FTSE 100 takes breather ahead of tariff deadlines

Independent

4 days ago

The FTSE 100 ended a six-day winning streak to close a strong week on the back foot, ahead of pending US trade talk deadlines.
The FTSE 100 index closed down 18.06 points, 0.2%, at 9,120.31.
The FTSE 250 closed 37.43 points lower, 0.2%, at 22,117.98, and the AIM All-Share closed down 0.23 of a point at 776.64.
For the week, the FTSE 100 rose 1.4%, hitting a new all-time high of 9,158.21. The FTSE 250 rose 1.0% and the AIM All-Share climbed 0.4%.
Equities have enjoyed a strong run this week on expectations that governments will reach agreements with the US to avoid President Donald Trump's threatened tariffs before next Friday's deadline.
Sentiment was lifted earlier in the week by the announcement of a Japan-US deal, as well as signals that the EU could be nearing its own agreement with Washington.
That 'momentum has not been kept up, and European stocks are weaker at the end of the week,' said Kathleen Brooks, research director at trading group XTB.
With no confirmation of a US-EU deal, sentiment towards European assets 'could be fragile as we lead up to that August 1 tariff deadline,' Ms Brooks added.
On Friday, Mr Trump estimated there was a 50% chance of Washington being able to strike a deal with the EU to reduce import tariffs.
'I would say that we have a 50/50 chance, maybe less than that, but a 50/50 chance of making a deal with the EU,' Mr Trump told reporters while leaving the White House for a trip to Scotland.
Mr Trump said his negotiators were working 'diligently' with EU officials.
In European equities on Friday, the CAC 40 in Paris rose 0.4%, while the DAX 40 in Frankfurt fell 0.3%.
Adding to the more cautious mood is the pending resumption of trade talks between the US and China at the start of next week, with investors looking for an extension to the August 12 deadline.
The confirmation of a meeting, following talks in Geneva and then London earlier this year, comes ahead of the deadline when a pause on tariffs between China and the US is scheduled to expire.
ING noted tariffs were drastically cut in a 90-day ceasefire agreement that was effective in May. This is set to expire on August 12.
'One big question for markets is whether the tariff ceasefire is extended. We expect that an agreement will be attainable, but, in the interim, markets will watch closely to see if there are adjustments to current tariff rates in either direction,' ING said.
Retailers were mixed as figures from the Office for National Statistics showed UK retail sales improved in June following record-setting warm weather, but fell short of expectations.
Total retail sales volumes rose 0.9% in June, compared to a fall of 2.8% in May, the latter downwardly revised from a decline of 2.7%. Sales fell short of an FXStreet-cited consensus for a 1.2% rise, however.
Next edged up 0.7%, but sports retailer JD Sports Fashion fell 0.9% while Marks & Spencer ended flat.
Further weighing on JD Sports was a profit warning from German sports brand Puma, which sent the latter's shares plunging 16%.
Puma reported a drop in sales and gross margin during the second quarter, as demand weakened across several regions, prompting a warning of weaker performance for the rest of the year.
Herzogenaurach, Germany-based Puma said preliminary sales fell 8.3% to 1.94 billion euros in the second quarter ended June 30 from 2.12 billion euros a year earlier.
'Looking ahead, Puma no longer expects to achieve the currency-adjusted sales growth previously anticipated for the remainder of 2025. The softer top line performance observed in the second quarter is expected to persist for the remainder of 2025, resulting in higher inventory levels,' Puma added.
The pound eased to 1.3437 dollars late on Friday afternoon in London, compared to 1.3535 dollars at the equities close on Thursday.
The euro traded at 1.1737 dollars, lower against 1.1773 dollars. Against the yen, the dollar was trading higher at 147.69 yen compared to 146.79 yen.
In New York, the Dow Jones Industrial Average was up 0.2%, the S&P 500 was 0.3% higher, as was the Nasdaq Composite.
The yield on the US 10-year Treasury was quoted at 4.42%, stretched from 4.40%. The yield on the US 30-year Treasury was quoted at 4.96%, widened from 4.94% on Thursday.
New orders for US durable goods fell sharply in June, dragged lower by a steep drop in transportation equipment orders, according to data released by the US Census Bureau.
Durable goods orders declined 9.3% month-on-month to 311.8 billion dollars, following a revised surge in May of around 17%.
June's decrease, which was driven almost entirely by the volatile transportation category, marks the second decline in three months.
However, it was milder than the around 11% decline expected by the FXStreet-cited consensus.
Next week, the Federal Reserve is widely expected to leave interest rates unchanged, a move unlikely to please Mr Trump. T
he US president has been vocal in his criticism of Fed chairman Jerome Powell, prompting much speculation as to his future at the helm of the central bank.
Despite political pressure, the CME's FedWatch tool places a 97% probability that the Federal Open Market Committee will maintain the target range for the federal funds rate at 4.25%-4.50%.
The unity of the decision will be in focus given calls from Fed officials, including Christopher Waller, for lower rates.
On the FTSE 100, NatWest rose 3.4% as it raised its full-year guidance, and boosted its dividend, after a strong first half which saw loans and deposits grow.
The Edinburgh-based lender reported operating pre-tax profit of £3.59 billion in the six months to June 30, rising 18% from £3.03 billion the year before.
Net interest income grew 13% to £6.12 billion from £5.41 billion, while non-interest income improved 8.1% to £1.87 billion from £1.73 billion. Net interest margin is 2.28%, improved on-year from 2.07%.
NatWest declared an interim dividend of 9.5 pence per share, up 58% on-year from 6p, and intends to launch a share buyback for £750 million in the second half of 2025.
'With positive momentum in our business, we are ambitious for the future and see clear opportunities for further disciplined growth,' said chief executive officer Paul Thwaite.
On the FTSE 250, Wizz Air climbed 11% as Barclays upgraded the low-cost airline to 'overweight' with a 1,500 pence share price target.
Close Brothers rose 4.5%, after agreeing to sell City broker Winterflood Securities to London-based Marex for £103.9 million in cash.
Close Brothers expects the sale proceeds to benefit its CET1 ratio by around 30 basis points, increasing it to 14.3% from 14.0%.
Brent oil was quoted lower at 68.66 dollars a barrel in London on Friday, from 69.40 dollars late on Thursday.
Gold fell to 3,329.51 dollars an ounce against 3,373.34 dollars.
The biggest risers on the FTSE 100 were NatWest, up 17.00 pence at 518.6p, Ashtead, up 104.00p at 5,136.0p, Entain, up 17.3p at 1,000.5p, Lloyds Banking Group, up 1.26p at 79.3p, and Beazley, up 12.5p at 902.0p.
The biggest fallers on the FTSE 100 were 3i, down 114.0p at 4,150.0p, Informa, down 20.2p at 862.8p, Rightmove, down 17.6p at 777.4p, Fresnillo, down 31.0p at 1,402.0p and Melrose Industries, down 10.0p at 510.0p.
Monday's local corporate calendar has half-year results from Primary Health Properties.
Later in the week, results are due from Barclays, HSBC, Shell, GSK, Unilever and AstraZeneca.
The global economic calendar next week sees interest decisions in the US, Canada and Japan and nonfarm payrolls in the US on Friday.