Good morning. Today we're talking about falling US stock markets, surprising UK economic data and John Lewis’ turnaround.

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Big Stories

Wall Street correction

Last week Wall Street endured its worst day of 2025 as recession fears, driven by the US President's trade policies, triggered a significant sell-off. The President Trump's acknowledgment of an economic "transition," coupled with his pursuit of tariffs and spending cuts, has unsettled investors, who are now questioning the stability of the US economy. A "correction" in the stock market is defined as a 10% or more drop from a recent high. The Nasdaq 100 has officially entered this correction territory, reflecting a sharp decline in investor confidence. The S&P 500 has also seen its post-election gains erased, signaling a major shift in market sentiment. The President's tariffs, particularly those imposed on major trading partners like Canada, Mexico, and China, have created significant uncertainty for businesses and consumers. This uncertainty, combined with fears of an economic downturn, has prompted investors to move towards safe-haven assets like government bonds, seeking to mitigate potential losses.

Surprise economic slump

January's GDP figures have delivered a surprise setback to the UK economy, contracting by 0.1% against economists' predictions of slight growth. This unexpected decline, driven by a sharp 1.1% fall in manufacturing output, presents a challenge for Chancellor Rachel Reeves ahead of the upcoming spring statement. While the services sector struggled to maintain momentum, construction also contributed to the downturn, hampered by adverse winter weather. The disappointing data raises concerns about the economy's resilience, particularly as tax rises loom in April. Businesses are voicing concerns about the combined impact of increased National Insurance contributions, rising minimum wages, and reduced business rates relief. These factors could potentially stifle economic growth, limiting employers' capacity for pay increases and job creation. Adding to the uncertainty, global economic pressures, including new US tariffs and demands for increased defence spending, are further complicating the economic landscape. The government's focus on boosting growth faces significant hurdles, potentially influencing Chancellor Reeves' ability to adhere to her self-imposed fiscal rules.

John Lewis turnaround

The John Lewis Partnership (JLP) has announced a 73% surge in annual profits, climbing to £97m, following a 3% rise in group sales to £12.8bn. However, despite this strong performance, the owner of John Lewis and Waitrose will not be issuing staff bonuses for the third consecutive year. Instead, the company is committing to a £600m operational investment, with a focus on enhancing regular employee pay. Chairman Jason Tarry emphasized that weekly pay, recently increased by 7.4%, is the priority for their staff. JLP has undergone significant restructuring, including store closures and a workforce reduction of approximately 4,000, bringing total employee numbers to 69,000. These measures have resulted in £255m in savings, with further cost reductions planned. While anticipating continued profit growth to £400m by 2028, JLP acknowledges the persistent challenges of the macroeconomic landscape. The decision to prioritise long-term investment and regular pay over bonuses reflects a strategic focus on sustainable growth and employee stability.

Elsewhere...

Mini payout: Nationwide building society announced this week that it would be dishing out £50 mini-windfalls to more than 12m members.

In the black: Deliveroo has delivered an annual profit for the first time, as grocery sales rose at the food delivery giant.

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Number of the Day

$3,000

The price of gold per ounce - a new record high driven by investors buying the popular safe haven asset as protection against persistent geopolitical and economic uncertainty.

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