11th Jul 2025 12:00
(Alliance News) - Stock prices in London were lower midday on Friday, after news of Donald Trump floating up to 20% blanket tariffs on some countries, and saying Canada will face a 35% levy effective from his latest August 1 deadline.
Meanwhile domestically, the UK trade deficit amounted to GBP5.70 billion in May, narrowing from GBP6.50 billion in April, the Office for National Statistics reported. Exports in May rose 1.2% on-month to GBP74.31 billion, while imports edged up 0.1% to GBP80.01 billion, with exports of goods to the US rising by GBP300 million in May after a "substantial decrease" in April.
The ONS had earlier reported that UK gross domestic product fell 0.1% on-month in May, falling well short of consensus for a 0.1% increase.
"After 'Awful April' the expectation was that the UK economy would have dusted itself off and at least managed to eke out a tiny amount of growth, but instead the country's economic engine was stuck in reverse," commented AJ Bell analyst Danni Hewson. "The threat of Donald Trump's tariffs meant that many manufacturers brought forward production to earlier in the year...A trade deal between the US and UK has mitigated some of the damage, but the uncertainty and delays in getting some of the measures across the line meant some businesses like Jaguar Land Rover simply stopped exporting for a time.
"The steel industry is still facing an agonising wait and whilst financial markets have broadly set aside the potential negative impact of tariffs for now, there are real concerns about the fallout from all this friction on global economic growth."
The FTSE 100 index was down 51.53 points, 0.6%, at 8,924.13. The FTSE 250 was down 97.32 points, 0.5%, at 21,597.38, and the AIM All-Share was down 0.39 points, 0.1%, at 772.74.
The Cboe UK 100 was down 0.6% at 890.31, the Cboe UK 250 was down 0.5% at 19,073.60, and the Cboe Small Companies was down 0.7% at 17,384.98.
On the FTSE 100, Polar Capital Technology lost 0.5%.
The Polar Capital LLP-managed investor said net asset value per share climbed 3.1% on-year to 325.20 pence at April 30, and as in the prior year did not recommend a dividend.
Polar Capital Tech said: "The financial year under review has been a challenging period for the company with the technology sector experiencing volatility following the arrival of DeepSeek's potentially low-cost AI model, President Trump's administration and the uncertainty surrounding the introduction of US tariffs and retaliatory tariffs as well as other geopolitical and macro-economic factors."
Chair Catherine Cripps said PCT remains "positive on the outlook for the sector", but warned that "macro-economic uncertainties remain and it is likely that market volatility will persist" and "continuing devaluation of the US dollar could potentially cause a headwind to the performance of the company as, in the near term, the majority of our assets are US dollar based."
On AIM, Rockfire Resources jumped 14%.
The Greece and Australia-focused gold, base metal and critical mineral exploration company reported that the Plateau asset "continues to deliver near-surface gold".
Rockfire also noted an update from joint-venture partner Sunshine Metals, which it said shows promising drilling results at the North Queensland asset.
Small cap Solvonis Therapeutics climbed 15%.
The biopharmaceutical company raised GBP1.0 million from a share subscription, and said the proceeds will go towards drugs treating addiction and other mental health disorders.
Solvonis said three of its largest shareholders subscribed for 333.3 million shares at 0.30p each, a premium to its closing price of 0.29p on Thursday.
In other UK news, cash individual savings accounts in the UK will be left untouched at next week's Mansion House speech, the PA news agency reported, in a move that has been welcomed by savings experts.
Speculation had been mounting that plans to cut the annual tax-free cash Isa allowance could be announced in Chancellor Rachel Reeves's Mansion House speech on July 15.
But PA understands that Reeves will instead focus on new plans to provide consumers with the information and support they need to invest. The government is expected to continue talking to industry members and others about the options for reform, with a broad consensus that the UK's savings and investment culture needs to be encouraged.
"The UK economy being stuck in the mud and the threat of high tariffs on Canada won't be a shock to markets, but they are hard to ignore," said AJ Bell's Dan Coatsworth. "After a strong start to the week, investors ran out of energy on Friday.
"European indices were in the red and futures prices imply Wall Street will follow the same path...Whether this is investors being reminded of headwinds or simply pausing for breath, it's clear that uncertainty will prevail well into the summer."
In European equities on Friday, the CAC 40 in Paris was down 1.0%, while the DAX 40 in Frankfurt was down 1.1%.
Germany's upper house of parliament on Friday approved multibillion-euro tax breaks to support companies and boost investment.
The measures include options for businesses to write off the value of investments in machinery from their taxes, as the government seeks to boost the German economy after two consecutive years of recession. The package also promises to gradually reduce the corporate tax rate from the current 15% to 10% by 2032. In addition, tax incentives for electric car purchases are planned.
Finance Minister Lars Klingbeil said the tax breaks would make Germany more competitive. "If we ensure new growth, then the state's income will also grow again," he said.
The package is estimated to cost the federal government, states and local authorities around EUR48 billion in tax revenue.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.7%, the S&P 500 index down 0.7%, and the Nasdaq Composite down 0.6%.
US President Donald Trump has claimed that he may impose a 15% or 20% blanket tariff on countries that have not yet received specific notifications.
When asked by NBC News what would happen to countries that did not receive letters, he said: "We're just going to say all of the remaining countries are going to pay, whether it's 20% or 15%. We'll work that out now."
Canada will face a 35% tariff on exports to the US starting August 1, Trump said in a letter to Prime Minister Mark Carney. The two countries remain in trade negotiations in hopes of reaching a deal by July 21.
The yield on the US 10-year Treasury was quoted at 4.39%, widening from 4.37%. The yield on the US 30-year Treasury was quoted at 4.91%, widening from 4.88%.
The pound was quoted at USD1.3536 at midday on Friday in London, lower compared to USD1.3561 at the equities close on Thursday. The euro stood at USD1.1689, higher against USD1.1679. Against the yen, the dollar was trading higher at JPY146.82 compared to JPY146.49.
Brent oil was quoted lower at USD68.94 a barrel at midday in London on Friday, from USD70.30 late Thursday.
Gold was quoted higher at USD3,346.84 an ounce against USD3,320.06.
Still to come on Friday's economic calendar, there is unemployment data from Canada.
By Emma Curzon, Alliance News reporter
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