London stock markets ended the day lower on Friday, despite showing early recovery, due to new worries about global politics. The FTSE 100 went lower by 0.24% to end the day at 8,717.97 and the FTSE 250 fell 0.44% to 20,708.72. After earlier hopes, the gloomier close focused on solid government statistics showing the economy was holding up well. Because of increasingly harsh statements made by the United States, progress in Europe was fast forgotten and risky assets fell broadly both in Europe and the U.S.
After Trump made it clear he would impose a 50% tariff on EU imports as of June 1, due to broken talks with the bloc, the markets shifted to pessimism. In addition, he announced that outside products made by Apple would be hit with a minimum 25% tariff which could encourage the company to move production within the U.S. The decision surprised investors and sparked worry about an ongoing trade conflict.
IG noted that market sentiment shifted sharply when Trump made his comments: “European and U.S. stocks went from gaining to dropping by as much as 2% after the threats by Trump.” Residents are paying greater attention to problems from trade disputes, slowdowns in economic growth and government finances.
Bond Yields and Safe Havens React
When people became more cautious, bond prices quickly improved all around the world. U.S. 10-year Treasury yields dropped sharply from a three-month high of 4.63% to finish the session at 4.45%. People who invest moved their money into safe options as economic and fiscal issues arose, especially after the U.S. Congress passed the massive bill on taxes and spending at the start of the week.
The bill supported by the White House may lead to a projected increase in U.S. national debt of $3.8 trillion in a decade. Because of this, many began to worry about the government’s future financial strength and lost interest in risky investments.
The U.S. dollar dropped back to its two-week lows after finishing higher last week. MMs turned to gold again since it is a classic safe asset. Crude oil rose more than 7% from its last low and some experts think it might reach new record highs above $3,500 an ounce if trade tensions worsen.
Energy and Commodities Mixed
Geopolitical tension in the Middle East caused oil prices to go up as well. Although the commodity gained briefly during the day, it is heading for losses by the end of the week. Experts are still weighing the threats from a supply shortage against decorating demand.
Resilient UK Economic Indicators Offer Some Relief
With global markets tumbling, the economic data published in the UK gave us a slightly better outlook. Retailers saw sales advance 1.2% in April, higher than what economists had predicted. Most of the increase was due to a 3.9% hike in volumes from food stores, assisted by spring weather and the usual rise in buying.
According to Hannah Finselbach, a senior statistician at the Office for National Statistics, nice weather and a comfortable climate helped boost sales in April for a variety of stores. After sales had suffered for a couple of months, supermarkets experienced strong demand for food. Success was evident at bakeries, butchers and off-licences as well.”
Yet, improvement was not seen in each part of the industry. Despite driving positive results in March, the clothing sector saw falls afterwards, but other retailers performed well.
In separate news, the GfK consumer confidence index went up three points to -20 in May because people felt their personal finances would probably stay the same and the overall economy was forecast to improve. Though the number remains low, the progressively higher rating may hint that confidence is returning to consumers, maybe spurred by the Bank of England’s rate cut.
Lower utility costs allowed many people an opportunity to relax financially. Ofgem, the UK’s energy regulator, has announced a 7% drop in the price cap from July, making the average annual bill £1,720. Compared to the top reached in 2023, costs have moved down by 28%, but remain 10% more expensive for households than they were last year.
Mixed Corporate Performances on London Markets
The stock market news show's results on the corporate side among London-listed equities were not all the same. Shares in AJ Bell rose 8.4% following the announcement of positive halfway results. Revenue at the company rose by 17% to £1605 million and pre-tax profits grew by 12% to £68.8 million, both figures helped by steady income from regular and one-off transactions.
Imperial Brands shares rose 1.19% after RBC Capital Markets decided to raise its target price for the tobacco group from 2,100p to 2,400p. Improved ranks in the market, careful spending and the company’s history of hitting targets were some of the reasons cited.
Nevertheless, Games Workshop shares fell by 3.21%, despite the company saying pre-tax profits for the year could be as much as £255 million which exceed analysts’ projections. Shares fell after the company said that last year’s record licensing revenue of £50 million would not be achieved again.
This has been a great year for Games Workshop, highlighted by impressive earnings and joining the FTSE 100, said Russ Mould of AJ Bell. But, the caution about earning future licensing income has led some to sell those companies.
In other markets, Watches of Switzerland shares declined by 4.16% due to concerns about its involvement in transatlantic retail markets as the U.S. announced its most recent tariffs. Questions about the possible effects of inflation on luxury purchases made investors fearful. Shares of Bloomsbury Publishing slid 5.34% after the company revealed that pre-tax profit for the year fell by 22% to £32.5 million.
Germany Shows Tentative Signs of Recovery
Germany made a stronger recovery than Europe’s larger economies expected. The revised GDP figures for the first quarter show a 0.4% increase which is twice the original estimate and the highest GDP growth for any quarter since late 2022. Germany’s economy bounced back after it shrank in the earlier quarter, suggesting a slow and early revival in the region’s largest state.
To Trump’s threat of tariffs, German economy minister Katharina Reiche said de-escalation is needed since both countries suffer if tariffs are placed. Many European officials said nothing at first, but she spoke out, presumably so that European responses would be coordinated within the European Commission.
Looking Ahead
Markets ended the week unsettled and investors were ready for more movement in the coming days. Because President Trump set June 1 as the deadline, there is now more urgency in transatlantic trade talks. In addition, markets are confronted by the risk of worldwide conflict and the danger of the economy slowing down.
While UK figures have improved, there are still weaknesses, especially because of pressure on household spending, prices and energy expenses. Strong outcomes in the corporate world and rising confidence among customers support the market, though they are not enough to push back global risks.
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