The FTSE 100 dipped in early trade on Tuesday with traders choosing not to push the index above the 8,800 level amid concerns around China’s economy, global growth and the ongoing trade tensions.
London’s leading index was up 0.1% at the time of writing, having recovered early losses.
“European equity markets struggled to find direction early on Tuesday, with investors still showing signs of nervousness around tariffs and the economic outlook,” said Russ Mould, investment director at AJ Bell.
The FTSE 100 succumbed to selling across the natural resources sectors with the US/China spat rumbling on and poor Chinese economic data weighing on markets.
Names such as Rio Tinto, Anglo American, and Glencore were among those that were most heavily hit on Tuesday.
China’s manufacturing sector is showing signs of slowing, with PMIs dropping as a result of US tariffs. This isn’t good news for metals demand dynamics.
We’re starting to see the first signs of poor economic data resulting from Trump’s tariffs, and slowing economies due to US trade policy will likely be the next big test for equities after a rip-roaring rally from recent lows.
“The OECD has downgraded its forecast for global economic growth as the effects of the trade war start to be felt. It’s only a small revision – from 3.1% to 2.9% for 2025 – but it’s still enough to cause investors some digestion as they consume their morning news. The downgrade weighed on the mining sector as the market fears it could mean reduced demand for commodities, and therefore a potential knock to the price of metals and minerals,” Russ Mould explained.
“The 90-day pause on tariffs has just over a month before expiration, meaning the pressure is on countries to do deals with the Trump administration. Reports suggest that Trump wants best offers on trade negotiations by Wednesday, perhaps to avoid any last-minute rush or stalemate situations.”
Trump’s actions have aptly led to the coining of the term ‘TACO’ ( Trump Always Chickens Out) among traders for his hesitancy to follow through on tariffs, but it’s the uncertainty for businesses around potential tariffs that is leading to economic disruption.
Although the index turned positive, there was a risk-off tone to trade with the FTSE 100 being supported by more defensive safe haven names such as Centrica, BAE Systems, and Fresnillo.
Babcock was still feeling the benefits of the government decision to upgrade its nuclear submarine fleet. Shares rose 2%.