(Alliance News) – Stock prices in Europe made a slow start on Thursday, with tariff worries coming to the fore again, after US President Donald Trump announced he would be in contact with trading partners in the weeks to come.
“We’re going to be sending letters out in about a week and a half, two weeks, to countries, telling them what the deal is,” he told reporters.
“At a certain point, we’re just going to send letters out. And I think you understand that, saying this is the deal, you can take it or leave it.”
The FTSE 100 index opened up just 2.58 points at 8,866.93. The FTSE 250 was down 80.27 points, 0.4%, at 21,348.27, and the AIM All-Share fell 2.13 points, 0.3%, at 766.70.
The Cboe UK 100 was down 0.1% at 883.05, the Cboe UK 250 fell 0.6% to 18,838.09, and the Cboe Small Companies was down slightly at 16,996.10.
In European equities on Thursday, the CAC 40 in Paris was down 0.5% and the DAX 40 in Frankfurt shed 0.6%.
Analysts at Deutsche Bank commented: “We’re now less than four weeks away from the end of the 90-day extension to the reciprocal tariffs, which is set to run out on July 9.
“The US is still negotiating with several countries, and earlier in the day, Commerce Secretary Lutnick said the EU ‘will be probably the very, very end’ of the trade deals that the US completes. Meanwhile, in a testimony to Congress, Treasury Secretary Bessent suggested there was no quid pro quo between US chip restrictions and China rare earths. Bessent’s other notable comment came on fiscal policy, saying that he wants to achieve a deficit ratio of below 4% by the end of Trump’s term. And after Bloomberg reported he might be in the running to become the next Fed Chair, Bessent also said he ‘would like to stay in my seat’ at the Treasury to 2029.”
Bessent said Wednesday that an extended pause on higher tariff rates is possible for some countries, as a deadline approaches for dozens of economies to face steeper levies.
“It will be up to President (Donald) Trump, but it is my belief that if someone is negotiating in good faith, that an extension will be possible,” Bessent told lawmakers. Trump unveiled sweeping tariffs on most trading partners in April but halted higher rates on many countries until early July while negotiations are underway.
In Tokyo on Thursday, the Nikkei 225 ended 0.7% lower. In China, the Shanghai Composite ended slightly higher, while the Hang Seng Index in Hong Kong shed 1.1%. Over in Sydney, the S&P/ASX 200 lost 0.1%.
The uninspiring trade in the Asia Pacific region followed a lower close in New York. Stocks in New York fell despite the start of the trading day stateside offering some promise amid a trade “framework” between the world’s two largest economies, as well as a softer than expected US inflation reading.
The Dow Jones Industrial Average ended slightly lower on Wednesday, the S&P 500 lost 0.3% and the Nasdaq Composite shed 0.5%.
Trump said US personnel were being moved from the potentially “dangerous” Middle East on Wednesday as nuclear talks with Iran faltered and fears grew of a regional conflict.
Trump also reiterated that he would not allow Iran to have a nuclear weapon, amid mounting speculation that Israel could strike Tehran’s facilities.
The geopolitical worries weighed on travel stocks. easyJet fell 2.6% in London, British Airways parent IAG shed 2.3% and Wizz Air was 3.9% lower.
Against the dollar, sterling was at USD1.3544 on Thursday morning, flat from USD1.3545 at the time of the London equities close on Wednesday.
The UK economy fell at a faster pace than expected in April, numbers on Thursday showed, as services output slumped.
According to the Office for National Statistics, the UK economy fell 0.3% in April from March. It had expanded 0.2% in March from February.
The reading for April fell short of expectations, as a smaller decline of 0.1% was expected, according to consensus cited by FXStreet.
Trade data was also released, which showed exports of UK goods to the US slumped by GBP2.0 billion in April, the largest monthly decrease on record.
XTB analyst Kathleen Brooks commented: “Overall, today’s UK growth data has been clouded by US tariffs. We expect to see some weakness in growth, especially exports to the US, reverse course in the coming months. Added to this, weakness in real estate is also expected to fade. The pound fell on the back of this data, although GBP/USD remains comfortably above USD1.3550. We expect this data to put further pressure on the UK chancellor, after her spending review led to a backlash. However, considering how seismic US economic policy has been for the global economy, the UK may have got off lightly, and the declines in the pound may be temporary.”
The euro climbed to USD1.1512 on Thursday morning from USD1.1486 at the time of the European equities close on Wednesday. Against the yen, the dollar fell to JPY144.02 from JPY144.63.
In London, Halma added 8.7%. It reported annual profit growth amid “varied market conditions and a challenging economic and geopolitical backdrop”.
The life-saving equipment maker posted pretax profit of GBP384.3 million for the year ended March 31, up 13% from GBP340.3 million. Revenue rose 11% to GBP2.25 billion from GBP2.03 billion.
Halma upped its final dividend by 7.0% to 14.12 pence per share from 13.20p a year earlier. Its total dividend was also 7.0% higher at 23.12p from 21.61p.
CEO Marc Ronchetti said: “This has been another successful year for Halma, reflecting the contributions and commitment of everyone in the group. We delivered record revenue and profit, with strong margins and cash generation, and increased returns on capital. We achieved our 22nd consecutive year of profit growth, and delivered our 46th consecutive year of dividend growth of 5% or more.”
The CEO continued: “Achieving such a strong performance amidst varied market conditions and a challenging economic and geopolitical backdrop is a testament to the fundamental strengths of our sustainable growth model.”
Halma said it has made a “positive start” to the new financial. It expects upper single digit organic constant currency revenue growth for the year.
Tesco shares rose 1.3%. Grocer Tesco left its annual outlook unchanged, after it kicked off the financial year with first-quarter sales growth.
Sales in the 13 weeks to May 24 amounted to GBP16.38 billion, rising 5.3% on-year, or 5.5% at constant currency. Like-for-like sales were 4.6% higher annually.
CEO Ken Murphy added: “In the UK we have continued to see market share gains and increased customer satisfaction across a wide range of measures, a reflection of our powerful value proposition, strong availability and focus on product quality and innovation.”
The CEO said the grocery market “remains intensely competitive”.
Tesco still expects adjusted operating profit of between GBP2.7 billion and GBP3.0 billion for the year, at best a 4.1% decline from GBP3.13 billion the prior year. It still predicts free cash flow within its medium-term guidance range of GBP1.4 billion and GBP1.8 billion.
Elsewhere in London, Manx Financial jumped 23%. The provider of financial services to commercial and retail customers expects to report a 41% climb in pretax profit for 2024 to around GBP9.9 million.
It plans to release annual result no later than June 25.
A barrel of Brent rose to USD69.09 early Thursday, from USD68.23 at the time of the London equities close on Wednesday. Gold rose to USD3,369.71 an ounce from USD3,338.63.
Thursday’s economic events calendar has US producer price inflation data and initial jobless claims at 1330 BST.
By Eric Cunha, Alliance News news editor
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