The FTSE 100 was trading broadly flat on Tuesday as investors digested the first executive orders by Donald Trump and attempted to gauge the course of action for the first 100 days of his presidency.
London’s leading index had started the day in positive territory and flirted with all-time intraday highs before the rally faded. The FTSE 100 was trading higher by just 2 points at the time of writing.
“Donald Trump is the master of unpredictability. Just as markets think they’ve sussed his next move, he either does something different or nothing at all,” said Russ Mould, investment director at AJ Bell.
“It only took a few hours into the new presidential term for this situation to arise, hence markets have been up and down like a yo-yo as investors try to separate speculation from fact.
“The big surprise was a lack of immediate action on trade tariffs as part of Trump’s initial list of executive orders. For someone who has talked repeatedly about wanting American companies to buy American goods and to deter foreign countries from profiting from the US, it was a surprise to see tariffs take a back seat as Trump put his new powers to use.”
The challenge for investors in the early days of Trump 2.0 is working out the extent to which he will deliver on his campaign rhetoric. The implementation of tariffs will have a deep impact on global trade, and there is an argument that markets have already priced tariffs into some markets. This could create an opportunity should Trump hold off on implementing the most damaging measures.
This uncertainty was reflected in UK markets, with roughly half of the FTSE 100 trading positive. Miners were among the losers, offsetting bank gains and some consumer-facing stocks.
Lloyds was the top riser after positive developments in the car finance litigation case investors fear could lead to substantial customer redress.
“The UK government’s backing in the motor finance case is a clear positive for Lloyds, the bank most exposed to the issue, with shares popping 5% as a result,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“By urging the Supreme Court to adopt a fair and measured approach, the Treasury is helping to ease fears of hefty penalties, potentially softening the financial blow for lenders. While Barclays has less exposure and NatWest none, the government’s bank-friendly stance should help lift confidence across the sector.”
BP and Shell were weaker as oil prices fell on reports Donald Trump intends to weaponize the oil price to attack Russia’s economy should they not conform to his demands to end the war in Ukraine.