London midday: Stocks stay down on Trump tariffs

London stocks were still in the red by midday on Tuesday as sentiment took a hit after Donald Trump announced plans to impose tariffs on Canada, Mexico and China.

The FTSE 100 was down 0.3% at 8,268.66.

Trump said that from 20 January, he will impose a 25% tariff on all goods coming from Mexico and Canada as he looks to clamp down on illegal immigration and drugs, and an additional 10% tariff on China.

Dan Coatsworth, investment analyst at AJ Bell, said: "Talk about swinging from one extreme to the other. The week started on a calm note with the nomination of Scott Bessent as US Treasury secretary, a hedge fund manager seen as a safe pair of hands and someone who might rein in Donald Trump’s more aggressive ideas, such as toning down tariffs.

"Trump was clearly having none of that, given he immediately took to social media to promise bigger than expected 25% tariffs on all products supplied from Mexico and Canada into the US, and a further 10% for Chinese goods, all on day one of his new presidency. That took the market by surprise, driving up the dollar and prompting a sell-off in the Mexican peso and Canadian dollar. The US dollar index rose by 0.2% to 107.06.

"If those tariffs are at the top of his agenda, there is now an elevated risk they will be closely followed by punishing tariffs on other countries. Trump clearly wants to make his mark and show he’s the boss.

"There has been a view among some investors that Trump’s tariff talk was a negotiating tactic, a threat rather than a promise. That might still end up the case, but it’s clear that the president-elect has no intention of backing down for now."

On home shores, the latest BRC-NielsenIQ Shop Price Index showed that shop prices in the UK continued to decline in November, but the rate of deflation slowed, signalling a potential shift in inflationary trends.

In equity markets, food producer Cranswick slumped even as it backed its guidance for the full year and reported a jump in interim profit and revenue amid "healthy" demand.

Electrical retailer AO World reversed earlier gains even as it lifted full-year forecasts after a surge in interim earnings.

On the upside, Melrose Industries shot to the top of the FTSE 100 as JPMorgan Cazenove hiked its price target on the shares to 850p from 650p and opened a "positive catalyst watch" ahead of full-year results in March.

Compass Group racked up healthy gains as the caterer said full-year operating profit jumped 16% and hiked its dividend by just under 14%.

Intertek gained as the testing laboratories company upgraded annual guidance as it reported a 6.6% jump in like-for-like revenue for the four months to 30 October.

Utilities provider Telecom Plus rallied as it said it was on track to meet full-year guidance and targeted a dividend increase of at least 13% after a sharp increase in customer numbers offset a decline in revenues due to lower energy prices.

Halfords surged despite reporting a dip in interim profit and revenue and saying that changes to National Insurance contributions and minimum wage announced in last month’s Budget will increase its costs by around £23m.

AJ Bell's Coatsworth said: "Make no mistake, the jump in its share price does not reflect a business in perfect health. This is simply a relief rally that full-year earnings guidance hasn’t changed."

Market Movers

FTSE 100 (UKX) 8,268.66 -0.28%
FTSE 250 (MCX) 20,616.84 -0.64%
techMARK (TASX) 4,709.13 -0.03%

FTSE 100 - Risers

Melrose Industries (MRO) 558.60p 5.96%
Compass Group (CPG) 2,743.00p 3.39%
Intertek Group (ITRK) 4,618.00p 2.35%
Flutter Entertainment (DI) (FLTR) 22,170.00p 1.56%
Imperial Brands (IMB) 2,588.00p 0.94%
Fresnillo (FRES) 638.50p 0.87%
Smith (DS) (SMDS) 596.50p 0.85%
InterContinental Hotels Group (IHG) 9,878.00p 0.80%
BT Group (BT.A) 155.75p 0.52%
Sage Group (SGE) 1,300.00p 0.39%

FTSE 100 - Fallers

Intermediate Capital Group (ICG) 2,068.00p -2.82%
JD Sports Fashion (JD.) 100.65p -2.09%
Lloyds Banking Group (LLOY) 53.60p -1.94%
Kingfisher (KGF) 250.90p -1.92%
Prudential (PRU) 644.60p -1.86%
Weir Group (WEIR) 2,178.00p -1.80%
Beazley (BEZ) 772.00p -1.53%
Spirax Group (SPX) 6,815.00p -1.52%
Rolls-Royce Holdings (RR.) 534.40p -1.51%
Diageo (DGE) 2,368.00p -1.44%

FTSE 250 - Risers

Burberry Group (BRBY) 925.00p 2.69%
Telecom Plus (TEP) 1,808.00p 2.61%
Genus (GNS) 1,708.00p 1.67%
Keller Group (KLR) 1,508.00p 1.21%
Domino's Pizza Group (DOM) 342.80p 1.00%
PayPoint (PAY) 824.00p 0.73%
Helios Towers (HTWS) 97.50p 0.72%
Shaftesbury Capital (SHC) 135.60p 0.67%
Caledonia Investments (CLDN) 3,370.00p 0.60%
4Imprint Group (FOUR) 5,090.00p 0.59%

FTSE 250 - Fallers

Cranswick (CWK) 4,865.00p -4.04%
Wood Group (John) (WG.) 55.95p -3.20%
Dr. Martens (DOCS) 58.05p -3.17%
PureTech Health (PRTC) 165.60p -2.82%
Savills (SVS) 1,060.00p -2.03%
Wizz Air Holdings (WIZZ) 1,336.00p -1.91%
Just Group (JUST) 144.80p -1.90%
Baillie Gifford US Growth Trust (USA) 264.50p -1.86%
Hays (HAS) 77.20p -1.84%
Mitie Group (MTO) 106.60p -1.84%