London midday: Stocks stay down as China retaliates against US tariffs

(Sharecast News) - London stocks were still in the red by midday on Tuesday as investors mulled the impact of the latest developments in the Trump tariff drama, after China announced retaliatory tariffs on a range of US imports.

The FTSE 100 was down 0.2% at 8,567.02, having tumbled on Monday after US President Trump announced over the weekend that he would impose 25% tariffs on imports from Canada and Mexico, and an additional 10% tariff on China.

On Tuesday, just as the tariffs on China took effect, the Finance Ministry there said it was imposing tariffs of 15% for US coal and liquefied natural gas and 10% for crude oil, farm equipment and some autos. It also announced a probe into Google.

Meanwhile, Trump has agreed to pause the implementation of 25% tariffs on Canada and Mexico for 30 days.

Russ Mould, investment director at AJ Bell, said: "There are more twists and turns to the tariff situation than a theme park rollercoaster.

"One minute we've got eleventh-hour deals to temporarily halt tariffs on Mexico and Canada, and the next we've got China flexing its muscles and showing it isn't a pushover.

"China has hit back at tariffs imposed on its goods imported into the US by saying it would retaliate with its own tariffs. It's like two cats screaming at each other in the street, tails puffed up and fangs on display.

"Donald Trump has shown he is prepared to stand his ground until the other side either agrees to his demands or reaches a compromise.

"There is an indication that Trump will hold talks with Chinese president Xi Jinping later this week. That conversation will hold the key to whether they reach a middle ground or we get a repeat of heightened tensions between the two countries omnipresent during Trump's first term as US president.

"Markets have shown some nervousness around the prospect of a trade war, yet it doesn't look like we're going to have another truly miserable day. Equity indices were only slightly down in Europe, pockets of Asia rallied sharply, while futures prices imply a fairly quiet day on Wall Street.

"It suggests that investors are digesting the tariff developments one step at a time, and the fact Mexico and Canada tariffs were postponed after last-minute talks helps to create some sense of calm. Whether this is lasting peace or the calm before the storm remains to be seen."

In equity markets, Vodafone tumbled after it reported another revenue decline in its key German market, denting a solid overall third-quarter performance across other regions.

The telecoms firm said German sales were down 6.4% in the period, compared with a 6.2% decline in the previous three months, primarily due to the impact of a new state media law. Despite the fall Vodafone reiterated full year guidance of �11bn in core earnings.

Drinks company Diageo slumped as it pulled its medium-term guidance ahead of incoming tariffs on Mexican and Canadian imports by the Trump administration, saying it cannot yet accurately predict how additional duties will affect its financial performance.

Diageo's tequila portfolio, which given geographic origin requirements must be made in Mexico, and also its Canadian whisky brands would be mainly affected by the protectionist measures.

Crest Nicholson slid as the housebuilder said it swung to a pre-tax loss of �143.7m in the year to the end of October 2024 from a profit of �23.1m a year earlier, calling it a "very tough and disappointing year".

In broker note action, Dunelm was boosted by an upgrade to 'outperform' from 'sector perform' at RBC Capital Markets, but SSP was knocked lower by a downgrade to 'sector perform' from 'outperform' by the same outfit.

Barratt Redrow gained after JPMorgan placed the shares on 'positive catalyst watch' ahead of the housebuilder's capital markets day on 12 February, where it expects the company to provide a more detailed trajectory of its mid-term objectives following the merger with Redrow. JPM said it believes this is "what the market is waiting for".

Market Movers

FTSE 100 (UKX) 8,567.02 -0.19%

FTSE 250 (MCX) 20,677.58 -0.17%

techMARK (TASX) 4,689.38 -0.65%

FTSE 100 - Risers

Entain (ENT) 710.40p 2.22%

Marks & Spencer Group (MKS) 342.40p 2.15%

International Consolidated Airlines Group SA (CDI) (IAG) 347.40p 2.00%

Sainsbury (J) (SBRY) 257.00p 1.58%

Airtel Africa (AAF) 147.40p 1.52%

easyJet (EZJ) 512.00p 1.19%

Barratt Redrow (BTRW) 457.50p 0.97%

Tesco (TSCO) 376.00p 0.97%

Schroders (SDR) 354.20p 0.91%

Smiths Group (SMIN) 2,052.00p 0.88%

FTSE 100 - Fallers

Vodafone Group (VOD) 65.14p -6.97%

Flutter Entertainment (DI) (FLTR) 20,760.00p -2.63%

Diageo (DGE) 2,313.00p -2.20%

BT Group (BT.A) 141.05p -1.74%

BP (BP.) 412.75p -1.73%

BAE Systems (BA.) 1,212.50p -1.50%

Rentokil Initial (RTO) 387.40p -1.32%

Beazley (BEZ) 811.50p -1.10%

Reckitt Benckiser Group (RKT) 5,246.00p -1.09%

Ashtead Group (AHT) 5,100.00p -1.05%

FTSE 250 - Risers

Raspberry PI Holdings (RPI) 758.25p 3.59%

Wizz Air Holdings (WIZZ) 1,274.00p 2.91%

Ferrexpo (FXPO) 106.00p 2.32%

Helios Towers (HTWS) 97.40p 1.99%

Dunelm Group (DNLM) 980.00p 1.92%

PPHE Hotel Group Ltd (PPH) 1,345.00p 1.89%

BH Macro Ltd. GBP Shares (BHMG) 400.00p 1.78%

Victrex plc (VCT) 993.00p 1.64%

Bytes Technology Group (BYIT) 464.20p 1.44%

NCC Group (NCC) 141.60p 1.43%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 169.70p -3.08%

SSP Group (SSPG) 176.00p -1.90%

Drax Group (DRX) 610.50p -1.85%

HICL Infrastructure (HICL) 112.60p -1.57%

Lancashire Holdings Limited (LRE) 632.00p -1.40%

Harbour Energy (HBR) 229.80p -1.37%

Mitchells & Butlers (MAB) 224.50p -1.32%

Foresight Group Holdings Limited NPV (FSG) 400.00p -1.23%

Indivior (INDV) 931.50p -1.17%

Aston Martin Lagonda Global Holdings (AML) 102.50p -1.16%