FTSE 100 on track for best day since 2020
After an hour and a half’s trading, the FTSE 100 index is still sharply higher – although it has dipped back from its early peak.
The blue-chip shares index is now up 320 points at 8001, up 4.2% today.
That would be its best day, in percentage terms, since 9 November 2020, the day when Pfizer and BioNTech announced that their coronavirus vaccine had been effective in trials.
But as flagged earlier, it still leaves the London market around 7.5% lower than before Donald Trump announced new tariffs on the rest of the world.
Matt Britzman, senior equity analys at Hargreaves Lansdown, says risk appetite has comes roaring 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. 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 9th best day in history.
We still don’t know if this tariff strategy is going to do more harm than good, and this should not be confused with a resolution to the underlying impact on areas like inflation and global growth. But it does give a host of countries a chance to come to the table and barter for a deal, while offering companies some much needed time to make whatever supply chain adjustments they can. What this means for the EU is still unclear, but given countermeasures were already declared it could find itself on Trump’s naughty list, as ever we await more clarity.
Key events
The US dollar is weakening this morning too against other major currencies.
The dollar index has lost 0.6% today, while the pound has gained half a cent to $1.2870.
Bas Kooijman, CEO and asset eanager of DHF Capital SA, explains:
The US Dollar could remain under pressure as markets weigh the risks around new developments in trade policy.
While President Trump’s announcement of a 90-day pause on most reciprocal tariffs could calm market concerns, levies on Chinese imports were raised to 125%, and uncertainty persists as the EU prepares a EUR 20 billion retaliation package, which could leave traders on edge.
Wall Street futures are down
Wall Street is set to fall when trading resumes later today, as some of the euphoria following Donald Trump’s tariff pause fades.
The Dow Jones industrial average is on track to fall by 1.3%, according to the futures market, with S&P 500 futures down 1.8%.
After the best day since 2008 yesterday, investors may be pondering the consequences of the US-China trade war escalating.
Tech stocks expected to drop back. Tesla are down 4.5% in pre-market, having surged by 22% yesterday.
S&P 500 FUTURES FALL 2.3%; NASDAQ 100 CONTRACTS DROP 2.8%
— First Squawk (@FirstSquawk) April 10, 2025
FTSE 100 on track for best day since 2020
After an hour and a half’s trading, the FTSE 100 index is still sharply higher – although it has dipped back from its early peak.
The blue-chip shares index is now up 320 points at 8001, up 4.2% today.
That would be its best day, in percentage terms, since 9 November 2020, the day when Pfizer and BioNTech announced that their coronavirus vaccine had been effective in trials.
But as flagged earlier, it still leaves the London market around 7.5% lower than before Donald Trump announced new tariffs on the rest of the world.
Matt Britzman, senior equity analys at Hargreaves Lansdown, says risk appetite has comes roaring 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. 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 9th best day in history.
We still don’t know if this tariff strategy is going to do more harm than good, and this should not be confused with a resolution to the underlying impact on areas like inflation and global growth. But it does give a host of countries a chance to come to the table and barter for a deal, while offering companies some much needed time to make whatever supply chain adjustments they can. What this means for the EU is still unclear, but given countermeasures were already declared it could find itself on Trump’s naughty list, as ever we await more clarity.
UK supermarkets are mssing out on today’s rally, as City investors are disappointed by the latest results from market leader Tesco.
Tesco told shareholders this morning that it expects to make operating profits of between £2.7bn and £3bn for this financial year, down from the £3.1bn it made in 2024.
Tesco explains:
In the last few months, we have seen a further increase in the competitive intensity of the UK market.
That follows predictions that rival Asda will step up the grocery price war with cuts.
Shares in Tesco have fallen 4.6%, while supermarket Sainsbury’s are down 3.8%, two rare fallers on a strong morning for the London market.
Calm has returned to the bond markets after yesterday’s chaos, but borrowing costs remain worryingly high.
US Treasuries (America’s government debt) are strengthening in value, which pulls down the interest rate (or yield) on the bonds.
Ten-year Treasury yields have dropped by 10 basis points, to 4.29% from 4.39% on Wednesday.
Shorter-dated 2-year Treasury bill yields are down 11 basis points, while long-dated 30-year Treasury yields have dipped by 5bps.
It’s a slightly different picture for UK government debt, though. Two-year gilt yields have risen, as investors calculate there is less chance of the Bank of England cutting interest rates in May (see earlier post)
Ten-year gilt yields are a little lower, down 4 basis points at 4.7%.
There’s a bigger move on 30-year gilts, where yields are down 12 basis points at 5.4%. That move should be welcomed in the Treasury; yesterday, 30-year gilt yields hit their highest level since 1998, as the bond market panic threatened to devour all Rachel Reeves’s fiscal headroom.
Reminder: Donald Trump hasn’t completely spared the global economy from new tariffs.
As well as the 125% tariff on China, the rest of the world still faces a blanket 10% tariff on all US exports.
Chances of UK interest rate cut in May have fallen
The chances of a Bank of England interest rate cut as soon as next month have dropped, after Donald Trump blinked in his trade war.
The City money markets are currently indicating that a rate cut, from 4.5% to 4.25%, is a 78% chance, with a 22% possibility that BoE policymakers leave rates on hold.
Earlier this week, a rate cut was seen as certain, with a small possibility that the Bank slashed rates by half a percentage point to 4%, to protect the UK economy.
If you missed Wednesday’s u-turn, here’s a clip of Donald Trump explaining his decision to pause tariffs during an event in front of the White House yesterday:
This week’s market turmoil has clear implications for the US Federal Reserve (America’s central bank), explains Professor Costas Milas, of the University of Liverpool’s management school.
He tells us:
Today’s surge in stock prices confirms that stock markets are at the mercy of Donald Trump’s tweets/social media announcements (in Truth Social) which has added to extreme stock market volatility over the recent days.
Fed Chair Jerome Powell and the Fed’s policymakers will do well to avoid any stock market intervention via, for instance, interest rate cuts. This is because big drops in stock markets can/are very well be followed by even bigger stock market rises which will make any interest rate cut look foolish and therefore undermine the Fed’s reputation.
Today’s rollicking rally lifts the UK’s FTSE 100 share index up to its highest level since Friday afternoon (when trade war fears were driving shares down).
But as this chart shows, shares are still much lower than before Donald Trump unveiled a swathe of new tariffs on US trading partners (and some penguins).
Last Wednesday (Trump’s ‘Liberation Day’), the FTSE 100 ended the day at 8,608 points, a few hours before the president intensified his global trade war.
We’re still 5% below that level….
