The FTSE 100 was the only major European equity index to rise on Monday amid a heavy sell-off following Trump’s targeting of the EU with 30% tariffs.
London’s index was 0.2% higher at the time of writing, while the German DAX slid 0.8% and the French CAC lost 0.6%.
Although most European equity indices were trading negatively on Monday, the losses were minor compared to the fallout after Trump’s initial tariff announcements. Many European equity indices are also trading very close to record highs and were due a bout of profit taking.
“A fresh tariff war of words erupted over the weekend and it’s blown a cloud of pessimism over European markets but London’s FTSE 100 remains resilient,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Investors are lurching from hopes that Trump’s threats are just a big negotiating tactic, to fears that his impatience will turn more vengeful and big hikes will come into force in August. He has vowed to slap 30% tariffs on the EU and it’s sending a wave of apprehension through the DAX and the CAC 40.”
Streeter continued to explain that volatility could pick up if there is any weight to reports of a coalition of tariff-hit economies to hit back at the US.
“There is speculation that a coalition of defiance could be forming, with nations facing the most onerous tariffs threats, ganging up against the US, which could intensify the trade turmoil.”
London’s weighting towards defensive sectors and miners helped the index outperform on Monday. The UK’s seemingly ‘safe’ trade deal with the US will also play a part in investor thinking.
“Unlike their counterparts across the Channel, British companies should be able to operate with greater certainty around trade, and exports may be diverted through the UK. This might act as a push for foreign companies to invest in manufacturing and logistics facilities in the UK,” said AJ Bell investment analyst Dan Coatsworth.
Most FTSE 100 shares were down at the time of writing, with 60 of the 100 constituents trading in the red at the time of writing.
However, the FTSE 100’s mining sector came to the rescue on Monday and helped offset losses elsewhere in the index. Precious metals miner Fresnillo rose nearly 3% and was the top riser. Antofagasta, Glencore, and Rio Tinto were also higher.
A 2% gain for AstraZeneca added a significant number of points to the index and played a part in London’s rally. AstraZeneca is London’s largest company by market cap.
WPP was again among the losers as investors continued to dump the stock after a profit warning last week.