The FTSE 100 slipped ok Wednesday as investors erred on the side of caution as trade concerns crept back in ahead of interest rate decisions from the Fed and Bank of England.
After closing higher for 16 consecutive sessions, London’s leading index fell 0.15% in early trade on Wednesday.
“Concerns about how Trump’s tariff wars will play out are still causing jitters, even though the door is open to a deal with China, with talks scheduled for this weekend,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The FTSE 100 is lower in early trade, after its record run of success, having netted higher closes for 16 sessions in a row. There’s a pause for breath for the Footsie ahead of key interest rate decisions from the Fed and the Bank of England, as investors await the take from central bankers about the current risks to the global economy.”
Despite the clear risks to the global economy, the Federal Reserve isn’t expected to cut interest rates this evening amid frosty relations between Donald Trump and Jerome Powell, the head of the Federal Reserve. Trump is pressuring Powell to cut interest rates while Powell is doing his best to remain politically independent and pointing to the risk of inflation if rates are cut too quickly.
Meanwhile, the Bank of England looks set to cut interest rates to 4.25% tomorrow.
China helped provide some support for the FTSE 100 through fresh stimulus measures that sent Glencore, Prudential and Rio Tinto higher.
However, it was the pharma giants AstraZeneca and GSK that dictated trade on an index level on Wednesday as the pair suffered from the latest comments from the US suggestion the introduction of tariffs on pharmaceuticals in the near future.
GSK was the FTSE 100’s top faller, losing 3%, while AstraZeneca gave up 1%.
BAE Systems was flat after saying it had a ‘strong start’ to the year and was sticking with previously issued guidance.
“BAE Systems is a rare beast on the UK stock market in that it is one of the few companies not to be derailed by tariff and economic turmoil,” said AJ Bell investment director Russ Mould.
“Governments in many parts of the world have pledged to increase defence spending, thereby creating a richer backdrop for BAE to bid for contracts. Most of the equipment delivered to US customers is made domestically with parts mostly sourced from American suppliers, so tariffs aren’t applicable in these cases.
“Trading is ticking along as expected and there is no change to earnings guidance. It intends to hire more people, including the training of many individuals to create tomorrow’s skilled workforce.”
BAE Systems is up 53% so far this year and is one of the best-performing FTSE 100 companies in 2025. Today’s update gave no reason for investors to book these gains as reduce exposure to the stock.