11th Feb 2025 08:53
(Alliance News) - London's FTSE 100 got off to a solid start on Tuesday, shaking off trade tariff worries to notch another record high, before central bankers come into focus.
Also hitting another record high, gold spiked above USD2,942 an ounce but returned some progress.
BP barely budged after reporting weaker fourth-quarter results, as eyes turn to a strategy update later this month.
The FTSE 100 index traded up 11.85 points, 0.1%, at 8,779.65. It traded as high as 8,789.58 shortly after the opening bell, its best ever level.
The FTSE 250 was 12.32 points lower, 0.1%, at 20,973.96, and the AIM All-Share added just 0.17 of a point at 724.77.
The Cboe UK 100 was up 0.1% at 879.39, the Cboe UK 250 fell 0.2% at 18,316.52, and the Cboe Small Companies was flat at 15,835.01.
In Paris, the CAC 40 added 0.2%, while Frankfurt's DAX 40 rose 0.1%.
The dollar was mixed early Tuesday. Sterling faded to USD1.2351 early Tuesday, from USD1.2381 at the time of the London equities close on Monday. The euro rose ever-so-slightly to USD1.0314 from USD1.0311. Against the yen, the greenback bought JPY151.81, rising from JPY151.75.
A barrel of Brent rose to USD76.63 early Tuesday, from USD75.88 at the time of the London equities close Monday. Gold rose to USD2,911.03 an ounce, from USD2,903.38. Gold spiked to another record high on Tuesday, this time above the USD2,942 an ounce mark.
"President Trump's tariff policy remains unclear, and thus, difficult to price in by financial markets. Trump said on Monday that tariffs on metals could go higher, and other tariffs could be announced later this week. At this stage, traders have little clarity about how far Trump's tariff policies will go, whether they are mostly a negotiating tactic or if they will have a more long-lasting economic impact. It is also unclear if it will spark a wave of protectionism," XTB analyst Kathleen Brooks commented.
"For now, risk assets seem comfortable with Trump's tariffs, but are they being too complacent?"
US President Donald Trump signed executive orders to impose 25% tariffs on steel and aluminium imports from March 12, ramping up a long-promised trade war despite warnings from Europe and China.
"Today I'm simplifying our tariffs on steel and aluminium," Trump said Monday in the Oval Office. "It's 25% without exceptions or exemptions."
In an executive order released after, he said: "As of March 12, 2025, all imports of aluminium articles and derivative aluminium articles from Argentina, Australia, Canada, Mexico, EU countries, and the UK shall be subject to the additional ad valorem tariff."
Trump issued a separate order for steel, which said it would apply to all imports from the same countries the aluminium tariffs hit, as well as to Brazil, Japan and South Korea.
Canada and Mexico are the biggest steel importers to the US, according to US trade data. Brazil and South Korea are also major steel providers.
The Bank of England's Andrew Bailey and Federal Reserve Chair Jerome Powell are due to speak. Bailey speaks at 1215 GMT before Powell testifies to US lawmakers at 1500 GMT.
Swissquote analyst Ipek Ozkardeskaya commented: "Powell begins his two-day testimony in front of US politicians today and is expected to adopt a cautious approach despite mounting pressure to lower rates from the Trump government. After all, US growth remains solid, the jobs market healthy, and inflation sticky. And Trump's growth-boosting policies and tariff threats threaten to make it stickier. As such, a hawkish stance from Powell could further boost the dollar appetite and temper gains in US equities.
"Also note that, besides the fact that a hawkish shift in Fed policy is bad for valuations – the appreciation of the dollar tends to weigh on Big Tech companies' earnings from outside the US. That's an added headwind for companies like Tesla, Nvidia, Amazon, and Alphabet, whose slowing earnings growth is already unsettling investors."
In the UK, Bank of England policymaker Catherine Mann told the Financial Times that she believes firms will struggle to raise prices this year. She told the FT that a half-point rate, a move she backed last week but was ultimately outvoted by the bulk supporting the 25 basis point cut, would have "cut through the noise".
A chunkier hike would have been a "superior communication device", she said,
Mann, previously considered a hawkish member of the MPC, backed a 50bp cut last week. The BoE cut bank rate by 25 basis points to 4.50%.
"Her fear is that demand conditions are weakening, corporate pricing power is fading and there is a risk of a 'non-linear' drop in employment. Further comments along those lines this morning could see the markets firm up pricing of three further 25bp BoE cuts this year," ING analysts said, noting Mann is also speaking on Tuesday morning.
"We do think GBP/USD is more vulnerable than EUR/GBP, however. This is because the euro could get hit should Washington turn its attention to the EU auto sector. 1.2250 looks like the near-term target for GBP/USD."
In London, BP shares edged up 0.1%. The oil major reported weaker fourth-quarter profit, but maintained its USD1.75 billion quarterly share buyback pace, ahead of a review of "elements of our financial guidance" later this month.
BP reported pretax replacement cost profit of USD764 million for the final-quarter, tumbling 79% from USD3.57 billion a year prior. Fourth-quarter revenue was down 8.6% year-on-year to USD48.09 billion from USD52.59 billion.
"In 2024 we laid the foundations for growth. We have been reshaping our portfolio - sanctioning new major projects, and focusing our low-carbon investment - and we have made strong progress in reducing costs. Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns. It will be a new direction for BP and we look forward to sharing it at our capital markets update on 26 February," Chief Executive Officer Murray Auchincloss said.
At the strategy update later this month, BP will review its buyback pace. For now, it announced another USD1.75 billion share repurchase programme, prior to reporting first quarter results.
BP added: "As part of our capital markets update scheduled for 26 February we intend to review elements of our financial guidance, including our expectations for 2025 share buybacks and capital expenditure."
Entain slumped 9.9%. The Ladbrokes owner said Gavin Isaacs has stepped down as chief executive officer with immediate effect, after only around five months in the role. Non-Executive Chair Stella David once again assumes the role of interim CEO, a post she held from December 2023 until September 2024.
Pierre Bouchut, currently senior independent director, will become non-executive chair on an interim basis.
David said: "Entain is making strong progress in delivering our strategic priorities. We would like to thank Gavin for his contribution. The board is pleased with the group's performance in 2024 and trading so far this year."
Entain said it is "comfortable with market expectations" for 2025. Isaacs became CEO of the gambling firm on September 2.
David had been interim CEO prior to that following the departure of Jette Nygaard-Andersen. Entain said Isaacs left the CEO role "by mutual agreement".
Elsewhere in London, Strip Tinning jumped 23%. The supplier of specialist connection systems to the automotive sector said a customer has placed an order for C-samples as planned. The customer is a German supplier of automotive motion technology to a US-based autonomous vehicle programme.
"The US vehicle manufacturer is wholly owned by one of the world's largest corporations and is currently running trials on public roads in three US cities," Strip Tinning said.
"The order, valued at USD780,000, covers the supply of the cell contact system for the vehicle's battery pack modules."
By Eric Cunha, Alliance News news editor
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