Stock market's FTSE 100 approaches all-time peak, yet Trump-related uncertainties persist
The FTSE 100 inched closer to a record high on Tuesday, propelled by optimism around US-EU trade talks. The UK's leading index rose 1% to around 8,800p during midday trading, recovering from losses triggered by President Trump's initial tariff threat.
The EU had faced a potential 50% levy on its goods, set to begin on June 1. However, following a call between Trump and EU Commission President Ursula von der Leyen, the tariff implementation was delayed until July 9. This development prompted optimism among investors, incentivizing a return to trading for the UK's blue-chip stocks after the Bank Holiday weekend.
Russ Mould, investment director at AJ Bell, commented, "The latest U-turn on tariffs from the Trump administration gave European markets a boost yesterday and provided UK stocks with renewed energy as they returned from the break."
Leading the rally, defense stocks soared. British Airways owner IAG advanced over 4%, while Melrose and Rolls-Royce recorded increases of 3% and 2%, respectively. Miners, on the other hand, suffered losses, with Endeavour, Fresnillo, and Rio Tinto dropping by over 3%, 3%, and nearly 1%.
The FTSE 250 also saw gains, rising 1.15%. Across Europe, markets generally responded positively to the temporary tariff truce and renewed focus on trade negotiations. Germany's DAX and Amsterdam's AEX climbed 0.8%, while France's CAC 40 gained 0.3%.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, expressed a cautious sense of relief, noting hopes for "more fruitful trade negotiations." The EU and US have pledged to advance talks swiftly and decisively, aiming to reach a deal by the July 9 deadline.
According to Von der Leyen, the EU is fully committed to reaching a trade agreement before the July 9 deadline. However, she also stressed the need for adequate time to achieve a favorable deal, ensuring that both parties can defuse the current tension.
- Optimism about US-EU trade talks, prompted by a delayed tariff implementation and a call between Trump and EU Commission President Ursula von der Leyen, boosted finance and business activities across various markets, including the UK's blue-chip stocks.
- The recovery of the UK's leading index, the FTSE 100, from losses following President Trump's initial tariff threat, was boosted by positive responses from the markets, especially defense stocks like British Airways owner IAG, Melrose, and Rolls-Royce.
- Politicians and business leaders are focusing on general-news items about the trade negotiations between the EU and US, with hopes of reaching a deal by the July 9 deadline and defusing current tensions in the global economy.
- The positive responses from European markets, including Germany's DAX, Amsterdam's AEX, and France's CAC 40, reflect a general optimism about the temporary tariff truce and the potential advancement in trade talks, as the parties aim to negotiate swiftly and decisively.
