Donald Trump’s tariff plans and the Budget fallout continue to be the main areas of focus for traders.
The dollar advanced after Trump vowed to hit Mexico and Canada with a 25% tariff on all products, as well as an additional 10% for China.
Halfords urged the Government to reform the Apprenticeship Levy as it became the latest retailer to highlight the Budget impact on labour costs.
FTSE 100 Live Tuesday
- Dollar advances on Trump tariff plan
- Halfords urges levy reform
- Compass upbeat after strong year
Market update: FTSE 100 struggles amid tariff focus, Melrose surges
10:24 , Graeme EvansDonald Trump’s tariff threats against Canada, Mexico and China today reignited the US dollar and dealt a setback to the improving FTSE 100 index.
The Canadian dollar weakened more than 0.8% to a four-and-a-half year low, while the Mexican peso was also sharply lower against the US dollar.
Their reverses follow Trump’s vow that his first day in the White House will see Mexico and Canada hit with a 25% tariff on all products. China also faces an additional 10% tariff, a comment that weakened Asia markets early today.
Hargreaves Lansdown analyst Matt Britzman said: “The President-elect’s scorched-earth approach has stoked fears of a trade war, with investors increasingly wary that Europe could be next in his crosshairs.”
The FTSE 100 index fell 0.5% or 40.60 points to 8251.08, ending a run of three sessions on the rise. The Cac benchmark in Paris and the Dax in Frankfurt weakened 0.8% and 0.5% respectively.
Drinks giant Diageo was among the leading fallers in London as shares declined 2.5% or 60p to 2342.5p, while Asia-focused Prudential dropped 11.6p to 645.2p..
Caterer Compass also reversed 57p to 2596p, despite a “year of strong operational and financial performance” as underlying profits rose 16% to $3 billion (£2.4 billion).
It said that net new business growth accelerated in the second half as expected, adding that 2025’s profit growth should be in the high single-digits.
While that was a little short of the City consensus, the shares are still 22% higher this year after two earlier upgrades to guidance.
Melrose Industries led the FTSE 100 by some distance after JPMorgan put the aerospace supplier on “positive catalyst watch”, helping to send shares up by 40.2p to 567.4p.
The next best stock was Intertek, which cheered 64p to 4576p after the quality assurance provider said it was on track to report a strong 2024 performance.
The FTSE 250 index weakened 0.7% or 142.33 points to 20,606.93 as mid-cap investors continued to focus on the bottom-line impact of last month’s Budget.
Fallers included AO World, even though it upgraded annual guidance alongside half-year results showing profits up by 30% to £17 million.
Higher labour costs from next year mean the online electricals chain faces a potential annual hit of £4 million, rising to £8 million with indirect costs.
It added: “We will work hard to mitigate the impact of this to overall profitability.”
The shares fell 1.8p to 107.8p, still 16% higher this year.
Topps Tiles also said that changes in the National Living Wage and national insurance contributions will drive almost £4 million of additional costs into the business on an annual basis from April, of which about £2 million will impact the 2025 year.
It said: “Given these cost increases represent a high proportion of the current level of profitability in the group, they will need to be managed very carefully, and the business is currently formulating plans to mitigate these costs as far as possible.”
Annual profit halved to £6.3 million in the year to 28 September but Topps said it continued to take share of a market down 20% on pre-Covid levels. The All-Share listed stock rose 0.75p to 40.25p.
Halfords, which also set out its stance on the Budget changes, surged 13% or 16.6p to 145.8p after reiterating guidance alongside results showing a 1.3% decline in half-year profits to £21 million. The shares are 24% lower this year.
FTSE 100 lower amid trade jitters, Halfords up 14%
08:58 , Graeme EvansThe FTSE 100 index is down 0.5% amid a weaker session for European markets due to Donald Trump’s remarks on China, Canada and Mexico trade tariffs.
Stocks down by more than 2% included Prudential, Rentokil Initial and Glencore as London’s top flight retreated by 42.19 points to 8249.49.
Caterer Compass fell 3% or 71p to 2582p after its annual results, but an update by testing firm Intertek helped its shares to improve 64p to 4576p.
The FTSE 250 index fell 138.07 points to 20,611.19.
AO World stands 1.25p lower at 108.35p, having initially risen by 2% on the back of its interim results. Utility Warehouse firm Telecom Plus led the benchmark, rising 4% or 76p to 1838p following the release of results.
In the FTSE All-Share, Halfords shares jumped 14% or 17.7p to 146.9p amid relief at unchanged guidance in half-year results.
AO World upgrades guidance after “Morecambe & Wise” summer
08:42 , Graeme EvansAO World today upgraded profit guidance in interim results that even included a mention for a famous sketch by comedy greats Morecambe & Wise.
The online electrical retailer lifted half-year profits by 30% to £17 million, prompting it to forecast an annual surplus between £39 million and £44 million.
Founder and chief executive John Roberts said: “We’ve had a Morecambe and Wise summer sales period; all the right volumes just not in the right categories.
“The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble driers than we had planned. Overall, our team did a fantastic job to play this out as a satisfying score draw.”
Canadian dollar weakens on Trump tariff vow, Nikkei lower
07:55 , Graeme EvansThe Canadian dollar has fallen more than 0.8% to a four-and-a-half year low, with the Mexican peso also sharply lower against the US dollar this morning.
The reverses follow Donald Trump’s vow that one of his first executive orders will be to hit Mexico and Canada with a 25% tariff on all products.
He added that China would face an additional 10% tariff, a comment that contributed to weakness in Asia stock markets earlier today.
IG Index said: “Trade-sensitive currencies and equities, including Japan's export-heavy Nikkei, declined amid fears of tariff impacts.
“Gold stabilised after its sharp drop yesterday, while oil prices also came under pressure on reports of progress on a ceasefire between Israel and Lebanon.”
Halfords urges apprenticeship levy reform, sees £23m Budget hit
07:42 , Graeme EvansHalfords has urged the Government to accelerate Apprenticeship Levy reform as a way to offset the “particularly acute” cost impact of National Insurance increases in last month’s Budget.
CEO Graham Stapleton said: “Critical to our success, and what really stands us apart from the competition, are more than 12,000 fantastic colleagues.
“We continually prioritise investment in their training – with skills and capability our number one focus.
“The cost implications from the recent UK Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers, face to face.
“While we will work hard to mitigate these costs, we urge the government to consider alternative ways of supporting businesses like ours, including the acceleration of Apprenticeship Levy reform, which would help us to upskill existing colleagues and offset some of the new headwinds.”
The company said measures announced in the Budget add about £23 million of direct labour cost, of which £9 million was already included in next year’s planning assumptions and fully mitigated.
Halfords, which today reported a 1.3% decline in half-year profits to £21 million, said the impact on consumer behaviour and the trajectory of its end-markets is still unclear.
Compass profits grow 16% after “strong” year
07:18 , Graeme EvansCatering giant Compass today reported a “year of strong operational and financial performance”, with underlying profits up 16% to $3 billion (£2.4 billion).
The FTSE 100-listed group, which employs 580,000 people in more than 30 countries, said that net new business growth accelerated in the second half as expected.
Organic revenues grew 10.6% in the year to 30 September, with the underlying operating margin up by 30 basis points to 7.1%.
For 2025, the company expects high single-digit underlying operating profit growth. This will be driven by organic revenue growth above 7.5% and ongoing margin progression.
Compass serves food in locations spanning the education, industry, sports, defence and healthcare sectors, with its brands including Eurest and Chartwells.
Dollar strengthens on trade war fears, FTSE 100 seen lower
07:03 , Graeme EvansThe US dollar has strengthened, fuelled by Donald Trump’s renewed tariff threats against countries including China.
The pound today stood at $1.254, having rallied yesterday after the greenback weakened on relief over Trump’s nomination as Treasury secretary.
The Dow Jones Industrial Average closed 1% higher last night, while the S&P 500 index rose 0.3%.
The FTSE 100 index is forecast to open 27 points lower at 8265, reversing Monday’s improvement.
