Daily market update: gold, Goldman Sachs, Wood Group

“An announcement slipped out quietly late on Friday exempting smartphones and other electronic goods and components from reciprocal tariffs is making a big noise in the markets on Monday,” says AJ Bell Investment Director Russ Mould.

“Asian stocks made meaningful advances on the show of flexibility and European markets opened firmly higher too, even if subsequent comments from President Donald Trump have muddied the waters.

“Warnings that consumer electronics could become hugely more expensive given the reliance on imports not just from China but also from other Asian countries hit with, if not as heavy still highly substantial import levies, seem to have prompted action. Notably the exemptions are being retrospectively applied.

“But Trump’s subsequent comments that no one was ‘getting off the hook’ have complicated matters with this category of goods apparently set to be placed in a different tariff ‘bucket’. Adding another layer of complexity on to an already complex trade policy may not be that well received by investors, but in the short term there is still likely to be palpable relief, particularly for the likes of Apple and Nvidia.

“Gold continues to shine through the uncertainty, reaching new record highs as its longstanding safe haven credentials are highly prized by the market.

“Quarterly earnings from Goldman Sachs later will be watched less for the numbers themselves but more for what the company is saying about the outlook. Its banking sector counterparts JPMorgan, Morgan Stanley and Wells Fargo were pretty circumspect at the end of last week.

“JPMorgan boss Jamie Dimon warned he expected firms to be pulling their guidance during the current earnings season.”

Wood Group

“Once a big success story in the UK energy industry, Wood Group looks set to succumb to a pretty sorry end, although shareholders may be only too willing to draw a line at this point given the company’s recent struggles.

“The shares recently traded at all-time lows after it was forced to delay results as an independent probe found key financial information had been withheld from auditors.

“This was expected to result in material adjustments to previous financial statements and its balance sheet. The latest in a litany of disasters does not seem to have dissuaded erstwhile suitor, Dubai-based Sidara, which has put forward a 35p per share proposal.

“This feels very small beer compared with the 230p on the table before Sidara walked away from a deal last summer but beggars cannot be choosers and such is Wood Group’s perilous position it has little choice but to accept what is on offer, particularly given Sidara is pitching a potential capital injection as part of the agreement. Wood Group rather forlornly says it is looking at alternative refinancing options but the fact it is minded to recommend a firm offer if it is forthcoming is telling.

“The whole saga is a reminder that so-called ‘transformational’ acquisitions more often destroy than create value as Wood Group’s problems can largely be traced back to its combination with Amec Foster Wheeler in 2017.”

These articles are for information purposes only and are not a personal recommendation or advice.