The FTSE 100 again reversed early losses on Tuesday as investors assessed the latest geopolitical and macroeconomic developments.
London’s leading index was up 0.3% at the time of writing after falling in very early trade on Tuesday.
“The lower opening echoes performance in European markets, and a retreat in US and Asian stocks overnight, reflecting unease over looming US tariff policies and their potential ripple effects on global growth and inflation,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
The difficulty for traders at the moment is to gauge how much of what Donald Trump says he actually means and will deliver on and how much he is positioning for his self-proclaimed role as a deal maker.
Nonetheless, markets are proceeding cautiously, with a string of potentially economically harmful events on the horizon.
“Suggestions the Trump administration would toughen existing restrictions on exporting semiconductors to China and hints tariffs on Canada and Mexico, initially delayed, were still coming down the track hit sentiment,” explained AJ Bell investment director Russ Mould.
Despite the lower opening, strong corporate earnings and interest in the FTSE 100’s banks helped the FTSE 100 into positive territory as the session progressed.
The FTSE 100’s banks were the driving force, with heavyweight HSBC jumping 2% and Standard Chartered rising 1.8%. Lloyds shares also rose, taking the stock to the highest levels for five years.
Smith & Nephew was the best performer after the medical device company reported strong sales activity in the US, which helped offset slower trading in China.
“There were three cheers due for Smith and Nephew’s hip and knee replacement business over in the US, which was the main driver of growth, with overall sales and profit topping analysts’ estimates,” said Adam Vettese, market analyst at eToro.
“The firm offered up 5% growth despite facing challenges in its China business as well as FX headwinds. They are currently dealing with a significant demand fall-off in China resulting in their distributors sitting on unusually high levels of inventory, which are beginning to come down but are still way above what would be considered normal. These issues are expected to continue into Q1 2025 but Smith and Nephew will be keen to resolve them as soon as possible so the region does not continue to drag on performance.”
Miners had another soft trading session which dragged on the index, while Scottish Mortgage Trust fell to the bottom of the leaderboard amid a sell-off in US tech shares.