Wall Street loses hope for a ‘Trump put’

Today’s agenda: Nato urges deeper EU-Turkey ties; Duterte arrested in Manila; Rheinmetall’s chief on re-arming Europe; and the British fintechs cracking the US market

Good morning. Today we’re starting with the big stock sell-off that started on Wall Street where investors’ hopes for a so-called “Trump put” have dimmed.

Why is sentiment shifting? Many investors had bet Donald Trump would ultimately back off his most severe tariff threats and cuts to the federal government if markets respond violently, but they fear the US president’s tolerance for market turmoil is far higher now than it was in his first term.

“Markets are questioning the notion that the Trump administration would adapt policies in response to equity market volatility or economic growth concerns,” UBS told clients yesterday evening.

White House reaction: The drumbeat of comments from top Trump officials playing down fears of stock market trouble has been consistent, and the White House doubled down on its dismissal of the financial market tumult following Monday’s steep equities sell-off by saying: “We’re seeing a strong divergence between animal spirits of the stock market and what we’re actually seeing unfold from businesses and business leaders, and the latter is obviously more meaningful than the former on what’s in store for the economy in the medium to long term”. Here’s the full story.

For more on markets, sign up for the Unhedged newsletter here if you’re a premium subscriber or upgrade your subscription. Here’s what else we’re watching today:

• Ukraine peace talks: Top US and Ukrainian officials meet in Saudi Arabia, just hours after America’s top diplomat said Kyiv would need to give up territory to Russia as part of a ceasefire agreement.

• Greenland: Voters go to the polls to elect the 31 members of parliament, amid a long-simmering independence debate. 

• EU: Finance ministers from the bloc are in Brussels for the Economic and Financial Affairs Council meeting.

• Results: Henkel, Lego and Volkswagen are among companies reporting. See our Week Ahead newsletter for the full list.

Five more top stories

1. Nato has urged EU leaders to step up engagement with Turkey after years of strained relations, according to officials briefed on secretary-general Mark Rutte’s remarks. The plea comes as the US’s retreat from European security forces the continent’s capitals to rapidly rethink their alliances.

2. Exclusive: US-backed mining company TechMet wants to develop a major lithium project in Ukraine in what could be one of the first projects built under the two countries’ minerals deal that is close to being finalised. Lithium resources at Dobra, chief executive Brian Menell said, were “very significant”.

3. Former Philippines president Rodrigo Duterte has been detained under an arrest warrant issued by the International Criminal Court over a crackdown on drugs that resulted in the deaths of thousands of mostly poor Filipinos across the south-east Asian country. Read the full report.

4. Exclusive: Société Générale’s chief executive has said “nothing is sacred” as he seeks cost cuts, including cutting IT spending and scaling back its use of external consultants. Here’s how Slawomir Krupa, who has spent almost three decades at SocGen, is seeking to turn around a bank hit by several setbacks since the 2008 financial crisis.

5. Exclusive: Pimco has already recorded a 17 per cent paper profit on its portion of Thames Water’s £3bn emergency loan. The windfall for the asset manager highlights the instant profits that some of the US’s largest investment firms and hedge funds are expected to earn by extending an expensive lifeline to the near-insolvent utility, which will contest an appeal against its restructuring plan in a London court today.

The Big Read

The UK’s two leading digital banks, Revolut and Monzo, are hoping to crack the American market as fintechs are once again attracting investment following a funding drought caused by rising interest rates. But the push across the Atlantic is no easy feat. Here’s why.

We’re also reading and listening to . . . 

Chart of the day

European military spending reached $457bn in 2024 — up 50 per cent on 2014, according to the International Institute for Strategic Studies — boosting defence companies including Rheinmetall. Yet the US still spends far more. Armin Papperger, the German weapons maker’s outspoken chief, sees transatlantic tensions as “good for business” as he pushes to re-arm Europe.

Take a break from the news . . . 

Known for his revivals of old structures, architect Asif Khan is reimagining two landmarks in London as well as a dock in Liverpool’s historic port area where he is creating a “place of contemplation” to invite reflection on the slave trade. Edwin Heathcote talks to Khan, and asks: is there anything he can’t transform?