Introduction: HSBC sounds alarm on tariffs as bad debt provisions rise
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Companies around the world are calculating the impact of Donald Trump’s trade war, and today we’re hearing from one of the world’s largest banks.
HSBC has set aside more money for bad debts this morning, warning that the economic outlook has deteriorated due to “geopolitical tensions and higher trade tariffs”.
HSBC has increased its expected credit losses (ECL) to $900m in the first quarter of 2025, which is $200m higher than in January-March 2024, as it lifted its provisions for debts going sour.
This helped to knock HSBC’s profits for the quarter down by around a quarter, to $9.5bn, compared with 1Q 2024 (when the bank’s results were flattered by the sale of its businesses in Canada and Argentina).
HSBC also told shareholders that it had modelled scenarios in which tariffs are “significantly higher”, hurting growth – and found it would hurt its revenue and push up bad debt provisions by another $500m.
HSBC also warns, in its latest financial results, that the US trade war has increased the risks facing the global economy.
It told shareholders:
Risks for the global economy have been heightened by new trade policies announced by the US and potential measures that may be adopted by several countries globally, including in the markets in which the Group operates.
This uncertainty poses downside risks to economic growth and impacts economic forecasts, financial markets and business and consumer sentiment. A further escalation of tariffs and trade tensions could lead to lower trade volumes, investment, consumer spending and, ultimately, weaker global GDP growth.
Supply chains could also come under renewed pressure from a fragmented trade landscape, which could cause inflation to rise again.
There are already signs that this slowdown is occuring – the number of vessels scheduled to arrive at the Port of Los Angeles next week is down by almost a third on the same period a year earlier.
The agenda
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8am BST: Kantar survey of UK grocery inflation
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10am BST: UK Treasury Committee to question senior officials at the Prudential Regulation Authority
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3pm BST: JOLTS report on US vacancies
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3pm: US consumer confidence report
Key events
China: We won’t kneel down to ‘paper tiger’ US
China has insisted that it will “never kneel down” in the trade war with the US, in a propaganda video that compares the US to “a small, stranded boat”.
The video, released on social media today by Beijing’s foreign ministry, claims that China is standing up for the rest of the world against American “bullying”.
The video suggests the current relative calm in the trade was is just “the eye of the storm”, declaring:
Bowing to a bully is like drinking poison to quench thirst. It only deepens the crisis.
The video then outlines how the US accused Japan of dumping semiconductors, forced Toykoto sign the Plaza Accord (to weaken the dollar against the yen), and forced the break-up of France’s Alstom.
Pitching China bravely carrying a torch against US imperialism, the video says:
History has proven compromise won’t earn you mercy. Kneeling only invites more bullying. China won’t kneel down because we know standing up for ourselves keeps the possibility of cooperation alive while compromise snuffs it out.
China won’t back down, so the voices of the weak will be heard. Bullying will be stopped, and justice will not disappear from the world. All bullies are just paper tigers.
GM pulls financial guidance due to tariff uncertainty
Car giant General Motors is also struggling to get a grip on the economic outlook.
GM has pulled its annual forecast, blaming uncertainty created by Donald Trump’s trade war.
GM’s chief financial officer Paul Jacobson told a press call:
“We believe the future impact of tariffs could be significant.”
“We’re telling folks not to rely on the prior guidance, and we’ll update when we have more information around tariffs.”
Jacobson was speaking after GM reported net income of $499m in the first three months of this year down from $536m for the quarter ending on 31 March, 2024.
The company has also delayed a call with analysts that had been scheduled for today, until Thursday.
GM says:
Based on recent reports regarding updates to trade policy, GM Chair and CEO Mary Barra and GM Chief Financial Officer Paul Jacobson will now host a conference call for the investment community at 8:30 a.m. ET Thursday, May 1 instead of Tuesday, April 29 to discuss these results and GM’s updated 2025 full-year guidance. The company’s initial full year 2025 financial guidance does not contemplate the potential impact of tariffs.
UPS won’t give new guidance due to economic uncertainty
Donald Trump’s trade war is making it hard for delivery companies to assess their future prospects.
Today, United Parcel Service (UPS) said the “current macro-economic uncertainty” means it is not updating its outlook for this year.
UBS, which could be hit if shipments to US consumers fall, made the comments as it reported a 0.7% rise in revenues in the first three months fo this year, with operating profits up 3.3%.
Ireland’s GDP grew 3.2% in Q1 2025
Ireland’s economy has grown for the third quarter running, driven by major international companies based in the Republic.
Irelands’ Central Statistics Office has reported that Gross Domestic Product (GDP) increased by 3.2% in the first quarter of 2025.
Enda Behan, Statistician in the National Accounts Integration Division, said:
“In today’s release, GDP is estimated to have expanded by 3.2% in January, February and March (Q1) 2025 in volume terms when compared with Q4 2024.
This was driven by an increase in the multinational dominated sectors in Q1 2025 with a more modest increase in the domestic sectors. GDP is estimated to have risen by 13.3% when compared with Q1 2024.
UK regulators stepped up monitoring of banks after trade war turmoil
The Bank of England’s stability watchdog has increased its scrutiny of Britain’s banks following the turmoil triggered by Donald Trump’s trade war, MPs have heard today.
Sam Woods, head of the Prudential Regulation Authority, told the Treasury Committee this morning that the PRA has “stepped up” its monitoring of the firms, as is typical in such situations.
Woods told MPs that “we consider ourselves still to be in the middle of this thing”, as he outlined the response to the jittery markets of recent weeks.
He says the PRA is watching “very closely”, but has not taken its monitoring to the highest level of ‘daily liquidity monitoring’, as it doesn’t think that is necessary.
Woods adds that the regulator is also watching for the “macro impact” of the trade war, reminding MPs that the IMF downgraded its growth forecasts last week.
I think it would be interesting to see whether our banks in the next period, choose to provide more for a different economic environment, because they do forward looking provisions. That’s where our focus is now.
Reminder: HSBC raised its expected credit losses by $200m to around $900m for the first quarter of 2025 this morning.
Woods also told MPs that the PRA did not see any signs that the market turmoil after ‘Liberation Day’ had spread into bank funding, and that there was also no sign that customer behaviour was affected.
But, he did flag the ‘very unusual move’ in the financial markets, which was the selloff in the US dollar and in US government debt.
Woods says that was a worry:
Normally we see the opposite in these risk off type of conditions. Normally we see a flight into those types of assets. So that was quite concerning.
He added that it is “notable” that after this move, president Trump decided to announce his 90-day pause which settled the markets.
Economic sentiment across Europe has weakened this month, as the Trump trade war hit financial markets.
The European Commission’s Economic Sentiment Indicator, just released, declined by 1.4 points in both the European Union (to 94.4) and the euro area (to 93.6).
A measure of employment expectations also fell across the EU.
EURO ZONE ECONOMIC SENTIMENT AT 93.6 IN APRIL (RTRS POLL 94.5) – EU COMMISSION
EURO ZONE APRIL INDUSTRIAL CLIMATE -11.2 (RTRS POLL -10.1) – EU COMMISSION
EURO ZONE APRIL SERVICES SENTIMENT 1.4 (RTRS POLL 2.2) – EU COMMISSION
EURO ZONE APRIL CONSUMER SENTIMENT -16.7 (RTRS…
— PiQ (@PiQSuite) April 29, 2025
Adidas: Trump tariffs will mean more expensive trainers
German sportswear group Adidas has warned today that Donald Trump’s tariffs will push up costs for American consumers.
In its latest financial results, Adidas told shareholders that it faces increased uncertainty due to US tariffs and higher macroeconomic risks.
It reported a 13% jump in sales, and increased operating profits.
Adidas chief executive Bjørn Gulden would said that the uncertainty created by new tariffs imposed by the US had “put a top” to an upgrade to the company’s guidance this year.
Gulden added:
Although we had already reduced the China exports to the US to a minimum, we are somewhat exposed to those currently very high tariffs. What is even worse for us is the general increase in US tariffs from all other countries of origin. Since we currently cannot produce almost any of our products in the US, these higher tariffs will eventually cause higher costs for all our products for the US market.
Given the uncertainty around the negotiations between the US and the different exporting countries, we do not know what the final tariffs will be.
Therefore, we cannot make any ‘final’ decisions on what to do. Cost increases due to higher tariffs will eventually cause price increases, not only in our sector, but it is currently impossible to quantify these or to conclude what impact this could have on the consumer demand for our products.
Primark-owner ABF is hoping that new tariffs on small shipments into America might encourage shoppers to visit its US stores.
ABF currently has 29 Primark stores in the US, and hopes to raise that to 60 by the end of 2026.
CEO George Weston has told Reuters today that the company remains committed to that plan, and suggests that the end of the ‘de minimis’ rule (under which packages worth less than $800 did not qualify for any taxes or tariffs) could help sales.
Weston says:
“De minimis imports in the U.S. are very, very large, they supply a lot of Americans who don’t know about Primark yet but are looking for value.
“With prices going up from this part of the trade, I wonder if some Americans might start going back to shopping centres to find value there.”
UK grocery inflation rises to 3.8%
UK grocery inflation has edged up this month, as consumers are hit by rising food prices.
Data provider Kantar has reported that supermarket prices rose by 3.8% per year in the four weeks to April 20, up from 3.5% a month earlier.
Despite this squeeze, spending on Easter eggs was up 11% year-on-year.
Fraser McKevitt, head of retail and consumer insight at Kantar, explains:
“Chocolate confectionery prices rose by 17.4% this period, the fastest of any category, but that didn’t stop the British public treating themselves this Easter. The volume of chocolate eggs sold through supermarket tills still grew by 0.4% on last year, while at the dinner table lamb was the most popular fresh meat joint, followed by beef and pork.
Some households chose to indulge in less seasonal fare as the sun came out and they dusted off the barbecue, with burger sales shooting up by 31% over the last month.”
A separate report from the British Retail Consortium today has shown that food inflation increased to 2.6% year on year in April, up from 2.4% in March.
ABF are also threatening to shut their UK bioethanol plant, Vivergo, unless the government relaxes regulations on the industry.
ABF told the City this morning that Vivergo, located in the East Riding of Yorkshire, has cut its production levels in response to continued low prices for bioethanol, leading to lower sales and an operating loss in the first half of the financial year.
The company says:
The way in which regulations are being applied to bioethanol is undermining the commercial viability of our business. We are having constructive discussions with the UK Government to explore regulatory options to improve the position. There is no guarantee that these discussions will be successful, and we will either mothball or close the Vivergo plant if necessary.
Groceries-to-clothing firm Associated British Foods has added its voice to the chorus of warnings about the economic outlook.
ABF told shareholders this morning that the “geopolitical landscape continues to be fragile”, citing the Russian war in Ukraine as well as trade polic changes in the US.
ABF flagged the risk of a US recession, saying:
Consumer sentiment remains cautious and trading activity within elements of our shopper base has been weak. Sentiment is unlikely to improve as markets continue to face uncertainty and instability following recent tariff announcements by the US, retaliatory actions by China and the risk of further tariff trade wars.
Consumer confidence could deteriorate further as a number of countries, including the US, face the risk of recession that could increase individuals’ debt problems. The impact on our businesses will depend on the extent of government intervention, the extent of increased taxation on individuals and businesses and the duration of any economic downturns.
The company reported a 2% drop in revenues for the six months to 1 March, with pre-tax profits down 21%.
CEO George Weston told shareholders he was “frustrated” with the results at its sugar business, which made an adjusted operating loss of £16m due to lower prices in Europe.
ABF, which owns the clothing chain Primark, also warned that trading has been challenging in the UK, saying:
The UK clothing retail market declined in the period, reflecting cautious consumer sentiment and a lack of seasonal purchasing catalyst in the autumn months due to mild weather.
Shares in the company are down almost 9% this morning, the top faller on the FTSE 100 index.
BP green energy chief to exit as it retreats from low-carbon investments
Jillian Ambrose
The architect of BP’s failed green energy agenda will leave the embattled oil company within months as it continues its retreat from low-carbon investments following this morning’s sharp fall in profits (see last post).
The oil company said Giulia Chierchia, the executive in charge of BP’s sustainability ventures, would step back from her role from 1 June 2025 to “pursue other opportunities” outside the company. She will not be replaced.
BP profits halve in last quarter
Oil giant BP has missed profit forecasts this morning, adding to the pressure on the company’s executives.
BP reported an underlying profit of $1.38bn for the first quarter of 2025, missing forecasts of $1.53bn, and much weaker than the $2.7bn it earned in January-March 2024.
The company blamed “weak” trading at its gas trading division – gas prices have fallen this year, on concerns that a global trade war will hurt demand for energy.
BIG OIL 1Q EARNINGS: Oh dear Lord, BP opens the quarterly season with a huge miss (and that’s after consensus came down ~30% in three months), even more debt than expected, and buybacks at the very low end of guidance. #OOTT $BP pic.twitter.com/Pa5g2yEh9F
— Javier Blas (@JavierBlas) April 29, 2025
Shares in BP have dropped by 2.3% in early trading.
The company has been under growing pressure from activist investor Elliott Management this year to make spending cuts, to increase its free cash flow.
Murray Auchincloss, BP’s chief executive officer, says:
In February, we announced a fundamental reset of our strategy – to grow the upstream, focus the downstream and invest with discipline in the transition – and we have already made significant progress.
So far this year we have started up three major projects, made six exploration discoveries and have progressed our divestment programme – all while delivering strong operational performance, with over 95% upstream plant reliability supporting the best operating efficiency* on record, and over 96% refining availability. We continue to monitor market volatility and changes and remain focused on moving at pace.
I’m confident that our plans to strengthen the balance sheet, reduce costs, and improve cash flow and returns will grow long-term shareholder value and strengthen the resilience of bp.
In what could be a nod to Elliott, BP says it will lower its planned spending for 2025 by $500m (£373m) to about $14.5bn this year.
It also plans to divest between $3bn and $4bn of assets.
Patrick Galey, Interim Head of Fossil Fuel investigations at Global Witness, is unimpressed, saying:
“BP has spent the last year flip-flopping on its climate commitments, lurching back towards fossil fuels just as the world needs a clean energy transition.”
“The fact that its returns are now dwindling and investors seem to be losing confidence shows BP’s climate u-turn is not only planet-wrecking but financially wrong-headed too.”
“Now is the time for investors to change direction. Continuing to back fossil fuel giants as the world moves towards safer, cleaner, home-grown energy is a decision that could leave them empty-handed in the years ahead, with falling demand and billions’ worth of stranded assets.”
FT: Amazon pressures suppliers to cut prices to limit Trump tariff shock
Amazon is seeking steep discounts from suppliers and setting tough terms to protect its margins amid the Trump trade war, the Financial Times reports this morning.
According to the FT, Amazon had sought low double-digit price cuts from the sellers of goods ranging from homeware to consumer electronics, according to three vendor consultants — who negotiate on behalf of multiple brands and suppliers.
You can read the story here.
German airline Lufthansa is sticking with its forecasts for this year, despite the rising trade tensions and tougher US immigration processes under Donald Trump.
CEO of Lufthansa, Carsten Spohr, struck an upbeat tone this morning, telling investors:
“Global demand for air travel continues to grow. Despite all the geopolitical uncertainties, we therefore remain on course for growth, are optimistic about the summer, and are sticking to our positive outlook for 2025.
In the first quarter, our airlines were able to sell their expanded capacity at higher yields in the market.
There have been reports in recent weeks that tourism to the US has fallen due to a backlash against Trump, and high-profile deportations and detentions at the border.
Lufthansa, though, has seen an increase in transatlantic demand; Spohr says:
On the North Atlantic, the number of guests rose by more than seven percent in the first quarter, with higher load factors and better yields. Demand continues to be robust for the second quarter.
Electrolux cuts US outlook as uncertainty rises
Swedish appliances maker Electrolux is also counting the cost of the Trump trade war.
Electrolux, which makes white goods and household appliances, warned this morning that the demand outlook for home appliances is “increasingly uncertain”.
The company has lowered its North America market outlook for 2025 from “Neutral” to “Neutral to negative”, and cut its assessment of external factors from “Negative” to “Significantly negative”.
Summing up the last quarter, Electrolux’s president and CEO, Yannick Fierling, says:
The market environment was characterized by increased uncertainty as the quarter progressed. In North America and Europe, market demand was largely unchanged. However, consumer confidence declined throughout the quarter due to economic uncertainty and concerns around U.S. trade policy developments. In Latin America, consumer demand increased marginally, primarily driven by Brazil, in a market characterized by rising competitive pressure.
Effects from changes in U.S. trade policies had a minor impact in the first quarter. It is impressive how our entire organization is acting with speed and agility to mitigate and adapt to the rapidly-changing market environment.
Trump to reduce impact of auto tariffs
There are sounds of another handbrake turn from the White House in its trade war.
President Donald Trump is expected to soften the impact of his automotive tariffs, by tweaking them so that duties on foreign-made cars are not stacked on top of other tariffs, such as those on steel and aluminium.
Trump is also expected to ease some levies on foreign parts used to manufacture cars in the US.
The change was first reported by the Wall Street Journal, and now appears to have been confirmed by the administration.
Commerce Secretary Howard Lutnick said in a statement:
“President Trump is building an important partnership with both the domestic automakers and our great American workers,”
“This deal is a major victory for the President’s trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.”
US treasury secretary Scott Bessent is expected to speak to the US press pack later today at the White House daily briefing – perhaps this might be discussed….
Introduction: HSBC sounds alarm on tariffs as bad debt provisions rise
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Companies around the world are calculating the impact of Donald Trump’s trade war, and today we’re hearing from one of the world’s largest banks.
HSBC has set aside more money for bad debts this morning, warning that the economic outlook has deteriorated due to “geopolitical tensions and higher trade tariffs”.
HSBC has increased its expected credit losses (ECL) to $900m in the first quarter of 2025, which is $200m higher than in January-March 2024, as it lifted its provisions for debts going sour.
This helped to knock HSBC’s profits for the quarter down by around a quarter, to $9.5bn, compared with 1Q 2024 (when the bank’s results were flattered by the sale of its businesses in Canada and Argentina).
HSBC also told shareholders that it had modelled scenarios in which tariffs are “significantly higher”, hurting growth – and found it would hurt its revenue and push up bad debt provisions by another $500m.
HSBC also warns, in its latest financial results, that the US trade war has increased the risks facing the global economy.
It told shareholders:
Risks for the global economy have been heightened by new trade policies announced by the US and potential measures that may be adopted by several countries globally, including in the markets in which the Group operates.
This uncertainty poses downside risks to economic growth and impacts economic forecasts, financial markets and business and consumer sentiment. A further escalation of tariffs and trade tensions could lead to lower trade volumes, investment, consumer spending and, ultimately, weaker global GDP growth.
Supply chains could also come under renewed pressure from a fragmented trade landscape, which could cause inflation to rise again.
There are already signs that this slowdown is occuring – the number of vessels scheduled to arrive at the Port of Los Angeles next week is down by almost a third on the same period a year earlier.
The agenda
-
8am BST: Kantar survey of UK grocery inflation
-
10am BST: UK Treasury Committee to question senior officials at the Prudential Regulation Authority
-
3pm BST: JOLTS report on US vacancies
-
3pm: US consumer confidence report
