Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.

Today, we’re looking at BoE rate cuts, US tariffs, and global stock performance. 

But first, our number of the week…

450%

That’s how much shares of Eutelsat, a French satellite provider, soared this week. Investors hope that the EU will move to replace Ukraine’s reliance on Starlink amidst increased defence spending. 

Sidekick Takeaway: Eutelstat’s gains are another indication of how the rift between the US and Europe is creating opportunities for equity investors. Germany’s paradigm shift in easing debt rules should fuel hopes of a continent-wide industrial renaissance.

Now to our main stories…

Only have a minute to read? Here’s the TL;DR:

• Amidst rising inflation, a former BoE policymaker warned that the bank should be ‘nervous’ about further rate cuts. With a slowing economy translating into weak demand, however, price pressures should fade, allowing the BoE to execute planned easing.
• US tariffs came and went once again, with Canada and Mexico securing a delay for goods falling under an existing trade agreement. It is increasingly clear that these tariffs lack any coherent policy rationale, with important implications for EU/UK trade negotiators. 
• In sharp contrast to the past few years, US stocks have lagged global peers to start 2025. With weak employment figures and poor corporate guidance, there is mounting evidence that policy uncertainty is translating into weak domestic fundamentals. 

It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.

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Stay the Course: BoE Shouldn’t Fear Cuts

After cutting rates last month, the BoE appears set to continue easing policy through the rest of 2025. 

Despite the slowing UK economy, however, not everyone agrees that additional cuts are ideal.

Following a recent uptick in inflation, a former BoE official argued this week that the bank should be ‘nervous’ about making further cuts. 

Pausing cuts could be a blow to markets, who are expecting additional easing. It could also put the UK in a weaker position than Europe as a whole, with the ECB cutting rates again this week. 

UK inflation has ticked up – but for how long?

Hawks are right to note a resurgence in price pressures for the UK economy:

• UK CPI jumped to 3.0% in January, up from previous months. 
• Underlying wage pressures are accelerating, with average earnings rising 6% to December 2024.
• Increasing inflation expectations risk cementing this recent uptick.

Crucially, however, these price increases need to be viewed in the context of the entire economy.

Traditional ‘cost-pull’ inflation occurs when demand runs ahead of supply – too many dollars chasing too few goods.

With signs of rising unemployment and slowing growth, it’s unlikely that demand can continue outstripping supply for long.

In fact, this weakening demand is a key element of BoE governor Andrew Bailey’s argument that the ‘underlying path’ of price growth is still downwards. 

Sidekick Takeaway: Despite an uptick in inflation and anxious commentary from rate hawks, the BoE should stick to the plan of cutting rates to support the UK economy. Price pressures are concerning, but need to be viewed in the context of weakening demand. 

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Trade War Nihilism: US Tariffs Come and Go

After a month-long hiatus, Trump’s tariffs on Mexico and Canada went into effect this week – sort of.

Initially, Trump announced a 25% universal levy on the two countries, in line with previous plans.

Just days later, however, Trump exempted goods falling under a 2020 North American free trade agreement.

The White House estimates that about 62% of Canadian imports and 50% of Mexican ones will still be subject to tariffs. Notably, the auto industry received an explicit carve-out.

Barring a further delay, full-scale tariffs are set to be implemented in April.

This persistent uncertainty is par for the course with Trump. Perhaps the worst part, however, is that these tariffs are being implemented for no coherent reason at all.

What is the point of America’s tariffs?

Although Trump has argued that tariffs will help return domestic manufacturing to the US, this policy goal is inconsistent with both empirical evidence and Trump’s other actions:

• A Federal Reserve study found that tariffs from Trump’s previous administration reduced domestic manufacturing employment by making American firms less competitive. 
• Trump has pushed to roll back the Biden-era CHIPS Act, which came with more than $50 billion in subsidies for domestic high-tech manufacturing.
• Trump’s comments on using tariffs as a revenue source are not compatible with tariffs as a means to reshore manufacturing. 

It should go without saying, but this type of back-and-forth policymaking does not offer firms the predictability necessary to adjust their supply chains.

It is increasingly impossible to analyse Trump’s trade war in policy terms when there is no policy rationale to begin with.

Sidekick Takeaways: The inscrutability of America’s aims has important implications for governments looking to strike a trade deal, such as the EU and the UK. Policymakers need to consider whether the time spent negotiating and executing an agreement is even worth it when any deal may be abandoned the next day.

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Losing Steam? US Stocks Lag Global Peers

For equity investors, the past few years have been a story of American exceptionalism. 

In 2023, US stocks outpaced other developed markets by over 9 points, according to MSCI indexes. In 2024, that gap grew to a massive 20 points.

But in 2025, that trend has begun to reverse.

This year, global developed markets are up more than 8 points – but US stocks are roughly flat.

US fundamentals are starting to weaken

Unsurprisingly, US stocks have wobbled on the inconsistent policymaking coming from the Trump administration. US indexes gave up all of their post-election gains this week.

While we might be able to look through bearish sentiment and rising uncertainty, there is growing evidence that this chaos is starting to filter through to economic fundamentals:

• On Q1 earnings calls, the number of companies issuing negative future guidance is almost 50% higher than those issuing positive guidance. 
• US private firms added just 77K new jobs in February, well below expectations. 
• Bellwether firms like Target, a major retailer, are planning to raise consumer prices in response to tariffs. 

Global stocks, meanwhile, have been buoyed by a range of factors, most notably expectations of rising defence spending in Europe.

Sidekick Takeaway: One of the biggest challenges in investing is differentiating the signal from the noise. While US policymaking is certainly noisy right now, there are also fundamental reasons underlying the pullback in US equities – this isn’t just a matter of animal spirits. 

Notices

Sidekick Money Ltd is a company registered in England and Wales (No. 13882980). Sidekick Money Ltd is authorised and regulated by the Financial Conduct Authority (FRN 984829). Our address is 21-33 Great Eastern St, London, EC2A 3EJ.

𝘗𝘭𝘦𝘢𝘴𝘦 𝘳𝘦𝘮𝘦𝘮𝘣𝘦𝘳, 𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘴𝘩𝘰𝘶𝘭𝘥 𝘣𝘦 𝘷𝘪𝘦𝘸𝘦𝘥 𝘢𝘴 𝘭𝘰𝘯𝘨𝘦𝘳 𝘵𝘦𝘳𝘮. 𝘠𝘰𝘶𝘳 𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘪𝘴 𝘢𝘵 𝘳𝘪𝘴𝘬 - 𝘵𝘩𝘦 𝘷𝘢𝘭𝘶𝘦 𝘰𝘧 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘤𝘢𝘯 𝘨𝘰 𝘶𝘱 𝘢𝘯𝘥 𝘥𝘰𝘸𝘯, 𝘢𝘯𝘥 𝘺𝘰𝘶 𝘮𝘢𝘺 𝘨𝘦𝘵 𝘣𝘢𝘤𝘬 𝘭𝘦𝘴𝘴 𝘵𝘩𝘢𝘯 𝘺𝘰𝘶 𝘱𝘶𝘵 𝘪𝘯.