The FTSE 100 was broadly flat on Wednesday as traders gathered their thoughts after the US president launched a trade war against some of the USA’s closest trading partners.
Despite Donald Trump agreeing to a 30-day delay in tariffs on Mexican and Canadian goods, financial markets remain vulnerable to any further developments in the tariffs spat, with traders wary of his next move.
“A sense of calm returned to markets after the tariff-related tantrum. Wall Street recorded decent gains last night while Europe held firm this morning,” said Russ Mould, investment director at AJ Bell.
“The elephant in the room remains China as Donald Trump has not backed down from a trade spat. Retaliation is underway and that’s led to the cancellation of a meeting between the two country leaders.
“The decision by the US Postal Service to stop accepting parcels from mainland China and Hong Kong shows the severity of the matter. That’s disastrous for big Chinese e-commerce platforms that send goods to the US including Shein and PDD-owned Temu.”
Although the volatility has subsided, the unpredictability of Trump’s economic policy will have markets on the edge of their seats for the foreseeable future. This will likely lead to markets trading headline to headline until significant monetary policy developments take centre stage again.
The FTSE 100 was down 0.1% at the time of writing, with positive corporate updates helping to provide some support for the index.
GSK shares shot to the top of the FTSE 100 leaderboard after announcing a sharp increase in oncology drug sales that helped group sales rise 7% on a constant exchange rate basis.
Investors will be delighted with the 6% jump in GSK shares on Wednesday after a fairly torrid 2024 for the stock.
“GSK’s latest earnings update brings some welcome relief for investors. After falling 20% since May, GlaxoSmithKline’s shares have struggled, weighed down by legal and political challenges that have lingered like a stubborn cold,” said Mark Crouch, market analyst at investment platform eToro.
“However, following a better-than-expected fourth-quarter, Glaxo now projects sales to grow by up to 5% in 2025. Strength in its HIV and oncology portfolios has been a key driver, offsetting weaknesses in vaccine sales as GSK generated £3 billion in free cash flow.”
Frenillo jumped 3% to 741p after JP Morgan hiked its price target to 1,000p.
BP and Shell were slightly bid despite oil prices falling again amid Trump’s trade war, which threatened to disrupt both the demand and supply sides of the crude market.
“Crude oil futures remained under pressure after a turbulent session, as traders reacted to rising U.S. stockpiles and escalating Sino-U.S. trade tensions,” said Joseph Dahrieh, Managing Principal at Tickmill.
“China’s tariffs add uncertainty and their broader impact on the global supply and demand of energy products could fuel some risks. Prices initially dipped after China imposed tariffs on U.S. energy imports but later rebounded when President Trump reaffirmed his strategy to apply maximum pressure on Iran, aiming to curb its crude exports. With sanctions potentially removing up to 1.5 million barrels per day from global supply, the market found some support.”
SSE shares were fairly flat after announcing a 26% in renewables output so far in their financial year and confirmed adjusted earnings per share would be similar to the last two years.