The FTSE 100 took a step back in early trade on Thursday as retail stocks weighed on the index and investors further assessed what Donald Trump could mean for stocks.
London’s flagship index was down six points at 8,538 on Thursday despite US markets hitting record highs overnight.
Markets globally are breathing a sigh of relief as it becomes increasingly clear Donald Trump’s campaign tactics and initial America First policies were designed to revive his popularity with his core base and may not necessarily result in actions that could send shock waves through the global economy.
Much of the action he has taken so far avoids meaningful economic consequences, and investors will hope campaign rhetoric around tariffs proves to be just that and his newly appointed advisors provide adequate counsel on the potential damage they may cause.
That said, the new President is famously unpredictable, which is reflected in the marginal retreat for the FTSE 100 on Thursday.
“Investors are still weighing Trump’s tariff talk, though history suggests his bark often echoes louder than his bite,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“Across Europe, markets have hit the pause button on their recent rally, with hopes pinned on further ECB rate cuts to keep the party going. Markets are getting wise to President Trump’s negotiation tactics, with investors gradually shrugging off his strong tariff rhetoric as a calculated bargaining ploy.
“This measured response helped the S&P 500 hit an all-time intraday high, though it failed to close at a new peak, fuelled by early earnings showing 6.4% profit growth and an 18.5% rise in revenue year-on-year. Tech stocks stole the spotlight, with standout performances in Semiconductors, Software, and the Mag 7 driving the Nasdaq higher, even as most sectors closed in the red.”
Corporate updates didn’t help the FTSE 100’s cause, with a soft update from AB Foods dragging the sector down.
AB Foods shares fell 2% after announcing slowing Primark sales amid a ‘challenging’ retail environment. The negativity seeped into the share prices of other retailers, including JD Sports, Marks & Spencer and Tesco, all of which fell on the day. JD Sports dropped 3% as it contends with problems similar to Primark’s.
Entain, dropping 4%, was the top faller after reports of a probe into its auditor. Intermediate Capital Group continued yesterday’s rally with a 1.6% rise.