Trade tensions, Sky and the hunt for other bid targets

New tariffs are already affecting the outlook for US companies and could pose problems for President Trump, warns Rebecca O'Keeffe, head of investment at interactive investor, who also discusses consequences of the Sky takeover.

During the first stages of the US-China trade war, markets concluded that the US President clearly held the upper hand and US markets reached new highs.  However, as a new round of tariffs are imposed, the market is far less sure that this is a smart thing for the President to be doing.  Not only has China retaliated immediately, but many of the new US tariffs are likely to have a direct negative impact on US companies and consumers. 

Last week, US chipmaker Micron warned of the negative effects of new tariffs on its business outlook, while consumer companies including Walmart and Target warned that US shoppers would have to pay higher prices as a result of the new tariffs. 

Support for tariffs in the US works as long as it doesn't have a direct impact on US consumers, jobs or share prices. If this latest move starts to result in higher prices for customers or lower corporate profitability, the President may find the going much tougher, even with his most ardent fans.

The Federal Reserve is poised to raise rates once again this week, with a further rate rise likely for December. However, the newest round of trade wars has dramatically increased the risk of higher US inflation. It will be interesting to hear what Fed Chair Jerome Powell will have to say about the current trade impasse and what that might mean for future interest rate moves. 

Sky shareholders are popping the champagne after this weekend's bidding auction valued the company at eye watering levels. 

The premium that is being offered by Comcast in indicative of how much pressure is on traditional media platforms. Their newer tech savvy rivals have revolutionised the way people engage with TV and internet content and these technology giants are investing huge amounts of money into both popular shows and new content to keep customers coming back for more. 

Legacy media companies are desperate to find a place in this new order and consolidation in the sector is likely to continue, with companies that can deliver new markets and opportunities highly sought after.

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