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“The week begins with tariffs once again dominating the agenda for financial markets as US president Donald Trump suggests imports from Mexico and the European Union will be hit by levies of 30% from the beginning of August,” says AJ Bell investment analyst Dan Coatsworth.
“That has put indices in mainland Europe under significant pressure, although the FTSE 100 stood out for its more resilient performance as the UK index moved 0.3% higher. With the UK having already reached an agreement on a 10% tariff for trade with the US, with exemptions for certain industries, the country is now seen to have an advantage in terms of trade relations.
“Unlike their counterparts across the Channel, British companies should be able to operate with greater certainty around trade, and exports may be diverted through the UK. This might act as a push for foreign companies to invest in manufacturing and logistics facilities in the UK.
“The last few months have taught us that a lot can change on a daily basis, let alone over several weeks, so investors will be watching closely to see where we land by 1 August.
“Having risen sharply at the end of last week on warnings of a tighter market than is perceived and speculation about Russian sanctions, oil traders were bracing themselves for news from the White House. The Trump administration is set to make an announcement on energy policy which could encompass sanctions and a shift in the management of the country’s Strategic Petroleum Reserve.
“With the big US banks set to kick off the second-quarter earnings season in the US tomorrow, corporate news was thin on the ground at the start of the week.
“Support services outfit DCC saw shareholders react with some mild disappointment to news it will receive no meaningful proceeds from the sale of its technology distribution business. The transaction does move along the tidying-up process as the business looks to sharpen its focus on energy – its highest returning area of operation.
“Radio frequency solutions firm Filtronic has surged higher in the last 18 months, largely propelled by contracts secured with Elon Musk’s SpaceX, so news of a fresh contract win with a different client was well received. The deal with a defence contractor helps demonstrate that Filtronic is not just a one-trick pony.”
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
