The FTSE 100 and European stocks regained some lost ground in trading this morning (Tuesday), after stock indices around the world nursed some painful losses yesterday (Monday), with Asian markets particularly badly hit.
The FTSE 100 had risen by 1.6% by midday today. Engine maker Rolls-Royce gained almost 6%, having sold off on Monday amid trade anxieties surrounding the car sector.
The DAX in Germany rose 1.2%, while France’s CAC 40 was 1% higher and the pan-European Stoxx 600 was up 1.3%.
Sterling regained some ground against the dollar, having dropped towards the $1.27 mark from around $1.31 on Monday.
US stock futures were also in the green. Futures contracts for the S&P 500 rose 1.5%. Dow Futures traded nearly 2% higher and the NASDAQ looked set for a jump of around 1.3%.
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Russ Mould, investment director at AJ Bell, said: “Asia led the way, including a 6% advance from the Nikkei after Japan effectively jumped to the front of the queue for tariff negotiations with Donald Trump. Reports that Japan would get priority status for talks fired up markets in hope of a resolution.
“Trump has the same end goal for the countries on which he has imposed new tariffs. He wants to make it easier for US companies to do business overseas, for the partnering countries to buy more US goods, and for the US to get its hands on strategically important assets such as natural resources.
“The brief flutter of excitement yesterday when rumours circulated that Trump was about to impose a temporary pause on tariffs (excluding China) resulted in a big but brief rally in US markets. While the White House quickly rubbished those rumours, it was enough of a window into what might happen with markets if Trump was more accommodating.”
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Investors are waking up to a positive sight for once, with markets opening higher across a broad range of European indices and the FTSE 100 up 0.9% at the open.
“However, this should hardly be seen as the end of the trouble, especially with President Trump showing no signs of easing his stance on perceived trade imbalances, having doubled down on China. Still, there is a glimmer of hope, as Japanese markets are up nearly 6% following news that trade talks will begin in a few days. The sooner deals are reached, the quicker companies and investors can gain some clarity on the lay of the land.”
Trump announced a sweeping new set of import taxes last week, sending economic shockwaves around the world. He has also now threatened additional 50% duties on China if the country does not scrap its plans for retaliatory tariffs. Such a move would be a major escalation of the trade war between the world’s two biggest economies.
