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FTSE skirts losses as investors shrug off Trump's tariffs

Investors shrug off US president Donald Trump's unveiling of $200 billion of tariffs on Chinese imports.

FTSE skirts losses as investors shrug off Trump's tariffs
 

Investors have shrugged off US president Donald Trump's latest tariffs against China, with the FTSE 100 edging into gains, buoyed by a small recovery in Asian markets overnight.

The UK blue-chip index rose 17 points, or 0.2%, to 7,319 as Trump unveiled his biggest round of tariffs yet, on $200 billion (£152 billion) worth of Chinese imports.

That dwarfs earlier two earlier rounds of tariffs, on $34 billion and $16 billion of Chinese goods.

But investors took heart from some apparent concessions. Unlike the previous two rounds, these levies will be set at 10% rather than 25%, although they will rise to the latter level if a deal cannot be agreed by January.

A number of technology items, safety products and chemicals have also been excluded including Apple's smart watches.

Michael Hewson, chief market analyst at CMC Markets UK, said investors' response was 'a classic case of "sell the rumour, buy the news"'.

'The deferred nature of the extra tariffs appears to have convinced some in the markets to indulge in some light buying on the basis that any ripple out effects from the latest tariffs are only likely to be felt further out in the revenue cycle,' he added.

But James Knightley, chief international economist at ING, underlined the magnitude of the latest round of tariffs.

'The US had already imposed tariffs on $50 billion of Chinese imports so this takes us up to $250 billion of goods that are taxed - just under half the value of all Chinese imports last year,' he said.

The US administration has meanwhile threatened to impose tariffs on an additional $267 billion of Chinese goods should Beijing retaliate to the latest round, which would mean all Chinese imports into the US would be subject to levies.

With China already announcing it had been ' left with no choice but to retaliate simulaneously', Knight said the stand-off represented 'a real ratcheting up of trade tensions that certainly heightens the risks for global and US growth.

The mild relief rally helped miners, which have been among the worst hit stocks by global trade fears, rise towards the top of the FTSE 100. Risers included:

  • Glencore (GLEN) +3% at 309.4p;
  • Fresnillo (FRES) +3% at 811.6p;
  • Antofagasta (ANTO) +2% at 792.8p;
  • BHP Billiton (BLT) +1.9% at £15.63;
  • Rio Tinto (RIO) +1.5% at £36.58.

Ocado (OCDO) meanwhile topped the index, up 4.6% at 954.4p as the online supermarket reported sales growth in line with guidance.

Analysts focused on the rapid development of the Erith customer fulfilment centre, opened during the third quarter and already processing 20,000 orders a week.

On the FTSE 250, Jardine Lloyd Thompson (JLT) soared 31% to £18.78 as US financial services group Marsh & McLennan (MMC.N) tabled a £4.3 billion bid for the insurance and reinsurance broker.

The news will provide a boost to the small number of fund managers with top positions in the stock.

Alan Dobbie holds 4.2% of his £58 million Rathbone Blue-Chip Income and Growth fund in the shares, Neil Brown and Peter Michaelis have a 3.5% position in their £423 million Liontrust UK Ethical fund, according to their latest factsheets.

Rachel Reutter and Michael Ulrich have a 2.4% position in their £600 million JOHCM UK Opportunities fund and Citywire AA-rated Hugh Yarrow and Ben Peters hold 2% of their £2.6 billion Evenlode Income fund in the shares.

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