 20022 for payments and reporting. 

The collaboration facilitates customer, operational and infrastructure opportunities through the development of Bankline Direct Digital, the new strategic ISO 20022-compliant cloud-based architecture behind Bankline Direct. This is a cash management solution for large corporates and financial institutions that fully integrates with TMS and ERP platforms to automate payment processing and data reconciliation and provide connectivity to UK and European payment schemes.

The transition to Bankline Direct Digital aims to accelerate and streamline connectivity, ensure long-term regulatory compliance and alignment with global standards, boost resilience and security, and offer scalability while supporting enhanced decision-making and business intelligence.

Bankline Direct currently supports over 500 corporate and institutional clients, offering payment services to four million retail and corporate customers. Capco is continuing to support NatWest in transitioning those customers to the new architecture.

“We’ve invested hugely in our digital banking suite, transforming services to be more modular and flexible by design, with the ambition to be the bank of choice for UK businesses and the simplest bank for corporates and other financial institutions,” commented Jennifer Scott, Managing Director, Head of Digital Technology, Commercial & Institutions at NatWest. “To support this, we’ve launched three core services to enable payment scaling, to adapt to and grow with our customers, and improve reliability of the channel by operating with minimal downtime. These include an Intelligent Router, a Payments Orchestration Layer, and a Data sync layer.”

 

Saudi EXIM and Glencore sign $300m credit facility agreement 

The Saudi Export-Import Bank (Saudi EXIM) has signed a $300m credit facility agreement with Glencore, one of the world's largest commodity production and marketing businesses. This agreement aims to help Saudi non-oil exports to expand and penetrate over 156 markets worldwide.

The agreement stipulates that Saudi EXIM Bank will finance Glencore to enhance the company's purchases of minerals exported from the Kingdom and market them to international buyers in over 156 countries. This initiative aims to strengthen the position of Saudi mineral exports and expand their geographic reach.

“This agreement falls within the framework of integrated efforts to achieve Saudi Vision 2030 objectives and the National Industrial Strategy, as the Kingdom seeks to transform into a global centre for mineral production and manufacturing, considering mining as a third pillar of the national industry,” commented Saad bin Abdulaziz Al-Khalb, CEO of Saudi EXIM Bank. “It also represents a step toward aligning with global efforts to develop investments in the mining sector.”