The FTSE 100 gained in early trade before falling back on Tuesday as investors geared up for a week of central bank action amid softening trade tensions and corporate earnings.
London’s leading index was largely flat as the recovery rally from Trump’s Liberation Day ground on with early gains.
Lows below 8,000 now seem a distant memory, with the FTSE 100 having rebounded around 1,000 points from its lowest post-tariff announcement level. Indeed, it’s just over a month since Donald Trump unleashed his tariffs on the world, and market analysts are talking about the FTSE 100 nearing all-time highs.
“UK markets seem well-rested after the long weekend and are back this morning with a spring in their step, with the FTSE 100 up in early trading,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“It’s been quite the ride as the UK’s blue-chip index pushes higher, keeping one eye on that all-time high from March. Investors look to have found their rhythm, having adjusted to life with tariff headlines around every corner. Now, the focus is shifting to what’s next – and with the Bank of England expected to cut rates this week, there’s growing hope that the UK economy might finally get the boost it’s been waiting for.”
Gains were capped by ongoing tariff rumblings from the White House as investors prepared for a busy week of central bank action, which is likely to see the Federal Reserve keep rates on hold and the Bank of England cut rates.
While the Federal Reserve is expected to keep rates on hold, investors will be wary about Powell’s comments about when they may move to cut rates after taking a hawkish tone in recent deliveries.
The defensive attributes that helped the Footsie shake off concerns around tariffs were on display again on Tuesday, with precious metals miners Endeavour Mining and Fresnillo leading the way higher as the gold price ticked up.
“Safer assets were back on the menu, with gold prices climbing to a one-week high as investors rushed to safer ground after President Trump threatened fresh tariffs,” Britzman explained.
“His latest targets include foreign-made movies and pharmaceuticals, adding to the uncertainty around global trade. All eyes are now on the Fed, with markets watching closely to see if it holds firm on rates despite pressure from the White House.
There was a noticeable element of risk aversion in the UK ahead of the Federal Reserve interest rate decision tomorrow as cyclical sectors, including banks and miners, slipped.
Glencore was down 0.9% and Antofagasta lost 1.3%. Banks was under pressure with Barclays dropping 1.3% and Standard Chartered gave up 2%.