FTSE 100 closes at record high as Trump's tariffs shake faith in US

Telegraph

21 hours ago

Britain's main stock market index closed at an all-time high on Thursday as investors seeking refuge from America's market slump turned towards the UK.
The FTSE 100 index of London's largest companies ended 0.2pc higher on Thursday at 8,834.92 points amid a backlash against Donald Trump's economic policies, which investors fear will hinder American companies' profits.
The flagship British index, which had performed poorly in recent years compared with the US, is up by 8.7pc since the start of the year, beating America's S&P 500's which has risen by 2.7pc.
Neil Wilson, of Saxo Bank said: 'We have clearly seen a rotation in global equity markets as investors have for the first time in years questioned the 'Tinata' – there is no alternative to America.'
He said clients were talking about 'reducing exposure to the US'.
The FTSE 100's record high came as the value of the dollar plunged to a three-year low after President Trump sparked fresh fears about global trade.
The US currency sank on Thursday to its lowest level since March 2022 against a group of major peers, leaving it down by nearly 10pc so far this year.
Investors have turned away from the dollar after the US president said he would send out letters to countries outlining the terms of trade deals.
That sent the pound to a three-year high above $1.36 and pushed the euro to close at $1.16, its highest level since 2021, as the president's comments renewed concerns that US tariffs could hit global growth.
'I love China'
In a further sign of his mixed signals on trade, President Trump sought to calm nerves by talking up the prospects of a US-China trade agreement, following two days of talks between Washington and Beijing officials in London this week.
He wrote on his Truth Social platform: 'THE CHINA DEAL IS GREAT!'
He later told reporters: 'I love China. We just made a deal, and I respect President Xi a lot, and we made a deal that's good for both countries. The deal we made with China good for both countries. Going to be a lot of money made, and it's going to ultimately open up China, which is the ultimate thing.'
Charu Chanana, of Saxo Bank, said: 'Markets may have no choice but to respond to Trump's tariff threat – even if it's just posturing to bring others to the table.'
The dollar was also hit by a flurry of data, which suggested the global economy was beginning to show signs of strain.
Britain's goods exports to the US plunged at a record pace after President Trump launched his tariff onslaught in April, official figures showed.
UK exports to the United States fell by £2bn compared with the previous month, according to the Office for National Statistics, which was the largest drop since official records began in 1997.
The value of goods exports to the United States during the month – totalling £4.1bn – fell to its lowest level since February 2022.
The US president hit Britain with 10pc tariffs under plans announced on April 2, a date which Mr Trump had long touted as his so-called 'liberation day'.
Businesses dramatically changed their investment plans in response, bringing forward orders in an effort to get ahead of higher import taxes before they were announced.
Official figures showed UK manufacturing output fell by 0.9pc in April, a further drop from 0.8pc in March but a sharp reversal from a 2.4pc surge in February.
This was despite the high-profile announcement by Sir Keir Starmer of a trade agreement with the US last month, which is yet to be finalised.
Robert Wood, an economist at Pantheon Macroeconomics, said: 'Exports should begin to stabilise in May now that the front-running has unwound and after President Trump began walking back some of his more ruinous tariffs.
'That said, the UK-US trade deal 'agreed' in May is yet to fully come into force so there could be further export weakness still ahead.'
In a further sign of strain in the US, wholesale inflation ticked higher last month.
The producer price index – which measures inflation before goods hit consumers – rose by 2.6pc in May, according to the Labor Department.
This was up from 2.4pc in April but in line with expectations. Separate data showed US filings for jobless benefits were unchanged last week.