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“Equity markets were flashing red as Trump’s tariff regime hits another milestone,” says Russ Mould, Investment Director at AJ Bell.
“Investors have been caught off guard, having previously hoped Trump would kick the new tariff levels down the road pending further negotiations with foreign trade partners. Instead, we’ve got new rates galore and that means investors need to spend time understanding what that means for companies in their portfolio.
“The fact Trump hasn’t chickened out and pushed back the 1 August deadline to 1 September has soured the tone on the markets. Europe and Asia were in a grumpy mood and futures prices imply Wall Street will follow suit later today.
“We haven’t had a repeat of the sharp market sell-off seen immediately after the 2 April Liberation Day speech. However, it’s fair to say there is a broad negative tone at the end of the trading week and recent upwards market momentum has evaporated.
“Liberation Day was a moment of pure shock to financial markets, an opening gambit designed to show the world that Trump meant business. Today is merely the next episode in Trump’s tariff story – it’s unwelcome, hence the market dip; but it’s not entirely unexpected, hence the lack of a full market crash.
“Pharmaceutical stocks AstraZeneca and GSK were the main culprits behind the FTSE 100’s decline. Investors in the healthcare sector got a dose of the blues after Trump wrote to various company bosses outlining how they should cut US prescription drug prices or face a crackdown.
“Widespread share price declines among pharma stocks are the market’s way of saying it doesn’t like the prospect of Trump effectively declaring war with the sector.”
International Consolidated Airlines (IAG)
“Shares in IAG ascended to their highest level since February 2020, extending an impressive run for the stock and putting them ever closer to pre-Covid levels.
“The airline is delivering non-stop good news and investors are loving every minute of the ride. Revenue and profit are growing, the balance sheet is stronger, dividends and buybacks are flowing nicely, and margins are improving.
“Diversity of routes and brands means IAG can cope with weakness in the US leisure market. There’s plenty of strength elsewhere to pick up the slack.
“There’s always more that can be done to put extra bums on seats as its planes aren’t flying full, but as airlines go, IAG is in a much stronger position than many of its peers.”
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
