23rd Apr 2025 17:05
(Alliance News) - The FTSE 100 closed higher on Wednesday, as hopes rose that an all-out trade war between the US and China could be avoided.
The FTSE 100 index rose 74.58 points, 0.9%, to 8,403.18. The FTSE 250 firmed 244.81 points, 1.3%, at 19,483.05, and the AIM All-Share climbed 4.69 points, 0.7%, at 676.48.
The Cboe UK 100 rose 1.0% at 836.52, the Cboe UK 250 gained 1.1% at 17,005.68, while the Cboe Small Companies eased 0.1% at 15,313.09.
In Paris, the CAC 40 ended up 2.1%, while Frankfurt's DAX 40 jumped 3.1%.
On Wall Street, US markets pushed higher as investors warmed to a softening of language between the US and China and weighed a barrage of earnings.
At the time of the London close, the Dow Jones Industrial Average traded 1.5% higher, the S&P 500 rose 1.9%, and the Nasdaq Composite climbed 3.0%.
Comments on Tuesday by US Treasury Secretary Scott Bessent, who said the trade war between the US and China was unsustainable, and by US President Donald Trump suggesting a deal would be reached between the two countries, gave investors hope rhetoric between the two countries could be dialled down.
Meanwhile, Trump also said he had no intention of firing Federal Reserve Chair Jerome Powell, a further source of recent market nerves.
AJ Bell's Russ Mould said: "These comments have given markets a sense of optimism that recent chaos might have peaked and we're heading towards calmer waters. It almost suggests that someone has taken Trump to one side and told him it's time to be more responsible with his words and actions."
Paul Donovan, chief economist at UBS Global Wealth Management, said Trump was demonstrating "the art of the retreat".
But he cautioned: the "erratic threaten-retreat-threaten-retreat cycle has economic consequences. The uncertainty this causes may impact consumer and business decision-making."
On Wednesday, the Wall Street Journal reported details of a plan that White House officials are weighing that would see tariffs to China reduced.
Officials are considering a proposal with a tiered approach that would see 35% levies on items not considered a threat to national security but at least 100% on those that are, eased in over five years, the WSJ reported.
One White House official told the paper that the result would be an overall China tariff roughly between 50% and 65%.
The remarks saw a pause in dollar weakness. Against the yen, the dollar was trading higher at JPY142.42 on Wednesday at the London equities close compared to JPY140.23 on Tuesday.
The euro stood lower at USD1.1367 on Wednesday against USD1.1479 on Tuesday. The pound also traded lower at USD1.3274 compared to USD1.3383 on Tuesday.
In the UK, the impact of the trade policy uncertainty was reflected in a surprise drop in economic activity in April.
The S&P Global purchasing managers' composite output index fell to 48.2 points in April from 51.5 in March, below FXStreet-cited consensus, which had pencilled in a milder slowdown to 50.4 points.
The flash UK services PMI business activity index deteriorated to 48.9 points in April from 52.5 in March, below the FXStreet-cited consensus of 51.3 points.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the biggest concern highlighted by the figures "lies in a slump in exports amid weakened global demand and rising global trade worries".
Rob Wood at Pantheon Macroeconomics explained that the PMI survey picks up "sentiment in addition to actual changes in output and overreacts to political events and uncertainty."
He pointed to the five-point month-to-month drop in the composite PMI after the Brexit referendum, when actual GDP ended-up growing solidly, which provides a stark reminder of the need to take the PMI with a "bucket of salt" at times like these.
"There is no doubt that the chilling effect of the US President's tariffs has slowed UK growth, but we seriously doubt the UK economy has suddenly dropped into recession," he added.
Meanwhile, figures showed public sector borrowing totalled GBP16.44 billion in March, up from GBP12.31 billion in February and higher than GBP12.7 billion the year before. It also exceeded an FXStreet-cited consensus of GBP16.05 billion.
On London's FTSE, the potential thawing in US-Chinese relations boosted miners on hopes that a marked slowdown in global economic growth will be avoided.
Antofagasta rose 7.0%, Anglo American climbed 3.2% and Glencore 4.0%.
Asian-focused banks Standard Chartered and HSBC also benefited from the tariff hope, rising 6.4% and 5.6% respectively.
Leading the risers was Croda, up 9.2% after a well-received trading update.
The Yorkshire-based speciality chemicals maker said sales rose 8.1% to GBP442 million in the first quarter of 2025 from GBP409 million a year prior, or by 9% at constant currency.
Analysts at Jefferies said sales were 5.7% higher than the Visible Alpha market consensus of GBP418 million.
As a result, the company expects to deliver GBP265 million to GBP295 million in adjusted pretax profit at constant currency in all of 2025, compared to GBP279.7 million in 2024.
AJ Bell's Mould noted that Croda has been "royally out of favour for so long with the market that the confident tone in its latest update is a pleasant surprise".
But Reckitt Benckiser fell 5.7% after its first-quarter sales fell short of expectations.
The Slough, England-based consumer products company said like-for-like sales rose 1.1% in the first quarter of 2025, below the company-compiled consensus for growth of 1.4%.
Reckitt also said market conditions may impact the time frame for the sale of its ailing Essential Home division.
Jefferies said that "there remain too many 'if' moments for the stock to work at the moment".
Elsewhere, Vodafone fell 2.7% as JPMorgan cut its rating to 'underperform' from 'neutral', but Babcock International rose 4.5% after a positive trading update.
THG fell 1.2% after it confirmed it has received and rejected a bid for its Myprotein business worth up to GBP600 million from Selkirk Group.
The Manchester-based e-commerce retailer of consumer beauty and nutrition products said the proposal was "wholly unsolicited, largely unfunded, highly conditional and non-binding".
Gold lost ground, trading at USD3,273.46 an ounce on Wednesday against USD3,425.98 on Tuesday.
Brent oil was quoted lower late in London on Wednesday, at USD65.74 a barrel against USD67.62 late Tuesday.
The global economic diary on Thursday has the Ifo business climate survey in Germany, plus US durable goods orders data and the weekly jobless claims report.
The domestic corporate calendar on Thursday sees trading statements from miner Anglo American, consumer products firm Unilever and wealth manager St James's Place.
By Jeremy Cutler, Alliance News reporter
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