Business

Diageo Faces Uncertainty as U.S. Tariff Threat Looms Over North American Sales

Published

18 hours ago

February 4, 2025

RTX

UK-based drinks giant Diageo plc has warned that escalating trade tensions in North America could significantly impact its business, with potential losses of up to $200 million (€193.7 million) in the second half of 2025 if threatened U.S. tariffs on Canada and Mexico take effect.

Diageo, which owns more than 200 brands including Guinness, Johnnie Walker, Baileys, and Captain Morgan, exports whiskey from Canada and tequila from Mexico to the U.S., its largest market. With North America generating the highest net sales volume for Diageo, any new tariffs could have far-reaching financial consequences.

On Tuesday, the company reported its financial year 2025 interim results, revealing lackluster performance in the last quarter and announcing the removal of its medium-term sales growth target of 5-7%, citing uncertainty over the global trade environment.

U.S. Tariffs Delayed but Risks Remain

U.S. President Donald Trump had planned to impose 25% tariffs on Canadian and Mexican goods on Tuesday, but following talks with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, the move has been postponed for a month. However, analysts warn that Diageo remains vulnerable if the tariffs are implemented.

Following the announcement, Diageo’s share price fell 1.3% on Tuesday afternoon, reflecting investor concerns about the company’s exposure to trade disputes.

Disappointing Financial Performance

Diageo’s latest earnings report showed a slight decline in net sales, with reported revenue at $10.9 billion (€10.6 billion), down 0.6%, mainly due to foreign exchange challenges. Organic net sales grew just 1% to $101 million (€97.8 million), while operating profit fell 4.9%, also affected by currency fluctuations.

CEO Debra Crew remained optimistic, highlighting that Diageo continues to gain market share in four out of five global regions.

“We outperformed the market in North America with high-quality share growth and positive organic net sales growth, driven by strong execution and momentum in Don Julio and Crown Royal,” Crew said in the earnings statement.

She also praised the success of Guinness, which delivered double-digit growth for the eighth consecutive half-year period, attributing the rise to brand building, innovation, and increasing global demand.

However, sales of premium spirits like Tanqueray, Gordon’s, and Smirnoff have been under pressure, as consumers turn to cheaper alternatives due to the ongoing cost-of-living crisis.

Analysts React to Diageo’s Results

Market analysts had mixed reactions to Diageo’s performance and decision to withdraw its medium-term sales forecast.

Chris Beckett, head of research at Quilter Cheviot, described the results as “satisfactory”, noting that organic sales rose slightly while profits dipped marginally, indicating a stabilization in performance. However, he warned that the removal of sales guidance may be negatively received by investors.

Russ Mould, investment director at AJ Bell, said Diageo’s uncertain outlook and external challenges have weighed on investor confidence.

“Diageo has had little good news to toast so far in 2025. First, the threat of cancer warning labels on its drinks emerged, and now the company has withdrawn its medium-term guidance,” Mould said.

He added that if the U.S. tariffs are imposed, Diageo will need to test its pricing power to see if it can pass higher costs onto consumers.

Future Outlook

Diageo’s earnings per share (EPS) fell 9.6%, mainly due to weaker performance from Moët Hennessy. The company is also struggling with lower global demand for premium spirits, as inflationary pressures push consumers toward budget-friendly brands.

Despite the challenges, Diageo reassured investors that it would provide more frequent trading updates and near-term guidance. However, with U.S. tariffs looming and shifting consumer spending habits, the company faces significant headwinds in the months ahead.

Business

Global Markets in Turmoil as U.S. Tariffs Trigger Trade War Fears

Published

2 days ago

February 3, 2025

RTX

Global financial markets plunged into turmoil on Monday following U.S. President Donald Trump’s decision to impose sweeping tariffs on Canada, Mexico, and China, escalating fears of an all-out trade war.

Trump Moves Ahead with Tariffs Despite Global Concerns

On Saturday, President Trump signed an executive order imposing 25% tariffs on Canadian and Mexican imports and 10% tariffs on Chinese goods, set to take effect Tuesday. To mitigate potential spikes in energy costs, Canadian energy imports will face a reduced 10% tariff.

In response, Canada, Mexico, and China have all signaled retaliatory measures, further raising economic uncertainty. Trump warned that any countermeasures could prompt higher or expanded tariffs on their exports.

Market Fallout: Euro Plunges, Stocks Tumble

Global markets reacted sharply to the announcement, with major currencies and equities sliding amid heightened trade tensions.

The Canadian dollar fell to its lowest level in over two decades against the U.S. dollar.
The Mexican peso dropped to a four-year low.
The euro slumped over 1%, hitting its weakest level in more than two years.
Commodity-linked currencies such as the Australian and New Zealand dollars also saw steep declines of around 2% against the U.S. dollar.

In commodities trading, crude oil prices surged 4%, initially reacting to potential supply disruptions before retreating due to the lower tariff on Canadian energy. Meanwhile, gold, silver, and copper prices declined as a strengthening U.S. dollar weighed on metal markets.

Cryptocurrencies also suffered amid broader market turmoil. Bitcoin fell from $101,000 (€99,000) over the weekend to just above $94,000 (€92,000) by early Monday morning.

Stocks Hit Hard, Auto Industry Faces Pressure

Equity markets in Asia, Europe, and North America opened lower, while U.S. and European stock futures tumbled. The hardest-hit sector was automobiles, particularly European car manufacturers with production in Mexico.

BMW, Volkswagen, and Mercedes-Benz saw pre-market declines amid concerns over U.S. tariffs on Mexican-made vehicles.
Stellantis and Renault also faced selling pressure, with investors fearing prolonged trade disruptions.

Analysts warned that risk-off sentiment would likely dominate the week.
“This week, investors are likely to go risk-off—particularly as Trump has said he is unfazed by the market reaction,” said Josh Gilbert, a market analyst at eToro Australia.

Government Bonds and Inflation Risks

Government bonds—typically seen as safe-haven assets—were in focus as investors sought stability. However, Trump’s tariffs and the potential for retaliation raised concerns about global inflation, complicating monetary policy decisions for central banks in the U.S. and the EU.

Canada, Mexico, and China Prepare Countermeasures

In response to the U.S. tariffs, Canadian Prime Minister Justin Trudeau announced 25% tariffs on $155 billion (€102.8 billion) worth of U.S. goods, targeting alcohol, agriculture, consumer products, and raw materials.

Tariffs on $30 billion (€19.9 billion) worth of goods will take effect immediately on Tuesday.
Analysts warn that the economic blow could push Canada into a recession, marking its first economic contraction since the pandemic.

Meanwhile, Mexican President Claudia Sheinbaum said Mexico was preparing a “Plan B” involving tariff and non-tariff measures to protect its economy. Details are expected to be announced later Monday.

In China, the Ministry of Commerce strongly condemned the U.S. decision, calling it a “serious violation of WTO rules.”

Beijing plans to file a complaint with the World Trade Organization (WTO) while keeping diplomatic channels open for negotiations.
A government spokesperson urged the U.S. to “correct its wrongful actions” and “work with China” to de-escalate tensions.

As trade tensions escalate, global markets brace for more volatility, with investors watching for further U.S. policy moves and retaliatory measures from affected nations.

Business

Eurozone Inflation Rises to 2.5% in January as Markets React to US Tariff Threats

Published

2 days ago

February 3, 2025

RTX

Eurozone inflation exceeded expectations in January, rising to 2.5% from 2.4% in December, according to a flash estimate from Eurostat. Despite the increase, the euro weakened, and European stock markets tumbled, as investor concerns over potential US tariffs overshadowed expectations of a more aggressive monetary policy response from the European Central Bank (ECB).

Inflation Surpasses Forecasts

Economists had forecast inflation to remain steady at 2.4%, but the latest figures mark the highest rate since July 2024. Core inflation, which excludes energy and food prices, held firm at 2.7%, defying predictions of a slight dip to 2.6%.

Among the key inflation components:

Services recorded the highest annual price growth at 3.9%, down slightly from 4.0% in December.
Food, alcohol, and tobacco prices rose 2.3%, a slowdown from 2.6% the previous month.
Energy prices surged to 1.8%, rebounding sharply from 0.1% in December.
Non-energy industrial goods inflation remained unchanged at 0.5%.

Among Eurozone member states, Croatia posted the highest annual inflation rate at 5.0%, followed by Belgium (4.4%) and Slovakia (4.1%). Ireland (1.5%), Finland (1.6%), and Italy (1.7%) recorded the lowest inflation rates.

Markets React: Euro Under Pressure

Despite the stronger-than-expected inflation data, the euro remained under pressure, falling 1.2% on the day against the US dollar and briefly finding support at 1.0230. Earlier in January, the currency hit 1.0175, its lowest level since November 2022.

The weakness came amid renewed fears of US tariffs on European goods. US President Donald Trump reiterated threats to impose tariffs on the European Union, warning they could be implemented “pretty soon.” The US has already enforced 25% tariffs on Canadian and Mexican goods and 10% on Chinese imports, sparking fears that Europe could be next.

“Tariffs will continue to dominate the markets, and some traders still believe they could be reversed,” said BBVA’s Alejandro Cuadrado, warning that the full impact is not yet priced into FX markets.

ING’s Francesco Pesole also noted that the prospect of a global trade war remains a key downside risk for the euro, adding that an upcoming US trade report in April could keep EUR/USD under selling pressure.

European Stocks Tumble, Auto Sector Hit Hardest

European stock markets saw sharp declines, with the Euro STOXX 50 falling 1.9% and Germany’s DAX index dropping 2%. The auto sector suffered the steepest losses as fears of US tariffs on European cars rattled investors:

Volkswagen shares fell over 6%
Mercedes-Benz declined 4.9%
BMW lost 4.5%
Stellantis dropped 7% in Milan trading
Pirelli shares slid 5.5%

Investors Flock to Bonds Amid Uncertainty

The uncertainty surrounding US trade policy led investors to seek refuge in sovereign bonds, pushing yields lower across Europe.

German Bund yields fell 8 basis points to 2.40%
French OAT yields declined 6 basis points to 3.15%

As markets digest the latest inflation data and trade tensions escalate, all eyes remain on the ECB’s response and the US administration’s next move regarding tariffs on Europe.

Business

Global Job Market to See Major Shifts by 2030, Report Reveals

Published

4 days ago

February 1, 2025

RTX

A new report from the World Economic Forum (WEF) highlights significant changes in the global job market, with technological advancements, demographic shifts, and economic uncertainty reshaping employment opportunities. While 92 million jobs are expected to be displaced by 2030, an estimated 170 million new positions will emerge, resulting in a net gain of 78 million jobs.

Tech-Driven Roles Dominate Fastest-Growing Jobs

According to the WEF’s “Future of Jobs Report 2025,” jobs related to artificial intelligence (AI), financial technology, and data analytics will see the highest growth rates over the next five years.

The demand for Big Data Specialists is projected to rise by 113%, followed closely by FinTech Engineers (93%) and AI & Machine Learning Specialists (82%). Other high-growth roles include:

Software and Applications Developers (+57%)
Security Management Specialists (+53%)
Data Warehousing Specialists (+49%)
Autonomous & Electric Vehicle Specialists (+48%)
UI & UX Designers (+48%)
Internet of Things (IoT) Specialists (+42%)
Data Analysts & Scientists (+41%)

Clerical and Administrative Roles in Decline

Conversely, clerical jobs are among the most at-risk, as automation and AI continue to streamline business operations. By 2030, nearly one-third of postal service clerks (-34%) and bank tellers (-31%) will be displaced.

Other declining roles include:

Data Entry Clerks (-26%)
Administrative Assistants & Executive Secretaries (-20%)
Cashiers & Ticket Clerks (-20%)
Accounting & Payroll Clerks (-18%)

AI-powered automation is a primary driver of these declines, with businesses increasingly adopting digital processes to reduce reliance on manual labor.

Agriculture and Delivery Industries Experience Job Boom

Despite automation, agriculture remains a crucial source of employment. The report predicts 49 million new farming jobs by 2030, offset by 14.1 million job losses, resulting in a net increase of 34.9 million jobs—accounting for 45% of global net job growth.

Similarly, the rise of e-commerce and online food delivery services will drive demand for light truck and delivery drivers (+9.8 million jobs) and food processing workers (+4.3 million jobs).

Healthcare and Education Show Steady Growth

Unlike other sectors, nursing professionals (+3.1 million jobs) and personal care workers (+1.6 million jobs) are expected to see only job growth, with no anticipated losses.

Education remains another area of expansion, with university and higher education teachers (+1.9 million jobs) and secondary school teachers (+1.6 million jobs) ranking among the fastest-growing professions.

Skills Evolution: A Workforce in Transition

Beyond job creation and losses, the report emphasizes the changing skill landscape. By 2030, 39% of current workforce skills will be obsolete, requiring significant reskilling and upskilling efforts.

As AI and automation continue transforming industries, professionals will need to adapt to emerging technologies to remain competitive in the evolving job market.