The FTSE 100 whipsawed on Friday after China responded to yesterday’s tariff hike by the US by increasing its tariff on US goods to 125%.
The news that UK GDP growth smashed expectations in January provided a welcome change to tariff headlines, and helped fire up the FTSE 100’s UK-centric sector as trade got underway on Friday.
However, the latest move by China in the tit-for-tat trade war between China and the US weighed on the index, and initial gains turned to losses, before rebounding once more.
The FTSE 100 lost and then regained 100 points from peak to trough on Friday morning.
That said, markets are settling back into calmer trade on Friday after a rip-roaring rally on Wednesday was met by a sharp sell-off in the US yesterday. The 100-point swings on Friday will be a welcome relief to the unrelenting selling witnessed at the beginning of the week.
The S&P 500 closed down 3.5% after being down by over 6% at one point during the session.
“Yesterday was, relatively speaking, a considerably calmer day than we’ve become used to of late, at least in terms of news flow,” said Michael Brown Senior Research Strategist at Pepperstone.
“We did, though, see most of Wednesday’s euphoria fade away, with stocks on Wall Street slumping once again, however given the double-digit midweek gains that benchmark indices printed, it’s not overly surprising to see the market take a pause for breath. If you were long, you’ve made a huge amount, and will probably have called it a week already. If you were short, and saw your book incinerated in an instant, you’ll logically be taking a break for a bit.”
Now that we know Trump’s tariff charts were nothing more than an elaborate negotiating tactic, investors are attempting to plot the path forward based on 10% base tariffs and higher tariffs on certain goods. These tariffs will make life difficult for businesses and investors alike, but they are infinitely better than the rates announced by Trump last week.
The big concern for traders is the escalating trade spat between the US and China, which is seeing both sides hike tariffs against each other on a near-daily basis. The US increased tariffs on Chinese imports to 145% yesterday, and China hit back today by increasing tariffs to 145%.
The implications were felt in the FTSE 100 on Friday, with the index dropping around 80 points from the highs after news of tariffs broke.
An early rally in diversified and base metal miners was sold into with copper miner Antofagasta’s 3% rally turning into a 1% loss. Glencore was managing to hang on to gains.
Continued uncertainty around US Treasuries, and US assets in general, drove gold higher again on Friday and sent precous metals miners Fresnillo and Endeavour Mining to the top of the FTSE 100 leaderboard.
BP was the among the FTSE 100’s biggest deliners after releasing a trading update preview that failed to inspire.
“While a preview of quarterly figures ordinarily wouldn’t be assigned too much significance by serious investors, such is the pressure BP and its management are under that they have little margin for error,” said Russ Mould, investment director at AJ Bell.
“The teaser ahead of next month’s full quarterly results also presses on one of the market’s big sore points with the company – its onerous debt pile. While BP has pegged the increase in leverage on seasonal issues and expects to see this unwind in future quarters, there will still be nagging concerns about the uptick.”
BP shares were down 1.5% at the time of writing and are near the lowest levels since 2022.