The FTSE 100 gained on Monday, shaking off any concern about the latest wave of tariffs from Trump 2.0, while BP helped support London’s leading index.
Trump tariffs were back in focus on Monday, with the President focusing on goods for which he’s long had a grievance. Trump has long voiced his concern about cheap steel imports and their impact on the US economy, so a 25% tariff on steel and aluminium didn’t come as a surprise to markets.
“Trump tariffs on steel and aluminium sold into the US is negative for markets on two levels,” explained Russ Mould, investment director at AJ Bell.
“First, it suggests the new US president has only just got started with America’s budding protectionist trade policy. Second, it extends the affected countries beyond Canada, China and Mexico to places like Germany, Brazil, Japan and South Korea.
“With the promise of further tariffs later this week, Trump’s actions threaten to cause considerable volatility on the markets over the coming days if there is a tit-for-tat response from affected countries.”
However, the threat of tariffs had little impact on equity markets on Monday with the FTSE 100 up over 0.5% at the time of writing.
“Markets are largely taking unfolding events in their stride. Stocks in China and Hong Kong were up overnight,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“Perhaps a mixture of trade restrictions not being as bad as they might have been and hope for further Chinese stimulus. Indices both sides of the Atlantic are still close to record highs, despite differing economic trajectories.”
BP was the FTSE 100’s top riser after Bloomberg reported that activist investor Elliot Investment Management had taken a significant stake in the oil major. BP shares surged over 6% on news the hedge fund would attempt to influence BP’s strategy with shares considerably undervalued compared to its peers.
“Tick tock, the window for Murray Auchincloss to convince the market he has a plan to revive BP’s fortunes just got shorter with reports that activist investor Elliott has joined the shareholder base,” Russ Mould said.
“BP has not just fallen behind the leading pack of US energy names but also the chasing pack which includes its closest peer Shell and other European names, both in terms of share price performance and valuation.”
BP was joined by other natural resource companies at the top of the FTSE 100 leaderboard in the hope that China would act to stimulate its economy and stave off any impact of Trump’s tariffs. This may prove to be wishful thinking, given recent measures by China have failed to sustain a rally in the miners.
Nonetheless, Fresnillo, Antofagasta and Endeavour Mining all rose more than 2%. Anglo American added 1%.
IAG was the top faller after Goldman Sachs cut its rating on the airline to ‘neutral’ from ‘buy’, which is understandable, considering IAG shares have more than doubled over the past year.