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London open: FTSE falls again as China retaliates against US
London stocks were lower again in early trade on Tuesday following heavy losses a day earlier, after China announced retaliatory tariffs on a range of US imports.
At 0820 GMT, the FTSE 100 was down 0.3% at 8,554.05, having tumbled on Monday after US President Donald Trump announced over the weekend that he would impose 25% tariffs on imports from Canada and Mexico, and an additional 10% tariff on China.
On Tuesday, just as the US tariffs on China took effect, the Finance Ministry there said it was imposing tariffs of 15% for US coal and liquefied natural gas and 10% for crude oil, farm equipment and some autos. It also announced a probe into Google.
Meanwhile, Trump has agreed to pause the implementation of 25% tariffs on Canada and Mexico for 30 days.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “UK stocks are set for a rocky start as trade tensions continue to dictate the market mood. China hit back with tariffs on US goods, including oil and gas, just as fresh US levies on Chinese imports kicked in. Meanwhile, Trump hit the brakes on tariffs for Mexico and Canada but kept Europe on edge with lingering threats.
“With markets on a tariff tightrope, volatility looks set to stick around – but for those willing to ride the waves, there may be chances to cash in on overreactions, especially if Trump’s tariff bark proves worse than his bite.”
In equity markets, drinks company Diageo slumped as it pulled its medium-term guidance ahead of incoming tariffs on Mexican and Canadian imports by the Trump administration, saying it cannot yet accurately predict how additional duties will affect its financial performance.
Diageo’s tequila portfolio, which given geographic origin requirements must be made in Mexico, and also its Canadian whisky brands would be mainly affected by the protectionist measures.
Vodafone was sharply lower after it reported another revenue decline in its key German market, denting a solid overall third-quarter performance across other regions.
The telecoms firm said German sales were down 6.4% in the period, compared with a 6.2% decline in the previous three months, primarily due to the impact of a new state media law. Despite the fall Vodafone reiterated full year guidance of €11bn in core earnings.
Crest Nicholson slid as the housebuilder said it swung to a pre-tax loss of £143.7m in the year to the end of October 2024 from a profit of £23.1m a year earlier, calling it a “very tough and disappointing year”.
In broker note action, Dunelm was boosted by an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets, but SSP was knocked lower by a downgrade to ‘sector perform’ from ‘outperform’ by the same outfit.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Marks And Spencer Group Plc | +2.45% | +8.20 | 343.40 |
| 2 |  |
Aib Group Plc | +2.06% | +9.50 | 470.00 |
| 3 |  |
Sainsbury (j) Plc | +1.98% | +5.00 | 258.00 |
| 4 |  |
Banco Santander S.a. | +1.25% | +5.00 | 405.50 |
| 5 |  |
St. James’s Place Plc | +0.96% | +10.00 | 1,048.00 |
| 6 |  |
International Consolidated Airlines Group S.a. | +0.91% | +3.10 | 343.70 |
| 7 |  |
Wise Plc | +0.82% | +9.00 | 1,113.00 |
| 8 |  |
Smiths Group Plc | +0.79% | +16.00 | 2,050.00 |
| 9 |  |
Barratt Redrow Plc | +0.77% | +3.50 | 456.60 |
| 10 |  |
Glencore Plc | +0.72% | +2.45 | 344.55 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Vodafone Group Plc | -5.46% | -3.82 | 66.20 |
| 2 |  |
Diageo Plc | -4.00% | -94.50 | 2,270.50 |
| 3 |  |
Flutter Entertainment Plc | -1.92% | -410.00 | 20,910.00 |
| 4 |  |
Bp Plc | -1.67% | -7.00 | 413.00 |
| 5 |  |
Bae Systems Plc | -1.58% | -19.50 | 1,211.50 |
| 6 |  |
Bt Group Plc | -1.53% | -2.20 | 141.35 |
| 7 |  |
Rentokil Initial Plc | -1.40% | -5.50 | 387.10 |
| 8 |  |
Reckitt Benckiser Group Plc | -1.40% | -74.00 | 5,230.00 |
| 9 |  |
Astrazeneca Plc | -1.17% | -132.00 | 11,144.00 |
| 10 |  |
Ck Infrastructure Holdings Limited | -0.92% | -5.20 | 557.80 |
US close: Stocks lower as Trump slaps tariffs on key trading partners
Major indices closed lower on Monday after Donald Trump slapped several key trading partners with tariffs, leading to fears that a full-blown trade war would disrupt global supply chains, reignite inflation and slow economic growth.
At the close, the Dow Jones Industrial Average was down 0.28% at 44,421.91, while the S&P 500 lost 0.76% to 5,994.57 and the Nasdaq Composite saw out the session 1.20% weaker at 19,391.96.
The Dow closed 122.75 points lower on Monday, extending losses recorded in what was a volatile week for stocks as concerns about a bubble in the US artificial intelligence industry hammered market sentiment.
News that Donald Trump slapped a 25% tariff on goods from Mexico and Canada and also placed a 10% levy on imports from China was in focus throughout the session.
Canada responded with retaliatory tariffs of its own, while China vowed to file a lawsuit with the World Trade Organization. Although Mexico initially declared it would explore levies on US imports, Trump later announced that he had agreed to a one-month delay in tariffs for America’s neighbours to both the north and south lifting stocks from session lows.
Trump also indicated over that the UK and the European Union were next up for a fresh round of tariffs, stating that both were “out of line”. While he noted that a deal could possibly be “worked out” with the UK, he stated that EU tariffs “will definitely happen”.
The yield on the benchmark 10-year Treasury note was trading slightly higher at roughly 4.564%, while West Texas Intermediate futures advanced 0.87% to $73.16 a barrel and the ICE US dollar index was 0.05% stronger at 108.42.
On the macro front, S&P Global’s manufacturing PMI was upwardly revised to 51.2 in January, ahead of both a preliminary estimate of 50.1 and December’s 49.4 reading.
The Institute for Supply Management’s January manufacturing PMI rose to 50.9 from a downwardly revised 49.2 reading for December, beating expectations of 49.8. Last month’s reading also marked the first expansion in the factory sector after 26 straight months of contraction. New orders increased at a faster pace, while a rebound was recorded for production and employment. On the other hand, supplier deliveries were marginally slower, inventories fell more and price pressures intensified.
On another note, construction spending rose by 0.5% month-on-month in December to $2.19trn, according to the Census Bureau, following November’s upwardly revised 0.2% uptick. On an annualised basis, construction spending grew by 4.3%.
In the corporate space, Alphabet, Amazon and Disney will all report earnings before the end of the week.
Tuesday newspaper round-up: AstraZeneca, Thames Water, Funding Circle
The UK’s science minister, Chris Bryant, has described AstraZeneca’s decision to scrap plans for a £450m expansion of its vaccine plant in Merseyside as “deeply disappointing”. The pharmaceutical company announced on Friday that it was axing the planned expansion of its factory in the Liverpool suburb of Speke, citing factors “including the timing and reduction of the final offer compared to the previous government’s proposal”. – Guardian
The UK’s science minister, Chris Bryant, has described AstraZeneca’s decision to scrap plans for a £450m expansion of its vaccine plant in Merseyside as “deeply disappointing”. The pharmaceutical company announced on Friday that it was axing the planned expansion of its factory in the Liverpool suburb of Speke, citing factors “including the timing and reduction of the final offer compared to the previous government’s proposal”. – Guardian
A group of investors has accused Thames Water of putting “a gun to the head” of London’s high court by threatening to go into temporary nationalisation if it does not receive approval for a rival £3bn debt offer. The court heard the first day of arguments deciding between two rival plans to lend emergency cash to Thames Water, Britain’s biggest water company. Thames provides water and sewerage services to nearly a quarter of the UK population in London and south-east England. – Guardian
Construction activity has slumped across Britain’s biggest regional cities, underscoring the depth of the challenge facing Angela Rayner as she seeks to trigger a building boom. Developers made a start on 47 new projects in cities outside London last year according to Deloitte’s regional crane survey, which monitors construction in the central areas of Leeds, Belfast, Manchester and Birmingham. – Telegraph
A US hedge fund tycoon has failed in his latest attempt to seize control of two UK investment funds after facing a backlash from shareholders. Investors in the two funds run by Baillie Gifford on Monday voted against a series of proposals put forward by Boaz Weinstein’s hedge fund, Saba Capital Management, which called for a complete overhaul of the two funds’ boards. – Telegraph
Claims that defects in Funding Circle’s documentation and processes have left a firm owned by the hedge fund Elliott Management unable to pursue small business owners over personal guarantees are to be heard by the High Court. Azzurro Associates, which is owned by one of the world’s largest hedge funds, is pursuing two directors of a business borrower in a closely watched case which will test claims that payment under the guarantees is not due to Azzurro despite its contentious acquisition of loans from Funding Circle. – The Times
