Key Takeaways
- Diageo (DEO) slashed its fiscal 2026 guidance and halved its interim dividend to 20 cents per share following a 4% decline in net sales to $10.46 billion.
- China warned the U.S. against "shifting responsibility" and urged an objective review of trade agreements after the U.S. Supreme Court struck down several of President Trump's unilateral tariffs.
- German Chancellor Friedrich Merz met with President Xi Jinping in Beijing, leading a high-level delegation of 30 executives to stabilize trade relations currently exceeding $200 billion annually.
- Russia's Tagansky District Court fined Telegram 7 million roubles for failing to remove prohibited content, marking continued regulatory pressure on international messaging platforms.
China Rebukes U.S. Trade Policy Amid Tariff Uncertainty
The Chinese Ministry of Commerce issued a stern warning to Washington on Wednesday, urging the United States to stop "shifting responsibility" for trade frictions. This diplomatic friction follows a landmark 6-3 U.S. Supreme Court ruling that limited the executive branch's authority to impose unilateral tariffs under a 1977 law. Beijing is currently conducting a "comprehensive assessment" of the ruling's impact while calling for the immediate cancellation of all unilateral levies.
Despite the judicial setback, the Trump administration has signaled plans for a new 15% global duty on imports to maintain economic pressure. China has urged the U.S. to take an "objective look" at the implementation of existing agreements rather than causing new problems. Market analysts suggest these tensions could complicate the upcoming diplomatic visit by U.S. officials to Beijing scheduled for April.
Diageo Resets Strategy as U.S. and China Sales Slump
Beverage giant Diageo (DEO) announced a significant reset on Wednesday, with new CEO Sir Dave Lewis cutting the company's annual forecast and dividend. The maker of Johnnie Walker and Smirnoff now expects organic net sales to decline 2% to 3% for the fiscal year, citing persistent weakness in the U.S. spirits market and Chinese white spirits. The company’s organic operating profit growth guidance was also lowered to a range of flat to low-single digits.
To increase financial flexibility, the board halved the interim dividend to 20 U.S. cents per share, down from 40.50 cents a year prior. Lewis emphasized a shift toward a "weather-proof" portfolio designed to perform in all economic conditions. Investors reacted to the news as the company reported a 2.8% organic sales drop, driven by a "stretched consumer wallet" in North America.
Germany’s Merz Pursues Pragmatic Engagement in Beijing
In a high-stakes diplomatic move, German Chancellor Friedrich Merz arrived in Beijing for his first official visit since taking office. Merz met with President Xi Jinping to discuss fair competition and the protection of supply chains between the two industrial powerhouses. The Chancellor is accompanied by a delegation representing 30 major German firms in the automotive, chemical, and biopharmaceutical sectors.
The visit underscores Germany's attempt to balance its security interests with its status as China's largest trading partner in Europe. Two-way investment between the nations currently stands at over $65 billion, accounting for nearly a quarter of China's total engagement with the European Union. Merz framed the EU-China relationship as "essential for global stability" during his talks at the Great Hall of the People.
Regulatory and Media Briefs: Telegram Fined; EU Markets
In a separate development, a Moscow court imposed a 7 million rouble (approx. $75,000) fine on Telegram for failing to delete content deemed illegal by Russian authorities. The fine is part of a broader crackdown on foreign tech entities that Moscow claims are flouting local internet laws. The platform, which has over 1 billion monthly active users, continues to face legal challenges regarding content moderation in the region.
Meanwhile, early morning briefings from LiveSquawk indicated a cautious start for European markets as traders digested the mixed bag of geopolitical warnings and corporate earnings. The FTSE 100 was called up slightly by 0.3% in early trading, even as the British Pound softened against the Dollar.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.