finance

Cheaper Chinese imports help relieve pain of Trump's war in Iran

Source: Bloomberg Business

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Morning, I'm Chloé Meley from Bloomberg UK's breaking news team, bringing you up to speed on today's top business stories.

Trump's war in Iran may hurt the UK more than others. But his tariffs could, counterintuitively, help cushion some of that impact.

Facing high levies from the US, Chinese companies are turning to the UK instead and cutting prices on exports to Britain.

The price for cars, China's largest export to the UK, fell 4.6% in January and February compared to the same period last year, while prices for computers, phones and furniture also dropped while shipment volumes soared.

If the flood of cheaper Chinese goods continues, that would be "good news for inflation," according to Barret Kupelian, PwC UK's chief economist. It could help offset part of the energy price shock from the war in Iran and inform the Bank of England's decisions as it keeps a close eye on inflation pressures.

The one big concern, of course, is the impact that this influx of Chinese products could have on British industry -- not the most thriving of sectors, and a politically sensitive area for Keir Starmer.

What's your take? Ping me on X, LinkedIn or drop me an email at cmeley@bloomberg.net. Oh, and do subscribe to Bloomberg.com for unlimited access to trusted business journalism on the UK, and beyond.

What We're Watching

Speaking of, Starmer is facing growing pressure to help Brits with the rising cost of living, as the economic effects of the conflict in the Middle East -- soaring diesel prices and increasing energy bills -- start to hurt household budgets. No major package has been announced yet, though Starmer has suggested any help would be concentrated on the neediest people.

Novo Nordisk's weight-loss drug Wegovy is set to be offered far more widely on the NHS, becoming an option for about 1.2 million more patients after the drug price regulator recommended it to prevent heart attacks and strokes.

BP's new CEO Meg O'Neill starts today, becoming Big Oil's first female boss and the energy giant's first outsider CEO. She's inheriting a difficult cleanup job as investors expect significant cost cuts and a simpler portfolio to revive the company's fortunes.

Developer Berkeley said it won't buy new land while the tax and regulatory burden on residential development prevails, instead focusing on its existing land holdings.

Global Catch-Up

Malta, Europe's "blockchain island," pushes back against EU on crypto.
Anthropic accidentally released the source code for its Claude AI agent.
LVMH had the worst-ever start to a year as a luxury rebound stalls.

Markets Today: Tentative Hopes

Here's your daily snap analysis from Bloomberg UK's Markets Today blog:

It looks like April is starting on a more optimistic note for markets than last month, but the mood's still cautious with continued uncertainty about the situation in Iran.

March saw some uncomfortable milestones for markets. In the UK, the FTSE 100 posted its worst month since the pandemic-led selloff six years ago, while benchmark 10-year gilt yields saw their biggest monthly jump since the mini-budget chaos of 2022.

Given the hefty losses across asset classes, any signs of tensions thawing in the Middle East are likely to be gratefully received. Trump saying that he envisions an end to the war on Iran within two to three weeks means markets can take some comfort, but as always, it's unlikely to be straight forward.

The massive elephant in the room is still what happens with the Strait of Hormuz. The effective closure of the vital waterway has roiled global energy markets, and the longer the issue remains unresolved, the more pressure on governments around the world struggling to cope with elevated oil prices.

Hopes of a resolution to the conflict could be enough for a relief rally, but don't be surprised to see further volatility in markets with so many questions still lacking answers.

What's Next

It's a quiet day tomorrow on both the earnings and economic data front.

Pub Quiz

As of today, British Airways' loyalty program is changing, leading many frequent flyers to lose access to perks like lounge entry and priority boarding. Rather than being based on miles flown, elite status will now be based on what?

[Yesterday's answer: Tottenham Hotspur owner Daniel Levy's grandfather opened a hat shop in Stratford, east London, which grew into one of the UK's largest menswear chains.]