- FTSE 100 Index is down despite the UK's trade deal with the US, as tariffs return to focus. However Russia-Ukraine war carries some tailwinds.
The FTSE 100 Index (INDEXFTSE: UKX) was down by 0.12% at 8,776 points in the afternoon session, mirroring the decline in the broader global equities markets. Its largest weighted stocks had mixed results, with AstraZeneca (LSE: AZN) at -0.95%, Unilever down by 0.32% and Barclays (LSE: BARC) down by 0.32%. However, Shell (LSE: SHEL) and BP stock prices was up by 1.18% and 1.02% respectively as oil rose on Russia-Ukraine war escalation. The geopolitical risk sentiment also pushed up defence stock, BAE Systems (LSE: BA) to +1.18%, while Rolls Royce stock price (LSE: RR) was at +0.44%.
Stock Markets have started the week on a sour note as investors retreat in the wake of renewed trade tariff fears. US President Donald Trump reignited the bearish sentiment after accusing China of “totally defying” the terms of a ninety day consensus reached between him and China’s Xi Jinping. On its part, China accuses the United States of severe violations of the agreement, highlighting visa bans against Chinese students, restriction of chip exports to China and warning against using Chips made by Chinese manufactures.
Also, Trump promised US steel workers last week that he will impose 50% tariff on aluminium and steel imports as a measure to protect US industries. That has attracted both criticism and threats of retaliation from the European Union. This set up raises the potential of a return to the high tariff levels seen in May. While the UK has already secured its trade ties with the US, the FTSE 100 will likely feel the pinch due to the downward pressure on affected markets.
Gold Price Hits Three-Week Highs On Tariff, Russia-Ukraine Propulsion
Meanwhile, gold price rose to three-week highs of $3,378 propelled by trade tariff fears and a spike in Russia-Ukraine war risk levels. The yellow metal is a preferred safe haven asset in times of high risk aversion, and historically performs well in times of heightened geopolitical and economic risks. It was widely reported in the media that Ukraine’s massive drone attack on Russian airfields over the weekend damaged 41 warplanes. That has raised the risk of a spike in the intensity of military strikes between the two nations, injecting fresh impetus in equities markets. Gold price has risen by 28.6% year-to-date.
Dow Jones Index Opens In Red, "TACO" Trades Bubble Under
The Dow Jones Index has opened in the week down by 0.5% in the first hour of trading and at 42,053 points at the time of writing. The index is following the cue set by Asian and European equities markets, as US-China/US-EU trade tariff battle lines are redrawn. However, there's an element of an underlying bullishness, with some investors betting on TACO (Trump Always Chickens Out) sentiment to come into play soon.
This is based on the belief that US President Donald Trump has always climbed down from his steep tariff stances, and there's good reason to believe that he's currently playing the same card. Also, his advisors, including Trade Secretary Scott Bessent, sounded confident on Sunday that he will soon hold direct talks with his Chinese counterpart, Xi Jinping.
Lloyds Bank In FX Partnership With BNP Paribas
Meanwhile, Lloyds bank has announced a partnership with BNP Paribas to deliver forex execution algorithm to its customers. The service targets corporate and financial institution customers and will come with "sophisticated capabilities” that enable hedging of large exposures. In addition, it comes with analytics to support sound decision making and customisable strategies to support specific trading objectives. Customers can also pause, resume, amend or cancel orders mid-execution. Algorithm trading is increasingly growing in popularity in FX markets.
LLOYDS Struggles to Breach 78p for the Third Straight Session
Lloyds Bank share price continues to struggle to breach the 78p barrier. The stock inched up by 0.05% to trade at 77.24p at the time of writing. LLOY declined by 1% in the last five sessions, despite being up by 8.12% in the last month. An extended resistance at 78p for the third session signals a weakening upward momentum, potentially driven by profit booking after gaining 41.5% year--to-date ahead of the July UK Supreme Court ruling on the car miss-selling case.