27th Mar 2025 16:51
(Alliance News) - The FTSE 100 closed lower on Thursday amid fears around Donald Trump's auto tariffs, while several stocks going ex-dividend also soured the mood.
The FTSE 100 index closed down 23.47 points, 0.3%, at 8,666.12. The FTSE 250 fell 124.50 points, 0.6%, at 19,914.70, but the AIM All-Share rose 2.95 points, 0.4%, at 696.76.
The Cboe UK 100 ended down 0.4% at 864.93, the Cboe UK 250 closed 0.5% lower at 17,419.96, while the Cboe Small Companies fell 1.0% at 15,389.91.
Late Wednesday, the US president announced 25% tariffs on imported cars and light trucks, leading to threats of retaliation from Asian, European and North American countries.
Carmaker shares dropped around the world. On Wall Street, General Motors fell 6.7% while Ford fell 2.1%.
Bank of America said Ford is relatively less affected and may even benefit as it only imports a few models, which account for a modest 20% of its total volumes.
GM appears relatively exposed to the tariffs as it imports 49% of its vehicles, it added.
BofA estimated impacted vehicle prices could climb as much as USD10,000, while auto sales could drop by 2.5 to 3 million plus.
In Europe, shares in Stellantis, the owner of the Fiat, Peugeot and Chrysler brands, fell 4.2%, Mercedes-Benz fell 2.8% and BMW by 2.5%. In London, Aston Martin traded 6.2% lower.
UBS said Stellantis and Volkswagen are potentially the most affected in Europe by tariffs on Mexico and Canada, while Porsche, BMW and Mercedes are more exposed to tariffs on EU-made premium/luxury cars.
The broker sees at least 10% to 20% EPS risk for German OEMs on US import tariffs on EU-made cars, already factoring in some mitigating price action where possible.
UK Chancellor Rachel Reeves said the UK is not planning "at the moment" to introduce retaliatory tariffs on the US.
She told Sky News: "We are looking to secure a better trading relationship with the US. I recognise that the week ahead is important. There are further talks going on today, so let's see where we get to in the next few days," referring to an ongoing talks regarding a trade deal.
Stocks in New York were slightly lower at the time of the London equities close. The DJIA was down 0.2% and the S&P 500 index and the Nasdaq Composite were both down 0.1%.
In European equities on Thursday, the CAC 40 in Paris ended down 0.6%, while the DAX 40 in Frankfurt fell 0.7%.
The pound was quoted higher at USD1.2960 at the London equities close on Thursday, compared to USD1.2894 at the close on Wednesday.
The euro stood at USD1.0797, up against USD1.0788.
Against the yen, the dollar was trading higher at JPY151.05 compared to JPY150.53 late Wednesday.
UK bond yields crept higher on further reflection of Wednesday's spring statement. The yield on the UK 10-year bond rose around 6 basis points to 4.80%.
"The Chancellor's fiscal rules remain unbroken, but we remain sceptical about the medium-term spending trajectory and the relative optimism of the OBR's macroeconomic outlook, meaning the fiscal position is precarious," said analysts at Barclays.
"In a world in which heightened uncertainty has driven volatility in government bond markets globally, we think this leaves the fiscal position, even between now and October's budget, precarious," the bank added.
"If the Spring Statement was an obstacle that had to be overcome in order to give the Chancellor breathing room ahead of the June spending round and the Autumn budget, then that goal has seemingly been achieved. But the central challenges of public finances that remain under market scrutiny and a heavy gilt issuance program remain. For now, the bond vigilantes in the gilt market may be held in temporary abeyance, but the Treasury still faces acute pressures and a wary market, the acquiescence of which – let alone approval – cannot be taken for granted," Barclays continued.
On the FTSE 100, M&G, down 5.7%, Taylor Wimpey, down 4.7% and Schroders, down 4.5%, were among a batch of blue-chips trading without entitlement to the dividend.
But in the credit column, retailer Next stormed 10% higher after raising guidance as annual profit topped the GBP1 billion milestone.
The Leicester-based clothing and homewares seller reported a 10% increase in pretax profit to GBP1.01 billion in the financial year ended January 25 from GBP918 million the year prior, in line with prior guidance.
Next also raised its pretax profit guidance for the new financial year by GBP20 million to GBP1.07 billion, a would-be 5.4% uplift from financial 2025.
AJ Bell's Russ Mould said: "Next is the envy of the retail sector. Once again it has upgraded sales and profit guidance, leaving its rivals in the dust. Next is typically a cautious outfit, preferring to under-promise and over-deliver, which makes its latest optimism a surprise given the fragile market backdrop."
WH Smith edged up 0.7% as Sky News reported said it has agreed the outline of a deal to sell its roughly 500 high street stores to either Alteri Investors, the owner of Bensons for Beds, or Modella Capital, which owns retailers including Hobbycraft.
A final decision could be made as early as next week, Sky said.
Victrex fell 5.9% as JPMorgan downgraded the Lancashire-based firm to 'neutral' from 'outperform'.
The broker hosted the senior management of 15 European chemical companies at the annual JPMorgan European Chemicals forum in London this week and found the overall tone "sombre".
"The recent weaker macro datapoints in the US and the elevated uncertainty on the potential impact from trade tariffs, including a possible reversal of some potential front-loading of activity in 1Q ahead of the US tariffs, means that the near-term earnings outlook for the sector has become cloudier," JPM said.
The broker also downgraded Ludwigshafen, Germany-based BASF SE to 'underweight' from 'neutral'. BASF fell 3.6%.
Brent oil was quoted lower at USD73.83 a barrel at the London equities close Thursday down from USD73.95 late Wednesday. Gold climbed to USD3,051.11 an ounce against USD3,018.09 on Wednesday.
Friday's UK corporate calendar has full-year results from Amaroq Minerals.
The economic calendar for Friday has UK retail sales and US personal consumption expenditures data.
By Jeremy Cutler, Alliance News reporter
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