The FTSE 100 jumped on Tuesday, with European equities on track to record their first positive session since Trump unleashed his tariff charts on the world last week.
However, Tuesday’s gains did little to make a dent in the losses sustained since Trump’s announcement, and the FTSE 100 is still around 9% lower than where it was pre-tariff announcement.
The gains follow signs in a softening in the White House’s stance on tariffs and, importantly, the willingness to negotiate. Early signs of the potential for deals yesterday caused wild swings in US stocks that created and then wiped out trillions of dollars of value within seconds.
Two reports in close proximity saw the S&P 500 rally around 250 points – around 5% of the total index and $2 trillion in market value – in a matter of minutes, only for it all to disappear again just as quickly.
Reports that Trump was considering a delay to tariffs and suggestions the EU was happy to look at zero-tariff options sparked a rally of around 300 points that lasted no more than 10 minutes before the index gave back most of the gains.
The White House labelled reports that Donald Trump was considering 90 tariff delays as ‘fake news’, squashing hopes that a deal could be struck between major economies and the US, erasing all of the short-term gains. Rarely in history has such a large amount of equity value been created and destroyed so quickly.
However, a trickle of media commentary and White House statements suggesting that the US administration was in dialogue with around 70 countries helped support US stocks throughout the session, and the S&P 500 very nearly closed in positive territory overnight.
There were also a number of positive signals coming from the US on the corporate front, including Broadcom announcing a $10bn share buyback. The company’s AI revenues have surged recently, and its announcement served as a gentle reminder of the underlying strength in some of the world’s largest companies.
The step back from the abyss was taken positively by European stocks, which opened higher and continued to rally as the session progressed.
“After multiple punishing sessions, stock markets appear to have started their road to recovery,” said Russ Mould, investment director at AJ Bell.
“Asia led the way, including a 6% advance from the Nikkei after Japan effectively jumped to the front of the queue for tariff negotiations with Donald Trump. Reports that Japan would get priority status for talks fired up markets in hope of a resolution.
“Trump has the same end-goal for the countries on which he has imposed new tariffs. He wants to make it easier for US companies to do business overseas, for the partnering countries to buy more US goods, and for the US to get its hands on strategically important assets such as natural resources.”
Those stocks most heavily hit by Trump’s tariffs were among the FTSE 100’s top risers on Tuesday. Rolls Royce added 5% while Babcock International gained 4.5%.
Miners helped the index higher with Glencore rising 3%.
There were also more gains for Marks & Spencer and Unite Group – two of only five FTSE 100 shares that are higher than were they were just before Trump’s announcement.