Archived article: Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
“The TACO (Trump Always Chickens Out) trade is back on the table as the Trump administration’s latest announcements on tariffs offered some relief to financial markets,” says AJ Bell investment analyst Dan Coatsworth.
“While new levies were announced for 14 trading partners, news of a pause until 1 August to allow for further negotiations was received positively. This removes the immediate cliff edge created by a 9 July deadline and US president Trump has indicated that even this new date is not set in stone.
“On the flipside, this only extends the uncertainty with markets likely to spend the next three weeks trying to guess the ultimate outcome. If tariffs are a negotiating strategy it appears they may be a rolling one, with constant bartering and trade policy being used in the service of US foreign policy goals.
“This may explain why European markets remained fairly circumspect despite gains in Asia. The FTSE 100 was boosted by mining companies amid speculation about further M&A in the sector.
“Samsung Electronics’ recent struggles continued as it warned on profit. The company has been heavily impacted by US restrictions on the sale of AI chips to China.
“A relatively modest share price reaction to this downbeat update reflects the significant amount of bad news already factored into the share price.”
Rio Tinto
“Rio Tinto is on the hunt for a new CEO who has a flair for dealmaking, according to reports.
“There is speculation that chair Dominic Barton wants to hire someone capable of getting their teeth into large-scale acquisitions, as well as finding new ways to cut costs and increase productivity. It’s rare to find someone who specialises in both growth and efficiency, as normally it’s one or the other.
“Rio Tinto doesn’t need a ‘Mr Fix It’; instead, it needs someone with a bold vision to take the business to the next level and widen the gap against competitors. However, it also needs to make sure it doesn’t repeat previous mistakes with so-called ‘transformational’ acquisitions that ended up destroying value.
“The mining sector used to have a ferocious appetite for large-scale acquisitions. It all changed just over a decade ago when commodity prices went into a prolonged downturn and it became clear miners had grossly overpaid for deals. Rio was one of the worst offenders, with several deals that ultimately cost then-CEO Tom Albanese his job in 2013.
“Rio suffered a $14 billion write-down on the purchase of Canadian aluminium group Alcan and Mozambique-focused Riversdale Mining. Alcan was acquired just as the global economy was going into a major downturn, while the coal assets turned out to be a dud because of logistical challenges and mistakes interpreting the geology.
“There was chatter that Rio might counterbid for Anglo American when BHP tried to buy the FTSE 100 miner in 2024, yet nothing came of it. Talk of a merger between Rio and Glencore surfaced this year, but also didn’t result in a formal agreement. Whatever direction it takes, Rio will be looking to increase its market position in major commodities such as copper and/or iron ore, and it will want to achieve economies of scale.”
Shein
“Shein is still keeping its IPO dream alive. The Chinese retailer failed to get a US listing off the ground so its attention turned to the UK where progress has been incredibly slow. Now it seems to be trying a different tactic where it plays one exchange off against another.
“Reports suggests it has filed paperwork to list in Hong Kong as a way of putting pressure on the UK regulator to give the green light for a London listing. Chinese regulatory requirements are different to the UK, so Shein might simply be trying its luck in thinking the FCA would accept a Chinese-approved prospectus and bend the rules because it’s presenting a ready-made IPO on a silver platter.
“The UK is desperate for big-name companies to join the London market, but there are standards to uphold and the flood gates won’t simply be opened to anyone who fancies listing. Shein’s London IPO has been delayed by ongoing concerns from the regulator and potential investors around transparency, ethics and governance. Until there are answers to the smorgasbord of questions, it’s hard to see Shein heading for London’s market anytime soon.”
Greencore/Bakkavor
“A spanner could be thrown in the works of sandwich maker Greencore’s acquisition of food-to-go rival Bakkavor as the deal is probed by the CMA.
“The UK competition authorities have been quite interventionist in recent times but the modest share price reaction suggests investors are not overly worried about the destiny of the transaction just yet.
“The combination will create a dominant player in prepared food products, serving nearly all the big UK supermarkets. Grocers may be among the interested parties who respond to the CMA’s request for comments on the tie-up.
“The market may well keep its powder dry until the 22 July deadline for responses, at which point it may become clear if a formal investigation is going to be launched.”
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
