The FTSE 100 stormed higher on Monday after Donald Trump signalled a softening in his approach to the trade spat with China and other partners by announcing tariff exemptions on smartphones and other electronics.
London’s leading index surged 1.8% higher, driven by strong demand for natural resource shares and other companies with strong trade relations with China.
‘Dream’ news, as Wedbush boss Dan Ives put it, that the US would exclude smartphones and other electronics from tariffs – including goods from China – sparked a wave of optimism late on Friday.
There was an opportunity for Trump’s administration to calm the market’s nerves over the weekend by clearly communicating the path forward.
However, the White House’s messaging proved to be just as chaotic as its trade policy, and what could have been blowout news for stocks ended up being just a mild rally.
While those long equities, especially those long Nvidia and Apple, would have been delighted with reports of tariff exemption for smartphones and semiconductors, Trump’s advisors muddied the water with suggestions that the exemption could be temporary.
“Just when it seemed the tariff chaos couldn’t get any worse, tech investors have spent the weekend scrambling to make sense of a whirlwind of confusing – and at times contradictory – messages coming out of the White House,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“Despite the drama, European markets have taken an easing stance on US tech components as a positive in a broad-based rally this morning, with the FTSE 100 up 1.5% in early trading.”
US equity futures opened higher overnight and Asia had a strong session, helping the FTSE 100 to firmer ground in early trade on Monday.
London’s China-exposed miners soared with Glencore and Antofagasta rising over 2%. Oil majors BP and Shell added a substantial number of points to the index.
JD Sports rose again with the step down in trade tariffs potentially easing the impact on the sports wear market.
Melrose Industries – one of the most heavily hit by tariffs – was the FTSE 100’s top riser as bargain hunters picked up the aerospace specialist.
Underscoring the risk-on nature to the FTSE 100’s trade on Monday, the only three shares in the red at the time of writing were Severn Trent, United Utilities and Fresnillo.