28th Mar 2025 16:52
(Alliance News) - The FTSE 100 outperformed as equities struggled on Friday, with tariff and inflation worries keeping enthusiasm to a minimum.
Next week will see the US update on tariffs, hot-on-the-heels of announcing trade curbs focused on the automotive sector.
The FTSE 100 index ended down 7.27 points, 0.1%, at 8,658.85. The FTSE 250 was fell 49.72 points, 0.3%, at 19,864.98, and the AIM All-Share lost just 0.14 of a point at 696.62.
For the week, the FTSE 100 edged up 0.1%, the FTSE 250 lost 0.2%, but the AIM rose 1.1%.
The Cboe UK 100 fell 0.2% at 863.48 on Friday, the Cboe UK 250 shed 0.4% at 17,350.09, but the Cboe Small Companies ended 0.1% higher at 15,411.84.
In European equities on Friday, the CAC 40 in Paris ended down 0.9%, while the DAX 40 in Frankfurt fell 1.0%.
In New York, the Dow Jones Industrial Average was down 1.5%, the S&P 500 1.8% lower and the Nasdaq Composite plunged 2.4%.
Alongside a decline in equities, oil also fell. Reinforcing investor unease, gold prices spiked to another record high.
Brent oil was quoted lower at USD72.45 a barrel late on Friday afternoon in London from USD73.83 at the time of the London equities close on Thursday.
Gold was quoted up at USD3,081.91 an ounce against USD3,051.11. It reached a record high above USD3,087 on Friday.
The pound was quoted at USD1.2945 at on Friday in London, down from USD1.2960 at the equities close on Thursday. The euro stood at USD1.0829, higher against USD1.0797. Against the yen, the dollar was trading lower at JPY150.07 compared to JPY151.05.
The UK "reserves the right to respond" to American tariffs, Keir Starmer has said after US President Donald Trump's decision to slap a 25% import tax on cars.
The prime minister said his government was involved in ongoing discussions with the White House aimed at "mitigating the impact" of any levies, but that ultimately "our national interest has to come first".
The US is the second-largest export market after the EU for cars built in the UK.
Asked whether the UK reserves the right to respond to tariffs during a visit to Yorkshire, he said: "Yes, of course. Obviously, any tariffs are concerning and we're working hard with the industries and sectors likely to be impacted.
"None of them want to see a trade war, which is why we're engaged in discussions with the US about mitigating the impact of tariffs.
"Now, that's what we're working hard on, but in answer to your question, yes – in the end, our national interest has to come first, which means all options are on the table."
Bloomberg reported that the EU is looking at concessions it can make to Trump to partially remove tariffs.
US inflation pressure was stronger than expected last month, according to a key price index on Friday.
The Bureau of Economic Analysis said the core personal consumption expenditures index rose 2.8% on-year in February, picking up speed from 2.7% in January. According to FXStreet cited consensus, it had been expected to remain at 2.7% in February.
The core reading is the Federal Reserve's preferred inflationary gauge. It excludes food and energy.
The headline PCE index, which factors in those items, was steady at 2.5% growth on-year last month, matching the result from January.
On a monthly basis, core prices rose 0.4% in February from January, beating consensus of 0.3%. Core prices had risen 0.3% in January from December.
When including food and energy, prices rose 0.3% in February, in line with forecasts, and matching the pace of growth in January from December.
Pepperstone analyst Quasar Elizundia commented: "At the same time, soft data has continued to deteriorate significantly, adding uncertainty regarding the resilience of hard data. The University of Michigan consumer sentiment index fell to 57, its lowest level since November 2022, due to negative expectations regarding personal finances, unemployment, and inflation. In fact, two-thirds of consumers anticipate a rise in the unemployment rate, reflecting a level of concern not seen since the 2009 financial crisis."
In London, utility shares led the way on the FTSE 100, perhaps typifying investor discomfort in the face of uncertain economic conditions. SSE rose 3.9%, United Utilities added 2.8% and Severn Trent climbed 2.4%.
At the other end of the index, miners, banks and oil majors struggled. Anglo American lost 3.0%, Barclays fell 2.1% and BP shed 2.4%.
Among London-listed mid-caps, Aston Martin fell again, losing 5.0%. The carmaker has struggled since Trump announced the automotive tariffs. It fell 6.7% on Thursday.
JPMorgan estimates the total cost to the car industry to tariffs at USD82 billion, up from USD41 billion before, primarily on account of all countries being targeted, not just Canada & Mexico.
It thinks that given strong pricing power, automakers will be able to pass on most of the tariffs, and that Wednesday's announcement should boost vehicle prices by around 5%.
Bank of America thinks vehicle prices could increase as much as USD10,000 if manufacturers pass on the tariffs in full to consumers, while auto sales could drop by 2.5 to 3 million plus.
Figures from the Office for National Statistics showed UK retail sales volumes rose by 1.0% in February from January, well ahead of an FXStreet-cited consensus for a 0.3% fall. In January, retail sales had risen 1.4%, which had been downwardly revised from 1.7%.
On an annual basis, retail sales volumes in February rose 2.2%, accelerating from a 1.0% rise in the year to January.
Clocks in the UK and across Europe go forward by an hour on Sunday as daylight savings time begins.
Monday's economic calendar has German inflation data at 1300 BST, after UK mortgage approvals at 0930 BST.
By Eric Cunha, Alliance News news editor
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