After a storming session yesterday that took the FTSE 100 to within touching distance of the 9,000 milestone, Donald Trump’s latest trade threats and a dismal UK GDP reading gave investors a reason to unwind positions going into the weekend.
The volley of new considerations for investors curtailed demand for FTSE 100 shares and sent the pound down sharply against the dollar.
London’s leading index was trading down 0.3% at the time of writing, following news that Trump planned to slap a 35% tariff on Canada and UK GDP shrank 0.1% in May.
Donald Trump really put the TACO trade to the test overnight by saying on a phone call with NBC News that he plans to impose blanket tariffs of 15%-20% across most countries – considerably higher than the 10% he’s previously touted.
“Amid higher trade tensions, the latest growth snapshot for the UK may act as a bit of a drag on confidence. The economy contracted in May by 0.1%, with a drop in production the main culprit for the contraction,” explained Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Streeter added that although there was a raft of bad news for investors to digest on Friday, the FTSE 100’s losses were relatively contained, with the index well-positioned for any trade disappointment.
“There remain hopes that despite the trade bluster from Trump, the tariffs won’t weigh on the global economy as much as had been feared, especially as new trading relationships are being forged,” Streeter said. “The defensive nature of the FTSE 100 is also well-positioned for any rotation out of the US, as investors look to diversify and insulate their portfolios against Trump induced turmoil and potential volatility among the tech mega-caps.”
Most FTSE 100 shares were down at the time of writing, with 67 of the 100 constituents trading in the red.
BP was the FTSE 100’s top gainer after saying ‘upstream production in the second quarter is now expected to be higher compared to the prior quarter’. This helped offset disappointment about oil prices falling during the period.
The news took BP shares back above 400p for the first time since Trump’s tariff announcement in April.
“A big slump in the oil price following Trump’s Liberation Day tariff plan has done no favours to BP. It has flagged up to $1.5 billion of potential asset impairments, despite ramping up production in the second quarter, explained Dan Coatsworth, investment analyst at AJ Bell.
“The market doesn’t seem too fussed, instead focusing on good news from its oil trading business and higher refining margins.
“BP is in a new era of focusing more on oil and gas and less on renewables, so it needs to prove to the market that the business is doing the best it can.”
WPP was the top faller as the media giant resumed its downward trajectory, taking shares to the lowest levels since the financial crisis.