BUSINESS LIVE: UK GDP grows 0.5%; Shein gets okay for City IPO; US slaps China with 145%

(Reuters) – Morgan Stanley beat first-quarter profit estimates on Friday, helped by record equity trading and strong wealth management results.

The bank reported record equity net revenue with a 45% jump from a year ago, reflecting increases across business lines and regions, particularly in Asia, with its biggest gains in prime brokerage and derivatives.

The bank earned $4.3 billion, or $2.60 per share, in the three months ended March 31. That compares with a profit of $3.4billion, or $2.02 per share, a year ago. Analysts expected earnings per share of $2.20, according to estimates compiled by LSEG.

Shares dropped 1.9% in choppy trading before markets opened.

U.S. President Donald Trump’s decision to impose heavy tariffs on major economies and the launch of China’s generative AI model, DeepSeek, triggered a broad selloff in global markets.

“The volatility increased trading activity and there was deleveraging,” said Chief Financial Officer Sharon Yeshaya, adding that clients continued to be active. “We have not seen, so far, signs of market dysfunction.”

China will raise its tariffs against the U.S. to 125% from Saturday in the latest escalation in the burgeoning trade war, the finance ministry announced today.

The new duties are a significant climb from the 84% announced on Wednesday, rising to meet the current U.S. tariffs imposed on Chinese goods.

A Scottish boarding school has announced that it will start accepting Bitcoin for payments of school fees.

Lomond School, located in Helensburgh in the west of Scotland, said parents will be able to pay with Bitcoin from the Autumn term this year.

Lotus is cutting up to 270 jobs in the UK as it becomes the latest manufacturer to face difficulties off the back of Donald Trump’s automotive tariffs.

The car brand – now under Chinese ownership – said that ‘the proposed business restructure is to ensure sustainable operations’ as it faces ‘volatile and evolving market conditions including the US tariffs and shifting consumer demand for sports cars’.

It has been a rollercoaster week for global stock markets, which first dived amid US tariffs, trade war and recession concerns only to whipsaw back when President Trump placed a 90-day hold on levies.

It’s so far left the FTSE 100 around 2 per cent in the red. Small-caps, by contrast, fared much better, ending the week broadly unchanged. That said, the ride to get this point was a fairly scary one, full of undulations.

Edward Park, chief asset management officer at Evelyn Partners:

‘Our base case for 2025 now sees higher inflation and lower growth than we expected at the start of the year.

‘We expect economic growth to still be positive for the year but for it to be lower now that consumers and businesses must contend with the major uncertainty of global tariffs.

‘Despite the pause in the enhanced tariffs, the baseline 10% global tariffs remain and this will have an inflationary consequence, making the 2% inflation targets for the Federal Reserve and Bank of England look tricky to manage.

‘So, while markets have improved since Wednesday, uncertainty persists and stress remains, firstly in the bond market.’

Hybrids have been given a five-year stay of execution from the 2030 ban on sales of new petrol and diesel cars, after Sir Keir Starmer was forced to back down on his electric vehicle sales targets earlier this week.

On Monday, the Prime Minister announced a number of watered-down changes to the Zero Emission Vehicle (ZEV) mandate – the government’s binding policy designed to push an increasing number of Britons into electric cars in the run-up to the end of the decade.

Russ Mould, investment director at AJ Bell, comments on the markets this morning:

It was a pleasant surprise to see UK stock markets moving higher for the second day in a row in early trading.

When you consider that US markets fell by 3% to 4% last night on Wall Street and tariff uncertainty continues to dominate the headlines, one might have expected investors to be feeling gloomy. Yet we’ll take all the good news we can get at the moment.

Admittedly, the UK market struggled to hold onto early gains, but at least there wasn’t a sharp slump to start the day with a headache.

UK GDP figures coming in much stronger than expected will have helped to lift the market mood. It gives hope that the country is more resilient than some might think. Unfortunately, there is a feeling that this might be as good as it gets for a while.

China will impose 125 per cent tariffs on U.S. goods from Saturday, up from the 84 per cent previously announced, its finance ministry has announced.

The White House upped tariffs on Chinese imports to the US to 145 per cent overnight.

The boss of troubled spirits giant Remy Cointreau has quit as it grapples with tariffs and a tumbling share price.

After leading the cognac maker for five years, Eric Vallat said he would leave the French group for another project this summer.

BP has lowered its outlook for gas production for its first quarter as the energy giant cautioned that its debts are set to jump.

The London-listed company said production will be lower in gas and low-carbon energy for the first three months of the financial year, compared with the previous quarter.

The gas marketing and trading result is expected to be weak’, BP told investors in an update on Friday.

It nevertheless expects oil production and operations to be slightly higher than the quarter before.

Shein has reportedly been given the green light by the City watchdog for a long awaited initial public offering on the London Stock Exchange.

It comes ten months after the fast fashion giant, which sold $38billion of clothes last year, confidentially filed an initial public offering to the FCA.

Regulators have delayed sanctioning the listing due to concerns about the company’s labour practices and a challenge by an organisation advocating on behalf of the Uyghur minority.

Tesco yesterday fired the starting gun on a supermarket price war, sending shockwaves through the sector.

Boss Ken Murphy said Britain’s biggest supermarket is ready to take a £400million hit to profits this year as the competition intensifies.

Lale Akoner, global markets analyst at eToro:

‘The UK economy grew 0.5% in February, with gains across services, production, and construction. But this modest recovery comes amid deepening global trade tensions.

‘The recent escalation of US tariffs, raising costs of most UK exports by at least 10%, adds pressure at a time when Britain is still adjusting to Brexit’s long-term drag on growth, investment, and productivity.

‘Zooming out, trade friction between Washington and Brussels could also spill over, hitting UK sectors closely tied to both economies, such as autos and aerospace. British exporters risk being caught between retaliatory measures, reduced demand, and rising costs.

‘The government is trying to diversify through new trade deals, such as with India or the Gulf, but these are no quick fix. Meanwhile, many UK firms, particularly SMEs, have pulled back from European markets. Tariffs now represent more than economic headwinds; they’re signals in a global power game. Future GDP prints will give investors a steer on their true impact on the UK economy.’

Consumers could lose their appetite for shopping as tariff uncertainties take their toll, the British Retail Consortium has warned.

The trade association reported a 5.4 per cent decrease in shopping visits in March compared to the same month last year.  The drop was skewed by the timing of the Easter holidays, which fell earlier in 2024.

But beleaguered High Street bosses are worried that the carnage sparked by Donald Trump’s trade wars could put a further dent in already battered consumer confidence,

BRC chief executive Helen Dickinson said: ‘Global uncertainties resulting from tariffs and a potential economic slowdown could reduce the appetite for shopping trips in the coming months.’

Francesco Pesole, FX strategist at ING:

‘The dollar and Treasuries are acting as high-beta assets to risk sentiment and remain highly vulnerable to further selloffs.

‘Even if the dollar bounces on any hint of positive news on trade now, we suspect repairing the damage will require a broader unwinding of Trump’s protectionism policies.

‘A move to 1.15 in EUR/USD is now a more tangible possibility.

‘The dollar collapse is working as a barometer of “sell America” at the moment. The rotation to other traditional safe-havens like CHF, the Japanese yen or even the euro is justified by the loss of USD safe-haven appeal.

‘But the USD drop against high-beta currencies (including the China-sensitive AUD and NZD) is a signal that markets are heavily building positioning for a broad-based dollar decline.’

David Morrison, senior market analyst at Trade Nation:

‘Finally there’s some good news for UK Chancellor Rachel Reeves. But it’s also…