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Roiled by Trump’s tariffs and a row with Russia, global markets were in bearish mood this week. The FTSE 100 was down 1.2% by Thursday’s close. In the US, the S&P 500 lost 1.4%, and the FTSE Europe ex UK index fell back by 0.4%.
Speaking in the House of Commons on Wednesday, Theresa May, the UK prime minister, announced the expulsion of 23 diplomats and the suspension of high-level diplomatic contact with Russia in response to the nerve-agent attack that left three people in Salisbury seriously ill. The Kremlin, which has denied responsibility for the incident, is expected to react with expulsions of its own. Mrs May’s announcement was followed on Friday by a joint statement from France, Germany, the US and the UK, which said that there was “no plausible alternative explanation” for the attack.
Trump turmoil
If a resumption of the Cold War appeared to be underway in Europe, trade wars were the main worry on the other side of the Atlantic. After last week’s announcement of tariffs on steel and aluminium, Donald Trump was reported this week to be preparing to impose punitive charges on Chinese technology and telecom imports. On Monday, the US president blocked Singapore-listed Broadcom’s attempt to bid for the Nasdaq-listed Qualcomm. Broadcom has links to China, through its cooperation with Chinese telecom giant Huawei.
Mr Trump had a busy week. On Tuesday, he fired Rex Tillerson as Secretary of State and announced that Mike Pompeo, the director of the CIA, would replace him. Then, on Wednesday at a private fundraiser, the president said he had insisted that the US runs a trade deficit with Canada during negotiations with Justin Trudeau, the Canadian president – even though he had “no idea” whether it was true. It’s not.
All this made for a gloomy week for US equities. The S&P 500, Dow Jones and Nasdaq were all down over the four days to Thursday’s close, although the Nasdaq managed to reach an all-time high at the start of the week.
Rotterdam (or anywhere)
On Thursday, Unilever, the consumer-goods titan responsible for Dove soap, Magnum ice cream and Marmite, announced that its sole headquarters would be based in Rotterdam rather than London. The UK’s third-largest company by market capitalisation has been consolidating its operations and will combine its current dual HQs in a single Dutch location. According to Paul Polman, Unilever’s chief executive, the move “has nothing to do with Brexit” and will entail neither job losses in the UK nor a fall in British tax revenues.
Some market observers have speculated that the decision has been influenced by differences between UK and Dutch corporate law, with hostile takeovers considerably more difficult under the latter regime. Although Unilever will still be listed in the UK, the move raises doubts over its continued inclusion in the FTSE 100, as the consolidated entity may no longer be eligible, given its sole incorporation in the Netherlands and the liquidity of its shares there.
And finally …
This week, the world mourned Stephen Hawking, perhaps the pre-eminent physicist of his generation, who died on Wednesday at the age of 76. Best known for A Brief History of Time and for his theories on black holes, Professor Hawking was also confident that alien life was likely to exist. "The idea that we are alone in the universe seems to me completely implausible and arrogant," he said.
Professor Hawking may well have been right. But our chances of encountering our galactic neighbours in person appear to be vanishingly small. Scientists working to update the Drake Equation, which estimates the probable number of civilisations in our galaxy, reckon that even an alien empire that lasts 100,000 years will be long gone before its signals reach us. Our own radio waves have only crossed 0.001% of the Milky Way so far.
So any chance of shaking hands (or tentacles) with a genuine extraterrestrial may be remote. Still, Stephen Hawking reminds us that we should always think big. “We are just an advanced breed of monkeys on a minor planet of a very average star,” he said. “But we can understand the Universe. That makes us something very special.”
