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.

The Character Group plc has announced the withdrawal of its market guidance for the financial year ending 31 August 2025, citing significant business uncertainty stemming from escalating trade tensions between the United States and China.

In a trading update released today, the UK-based toy manufacturer revealed that recent unilateral tariff impositions by the US on Chinese imports, followed by retaliatory measures, have “greatly impacted global economic stability in a very short space of time.”

The Character Group is one of a growing number of UK-listed companies that have officially acknowledged the impact of tariffs on their business. One would expect more to do so over the coming days.

The company, which attributed approximately 20% of its group turnover to US sales in the previous financial year, stated that its ability to forecast American sales and assess financial implications has been “considerably obscured” by recent events.

Despite withdrawing guidance, Character Group’s board expressed confidence that the company will remain profitable for the current financial year. The firm highlighted its “strong balance sheet with healthy cash balances” that will enable it to “ride out this storm.”

The company’s half-year results, due to be published in mid-May, are expected to align with market expectations and match the first-half performance of the prior year, when the group reported a profit before tax and highlighted items of £2.1 million.

Character Group indicated it would provide shareholders with further updates as the global economic landscape becomes clearer.

Sainsbury’s is set to release its full-year results on Thursday with shares trading near the lowest levels since 2023 as a price war rages among the UK’s leading supermarkets.

Investors will watch keenly for any changes in the supermarket’s market shares and all-important sales and margin figures.

Despite fierce competition from traditional rivals and discounters Aldi and Lidl, Sainsbury’s, the UK’s second-largest supermarket chain has maintained its market share above 15%, behind only Tesco, according to the latest Kantar data.

Sainsbury’s strategy to maintain this market share and fight off the discounters will be just as important as last year’s trading results when Thursday’s report is released.

Tesco shares fell sharply yesterday after announcing that profits will fall this year due to the price war, and Sainsbury’s shareholders will be on the edge of their seats, worrying if they are to suffer the same fate.

Sainsbury’s Earnings Expectations

Analysts anticipate total group operating profit of £1.057 billion for the year ended March 2025, compared against management’s guidance of £1.01-£1.06 billion from retail operations plus £15-25 million from financial services.

Headline adjusted pre-tax profit is forecast at £754 million, representing an increase from £701 million in the previous year.

Looking ahead, modest growth to £1.085 billion in operating profit is projected for fiscal 2026, with pre-tax profit expected to reach £811 million.

Fourth quarter’s like-for-like sales growth figures will be key. Sainsbury’s grocery operations have been the driving force behind the group’s overall performance, and any slowdown here will not be taken well. Investors will hope to see improvement in general merchandise and Argos after a soft year of sales performance.

Free cash flow is anticipated to meet or exceed the £500 million target previously communicated. Sainsbury’s ongoing £200 million share buyback programme continues alongside the planned £250 million return to shareholders from the sales of its banking arm to NatWest and the Argos store card portfolio.

The dividend is forecast to increase to 13.4p per share from 13.1p in the previous year, with analysts projecting a further rise to 14.2p for fiscal 2026.

Tekcapital portfolio company Innovative Eyewear has secured European Union EN 166:2002 certification for its Lucyd Armor™ smart safety glasses, opening the doors for the company’s expansion into European markets.

The certification confirms the eyewear meets rigorous EU safety standards for workplace use.

Since its launch in Q4 2024, the Lucyd Armor range has rapidly become the company’s fastest-selling product. This EU certification adds to existing approvals in the US, Canada and UK.

The European safety eyewear market was valued at £1.3 billion in 2024 and is projected to reach £1.6 billion by 2030.

Lucyd Armor is the first smart safety glass to incorporate photochromic lenses alongside a comprehensive suite of technological features, including high-fidelity audio, built-in Walkie function for team communication, and are adaptable for prescription lenses.

The company said it sees the Armor range as key to its 2025 growth plans as they await the launch of Reebok “Powered by Lucyd” collection.

Touching on tariffs, Innovative Eyewear noted that ‘goods shipped from our manufacturing facilities in China directly to distributors, retailers and retail customers outside the US are not subject to US tariffs’ and that they see and opportunity to establish a stronger international presence in markets where smart eyewear is a newer concept with fewer established providers.

Plans are underway to introduce additional variants of Lucyd Armor later this year, including dedicated sunglass and full-range prescription versions to complement the original photochromic lens model.

“Lucyd Armor™ has quickly grown to become our bestselling product, thanks to the unique mix of functionality, style and affordability it brings to the safety market,” said Harrison Gross, CEO & Co-Founder of Innovative Eyewear.

“Unlike many of our other products which may be perceived as a “nice-to-have” upgrade, Lucyd Armor is unique among smart eyewear in that we believe it is a new “need-to-have” tool for working professionals worldwide, who need eye protection as well as handsfree comms and AI access. We look forward to working with hardware distributors and retailers to bring this new technology to hardworking folks across America, Europe
 and beyond.”

The FTSE 100 soared on Thursday after Donald Trump announced a 90-day tariff pause for all countries that didn’t retaliate against the US import tariffs announced last week.

London’s leading index surged by over 6% in the early minutes of trading, before falling back.

“The White House has finally seen some sense and given a whole host of countries a 90 day pause, with reciprocal tariffs immediately lowered to 10%, while isolating China in a tense battle,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“Was this Trump caving to pressure or his master plan all along? Who knows, but markets ripped on the news with the S&P 500 posting its 9^th best day in history.”

The S&P 500 closed 9.5% higher – its best one-day performance since the financial crisis.

Analysts have pointed out that while yesterday’s US equity market rally was more than welcome, the catalyst behind it further underlines the disconnect between what Donald Trump says and what he does. This will be a cause for concern long after markets close this evening.

“It seems that, contrary to many public protestations that he doesn’t pay attention to equity markets, he does. Despite multiple assertions that ‘reciprocal’ tariffs weren’t a negotiating measure, they were,” explained Michael Brown Senior Research Strategist at Pepperstone.

Although the equity markets would have played some part in Trump’s U-turn, it was the bond markets that probably forced his hand. Yesterday, risks of funding issues were starting to creep in as bond yields soared and the financial system showed signs of strain.

Nonetheless, anyone buying stocks earlier this week has been handsomely rewarded and will care little for Trump’s motivations to announce a 90-day pause on tariffs.

Those buying Barclays near 220p this week will be delighted to see the bank rebound 12% on Thursday, shooting to the top of the FTSE 100 leaderboard.

Melrose, St James’s Place and Intermedite Capital Group were not too far behind Barclays with gains in excess of 10%.

More than 40 FTSE 100 constituents were more than 5% higher on the day at the time of writing.

Tesco, Sainsbury’s and Marks & Spencer were the top fallers and the only stocks in negative territory.

Their declines can, in part, be attributed to the safe-haven status they earned during the recent sell-off and investors selling them down to focus on bargains elsewhere on Thursday. However, the leading reason for the sharp declines is concern about a profit warning Tesco issued on Thursday, pointing to increased competition that will impact the entire sector.

“Despite holding the largest share of the grocery market for over a decade, Tesco has issued guidance for lower profit next year than those just reported,” said Adam Vettese, market analyst at investment platform eToro.

“This reflects how seriously they are taking the threat of a supermarket price war following Asda’s move to sacrifice profits for a discounting campaign.”

Tesco shares were down 7% dragging Sainsbury’s 5% lower.

Tesco shares fell on Thursday after the supermarket said profits are likely to fall in the year ahead, despite enjoying strong growth over the past year.

The impact of increased competition will erode Tesco’s profits, which are now expected to decline as much as 10% in the current financial year.

Tesco shares were down 4% at the time of writing, which wouldn’t be considered that bad if the FTSE 100 wasn’t up 6%.

“Despite holding the largest share of the grocery market for over a decade, Tesco has issued guidance for lower profit next year than those just reported,” said Adam Vettese, market analyst at eToro.

“This reflects how seriously they are taking the threat of a supermarket price war following Asda’s move to sacrifice profits for a discounting campaign.”

Tesco released preliminary results for the financial year 2024/25 on Thursday, revealing adjusted operating profit surged 10.9% at constant rates to £3,128 million.

The retail giant’s robust performance was driven by volume growth and successful cost-saving initiatives across its markets.

The supermarket chain reported like-for-like sales growth of 3.1%. with the UK market driving 4.0%. Republic of Ireland operations delivered an even more impressive 4.6% growth, while Central Europe contributed 2.2% to the overall performance. Booker, however, experienced a slight decline of 1.8%, reflecting the ongoing downturn in the tobacco market and reduced volumes in Best Food Logistics, despite growth in its core retail and catering segments.

“Our investments over the last four years have resulted in the most competitive position and highest market share we have had for many years,” Tesco said in its report.

The company’s UK market share increased by 67 basis points year-on-year to 28.3%, marking 21 consecutive four-week periods of share gains and reaching its highest level since 2016.

Tesco’s core UK and Republic of Ireland operations saw adjusted operating profit climb 10.3% to £3,016 million, bolstered by strong volume performance and savings from the company’s “Save to Invest” programme.

Although Central Europe is still a small part of Tesco’s business, its proving to be a great source of growth with adjusted operating profit surging 28.9% to £112 million.

Tesco’s focus on its product range and customer experience is evident in the numbers. The company launched over 1,000 new products and improved more than 600 existing ones during the year, and sales of its premium ‘Finest’ range jumped 15% to £2.5 billion.

However, for all the progress it made in 2024/25, investors only really care about the future, and that doesn’t look so good.

Tesco pointed to increased competition and said it expects adjusted operating profit of between £2.7 billion and £3.0 billion this, down from the £3,128 million achieved in 2024/25.

This is a big disappointment, and Tesco shares sank as a result.