The FTSE 100 was marginally lower on Monday as the UK/US trade deal came into force and investors readied themselves for developments in other key trade negotiations.
London’s leading index had started the week higher, but gains turned to minor losses as Monday’s session progressed. The FTSE 100 was down 0.1% at the time of writing.
Canada is thrashing out a deal with the US, making concessions on tech taxes, while Trump has said he’d like the EU to boost spending on US defence products.
Markets are likely to be dictated by trade negotiations in the coming sessions, and there was a very minor sense of nervousness in the UK markets, while US equity markets looked set to break record highs.
“There is a lot going on to influence markets before the summer lull and investors’ animal spirits continue to fuel the equities space,” says Dan Coatsworth, investment analyst at AJ Bell.
“Investors seem confident trade deals will be struck, geopolitical tensions ease, and a major economic slump is avoided. The big unknown is whether investors are correct or are simply being too complacent.
“Futures prices imply another robust session for Wall Street when it opens later today, with the S&P 500 indicated to open 0.4% ahead.
“The FTSE 100 was flat in early trading. Investors were tempted back to previously strong areas of the market such as defence and utilities, while pharmaceuticals were out of favour.”
Engineering firms, especially those with a weighting towards defence, are benefiting from a double whammy of optimism around trade and higher defence spending.
Rolls Royce was among the gainers as defence-related stocks continue to march higher after NATO’s pledge to boost defence spending. Rolls Royce shares were 2% higher at the time of writing.
Babcock and BAE Systems were also higher on the session.
UK-centric sectors such as retailers and housebuilders were weaker on the session. Marks and Spencer lost 2%, while Persimmon dropped 1.8%.
Intermediate Capital Group was the FTSE 100 top faller, losing 3%.