11th Feb 2025 06:54
(Alliance News) - London's FTSE 100 is set to decline slightly on Tuesday, after US President Donald Trump signed an executive order on steel and aluminium tariffs, before eyes turn to the Federal Reserve chair who speaks later.
IG says futures indicate the FTSE 100 to open 9.6 points lower, 0.1%, at 8,758.20 on Tuesday. The index of London large-caps closed up 67.27 points, 0.8%, at 8,767.80.
The dollar was on the up early Tuesday. Sterling faded to USD1.2361 early Tuesday, from USD1.2381 at the time of the London equities close on Monday. The euro fell ever-so-slightly to USD1.0308 from USD1.0311. Against the yen, the greenback bought JPY151.94, rising from JPY151.75.
Trump on Monday made good on a promise to slap 25% tariffs on steel and aluminium imports, stepping up a long-promised trade war despite warnings from Europe and China.
"Today I'm simplifying our tariffs on steel and aluminium," Trump said in the Oval Office. "It's 25% without exceptions or exemptions."
He also signalled that he would look at imposing additional tariffs on automobiles, pharmaceuticals and computer chips.
"The contours are becoming a little clearer. After Trump left a lot uncertain on Sunday, more details about the planned tariffs on steel and aluminium emerged yesterday. The tariffs will start on 12 March and, unlike the steel and aluminium tariffs of the first Trump administration, there will be no exemptions and metal products will also be included. So Canada and Mexico will not be spared, as they were last time, and the European Union, which negotiated a deal in 2021, would now be fully back in the game. The same goes for Brazil and Australia, although Trump did mention in an aside that Australia could possibly be exempted. So the only thing that is certain is that nothing is certain yet. And there is plenty of room for negotiation between now and March 12," Commerzbank analyst Volkmar Baur commented.
"What is interesting about these tariff announcements and counter-announcements is sometimes the unintended consequences they can have. Even though the EU has not been the focus of Trump's tariff announcements so far, the German automotive industry is already affected. On the one hand, negatively because the Chinese counter-tariffs to Trump's 10% tariff increase explicitly include tariffs on large combustion engine cars produced in the US. However, this mainly affects German carmakers that export cars from the US to China, rather than US carmakers themselves."
A barrel of Brent rose to USD76.25 early Tuesday, from USD75.88 at the time of the London equities close Monday. Gold rose to USD2,918.22 an ounce, up from USD2,903.38. Gold spiked to another record high on Tuesday, this time above the USD2,942 an ounce mark.
Fed Chair Jerome Powell testifies in front of a Senate committee on Tuesday.
SPI Asset Management analyst Stephen Innes commented: "He is unlikely to stray far from the FOMC’s current neutral stance. Markets will be combing through his remarks for any hints on inflation and the future rate path, but barring any major surprises, the focus will likely remain on the broader trade war drama."
In China, the Shanghai Composite was down 0.3%, while the Hang Seng in Hong Kong was 0.6% lower. Sydney's S&P/ASX 200 ended fractionally higher. Financial markets in Tokyo are closed.
In New York on Monday, the Dow Jones Industrial Average rose 0.4%, the S&P 500 added 0.7% and the Nasdaq Composite shot up 1.0%, shaking off tariff nerves.
In Tuesday's UK corporate calendar, as well as full-year numbers from oil major BP, there are half-year results from homewares retailer Dunelm.
The economic calendar for Tuesday has comments from Fed Chair Jerome Powell and Bank of England Governor Andrew Bailey.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.