US-Ukraine Sign Deal, Microsoft & Meta Beat, Ikea Talks Trade Impact
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This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Thursday the 1st of May in London. I'm Stephen Carroll. Coming up today, the US and Ukraine sign a deal over access to the country's natural resources. Donald Trump concedes his approach to global trade poses significant political risks as Microsoft and Meta shrug off economic turbulence to deliver results that defy expectations.

Plus, unclear instructions. The boss of IKEA's owner tells us they've no choice but to wait and see as tariffs create uncertainty for businesses and consumers. Let's start with a roundup of our top stories. The United States and Ukraine have reached a deal over access to Ukraine's natural resources. Under the agreement, America will be given privileged access to new investment projects

to deliver things like aluminium, graphite, oil and natural gas. The deal is seen as an important step in securing President Trump's goodwill toward Kyiv as his administration continues efforts to end the war that began with Russia's full-scale invasion more than three years ago. Here's US Treasury Secretary Scott Besant.

Today's agreement signals clearly to Russian leadership that the Trump administration is committed to a peace process centered on a free, sovereign and prosperous Ukraine over the long term. It's time for this cruel and senseless war to end.

Scott Besson speaking there as the signing eases tensions between the two countries. Ukrainian President Volodymyr Zelensky travelled to Washington in February to sign a deal, but returned empty-handed after a tense on-camera exchange with President Trump and Vice President J.D. Vance in the Oval Office.

Donald Trump has acknowledged that his sweeping tariff programme poses significant political risks to his presidency, but the US president says he won't rush into deals to appease nervous investors. Speaking during a town hall event, Trump said he remained determined to push on and he believes he'll be able to convince people how good this is. Trump was also asked by News Nation host Bill O'Reilly if he agreed that his tariff proposals had a perception problem.

Yeah, but I'm an honest guy and we have to save the country. We were losing $5 billion a day with this man that we had as a president, the auto pen president. Nobody even knows who the president was. We're losing, think of it, we're losing $5 billion.

billion a day and a big chunk of it was from China. Now China is sending its boats back. The boats are not being unloaded because they have a 145% tariff, which is a record-setting type tariff.

Trump spoke at that News Nation town hall event via a video link after data showed that the US economy contracted at the start of the year for the first time since 2022. Inflation-adjusted GDP decreased at an annualised rate of 0.3%, dragged down by a surge in imports as firms appeared to be front-running US tariffs. Trump says he should get a pass on the data as his administration was just getting used to things.

The European Union will present US officials with proposals next week aimed at kick-starting trade negotiations. Bloomberg has learned the ideas include lowering trade and non-tariff barriers, as well as boosting European investment in the US. Our sources say the EU is also preparing for a worst-case scenario if negotiations fail, including lists of US goods to hit with counter-tariffs and possible export restrictions. Here's Bloomberg's Kayleigh Lyons in Washington.

What's important about this is we understand that this proposal on trade includes both tariff and non-tariff barriers, perhaps in recognition of the kind of language we've heard from administration officials around the issues with Europe specifically.

That's Bloomberg's Kayleigh Lyons in Washington. It comes as the Aborigines think tank says Keir Starmer's government won't be able to avoid uncomfortable trade-offs on areas such as human rights when negotiating trade partnerships in an increasingly unstable and uncertain world. The IPPR, which has close links to the Labour Party, says the UK will need to be pragmatic about trade deals with countries that don't share all our values and flexible in observing international law.

Microsoft shares soared in after-hours trading on the back of better-than-expected sales and profit growth. Total revenue during the third quarter of the financial year rose by 13% to just over $70 billion. Gains were bolstered by the firm's Azure Cloud unit, which attributed 16 percentage points of its growth to artificial intelligence products. CEO Satya Nadella says the company's AI capabilities are growing rapidly.

Now I'll highlight examples starting with infrastructure. We continue to expand our data center capacity. This quarter alone, we opened DCs in 10 countries across four continents. Model capabilities are doubling in performance every six months thanks to multiple compounding scaling laws. Microsoft's Satya Nadella speaking there. Microsoft shares rose by almost 7% in after-hours trading yesterday.

Staying with tech news, Meta also reported estimate beating financial results, defying tariff concerns. The Facebook and Instagram parent announced $42.3 billion in first quarter sales, beating analysts' expectations for $41.4 billion. Speaking after the news, Meta CEO Mark Zuckerberg told investors the firm is ready to face market volatility.

We've had a strong start to the year. Our community keeps growing with more than 3.4 billion people now using at least one of our apps each day.

Our business is also performing very well, and I think we're well positioned to navigate the macroeconomic uncertainty. Mark Zuckerberg speaking there. The company says it expects to spend between $64 and $72 billion this year, attributing some of the increase to tariffs imposed by the Trump administration. Meta also says it's responding to the trade war by rethinking suppliers and optimizing its supply chain.

And polls opened today in some parts of England for local and mayoral elections. Changes to councils means there are fewer positions being voted on than in previous years, but the vote is the first big set of polls since Labour's landslide election victory last year.

Those are your top stories. On the markets, we had US stocks jumping into Wednesday's close, extending a winning streak. The S&P 500 finishing up two tenths of 1%. Seven sessions in a row now of gains and futures pointing higher again, 1.1% higher for S&P E-mini futures.

while Nasdaq futures are up by 1.5%. Of course, the earnings from Microsoft and Meta in focus there as well. Treasuries also clinching a seven-day winning streak. Ten-year yields have fallen over 20 basis points. They're up two today to 4.18% on the 10-year. The dollar also continuing to recover, trading a quarter of 1% higher on the Bloomberg Dollar Spot Index. The yen is six-tenths weaker after Bank of Japan held interest rates steady. We're also watching gold prices down again today by 1.8%.

to $3,228 a troy ounce. In a moment, we'll bring you more on the US-Ukraine deal on natural resources, plus what the boss of the group operating hundreds of IKEA stores around the world told us about the impact of tariffs.

But on the question of Meta's earnings, I was reading Bloomberg Opinion, Dave Lee's column about this this morning, and in particular comments that drew a lot of attention in Meta's statement about how they're warning of a materially worse user experience for European users because of rules introduced under the EU's Digital Markets Act. Now, Dave Lee says...

This essentially means that the social media giant will now expect to make significantly less money from users in Europe than it otherwise would have. So what actually might be materially worse is actually for Meta itself, unclear exactly how it would make...

the user experience worse for users of Meta's platform. Meta made about 16% of its global revenue in the EU last year. They're currently in this battle with the EU over the EU demands under the legislation to offer less personalised ads and better protect users' personal data as a result. Now, Meta had offered a version of this. The EU hasn't approved that yet. It also didn't welcome Meta's idea for a paying subscription that would give users no ads.

But as Dave Lee points out, these changes are coming at a delicate time for advertising. Sales growth outside the US is slowing, although this report was very strong from Meta. And the impact of tariffs, particularly in what it means for Chinese advertisers advertising targeting American consumers, is still unclear. Lots of detail in his piece. You can read it at Bloomberg.com forward slash opinion. And we'll put a link to it in our podcast show notes as well.

Well, let's bring you more now on the deal between the US and Ukraine over access to natural resources. Our EMEA News Director Rosalyn Matheson joins us now for more. Ros, good morning. What exactly does this deal entail? Well, what it does is it actually gives the US privileged access to new investment projects, and that's to develop Ukraine's natural resources, of which it has potentially invested.

quite a bit. It is changed somewhat for the initial deal that was talked about, and that's after some objections from the Ukrainians. The negotiations got quite contentious, of course, throughout. And what it does now cover is actually reimbursing the US for future military assistance to Ukraine, rather than all the military assistance that's been provided to

already and it does keep the door open under the terms of this deal for Kiev to push ahead with its intent at least or its desire to join the EU. But what it is is essentially a fund which is financed by revenues from these new licenses. It'll be everything from critical minerals to oil and gas and

The U.S. gets first claim on the profits that are transferred into that fund, and it's jointly managed by both nations. So this gives Ukraine an economic link to the U.S., strong economic ties. It gives the U.S. some investment opportunities in Ukraine. It's not a hard security guarantee, though, for Ukraine. So overall, I mean, is this a good deal for Kyiv?

Well, it's better arguably than the original terms of the deal, which was seen as very much favouring the US and giving the US in essence control over a large part of Ukraine's economy. So some of the terms have been altered here.

in the final version. And the US would argue that economic ties really are a version of security ties because it binds the US into Ukraine's future and its future success. But it's not a hard security guarantee. And certainly it's not a military guarantee. And it's not anything that says that the US would come

to Ukraine's aid militarily, potentially in the future. So it does give Ukraine something in its pocket. And it does also signal to Donald Trump that the Ukraine is serious about trying to reach a ceasefire. What does this mean for Donald Trump, though? Is this something that he can claim as a victory at a time when he's under pressure over the impact of his trade policies on the US economy?

Well, that's right. He does need to declare at least a few victories and that gives him something. He can say, I've got a tangible deal here in my pocket. He is looking at an economy in the US where it's under some pressure over his quite volatile policymaking when it comes to trade. And you can see that showing up in sentiment and other data in the US now. And he does need some runs on the board. He says he's got trade deals coming

with individual countries, but he doesn't have any of those so far. And of course, we know, you know, separately fighting has resumed in Gaza. Israel is back in there. Its troops are back in there fighting Hamas in Gaza. So there's been no quick resolution to that conflict either. It does give him a win, but there's still no broader ceasefire yet arranged when it comes to Ukraine. Okay. Roslyn Mattson, our AMEA news director. Thank you very much.

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Well, let's turn to another story now. Donald Trump saying he's not going to rush into deals to appease investors' uncertainty over his tariffs. The US consumer confidence, though, slumping to its lowest level in almost five years. And it's been dented elsewhere, too, by fears over the impact of the trade levies. The Swedish furniture chain IKEA operates in more than 60 countries worldwide, including a significant presence in the United States. The CEO of the Inca Group, which operates most of IKEA's stores, has been speaking to Bloomberg about how they're adapting to the tariff uncertainty.

We, like any companies, benefit from stable relations, predictable relations. And of course, whether it's free trade or low tariff arrangements, normally that leads to less inflation and less uncertainty in general. But we just have to wait and see.

That's Inca Group CEO Jesper Brodin there speaking to Bloomberg's Jennifer Creary, who joins us now for more. Jennifer, good morning. How worried then is Jesper Brodin about the impact of tariffs on the IKEA business?

Yeah. So as you heard, Jesper was calling for stable and predictable trade relations. So the implication being that it's very difficult for IKEA and other companies to navigate Donald Trump's volatile trade policies. Now, he's not saying much about how much tariffs are actually going to impact IKEA's supply chain. You know, he hasn't committed to any definitive measures yet. But what's interesting about IKEA is that it sources most...

about 70% of its products from Europe, while the rest of it is made in Asia. So, of course, they'll be impacted by any levies on imports from China to the US, the US being its second largest market.

So some of those pressure points will be, you know, they'll have to ask these questions like a lot of companies are asking, you know, can they make cost savings through negotiations with suppliers or will they have to raise prices? And what's interesting is, you know, IKEA as a value meter will be in this tricky spot because they'll still need to be affordable because, you know, as we all know, buying furniture can get pretty expensive sometimes.

Is Jesper Brodin seeing any signs of the weaker consumer confidence issues that we've seen highlighted in data, both in the US but also elsewhere? Yes, I asked him this yesterday and he said consumer confidence has declined in the past few months. But he caveated that by saying, you know, this is not something that is exclusive to IKEA. It's affecting all companies. But, you know, if you look at its last set of results last year, so it's last year's full year results,

Ikea already reported a decline of about almost 38% in operating profit. And that came after it announced that it had invested 2.1 billion euros in cutting prices. And that has come at the expense of some of those financial gains. It's already under pressure. It's starting the year on kind of a weaker foot. And of course, with tariffs and other kind of inflation on the cost of raw materials, that's just going to pile additional challenges on.

onto the retailer. But, you know, I asked him, are you going to hike prices? And there's no indication yet. He was very tight-lipped about that. So let's wait and see. ♪

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