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(Alliance News) - Stock prices in London opened largely lower on Friday, with trade policy uncertainty continuing to hang over equities, after US President Donald Trump announced planned reciprocal tariffs.
The FTSE 100 index fell 30.67 points, 0.4%, at 8,734.05. The FTSE 250 added just 2.35 points at 20,918.49, and the AIM All-Share fell 3.35 points, 0.5%, at 719.85.
The Cboe UK 100 was down 0.2% at 876.04, the Cboe UK 250 flat at 18,280.03, and the Cboe Small Companies was up 0.4% at 16,178.48.
In European equities on Friday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was down 0.3%. Luxury retail helped the Paris market, after strong numbers from Hermes. Hermes rose 2.5%, while peer LVMH added 1.3%.
US President Donald Trump inked plans Thursday for sweeping "reciprocal tariffs" that could hit both allies and competitors, in a dramatic escalation of an international trade war that economists warn could fuel inflation at home.
Since taking office, Trump has announced a broad range of tariffs targeting some of America's biggest trading partners, arguing that they would help tackle unfair practices – and in some cases using the threats to influence policy.
Speaking in the Oval Office, Trump said Thursday he had decided to impose reciprocal duties, telling reporters that US allies were often "worse than our enemies" on trade.
"Whatever countries charge the US of America, we will charge them," Trump added.
In particular, he called the EU "absolutely brutal" in trade ties with Washington.
The levies would be tailored to each US trading partner and consider the tariffs they impose on American goods, alongside taxes seen as "discriminatory," such as value-added taxes, a White House official said on condition of anonymity.
The UK government faces questions on how it will respond to Trump's latest trade announcement, which threatens to impose tariffs as a retaliation for charging VAT on US goods.
The impact of the announcement on the UK was not immediately clear, but the policy published by the White House included VAT as a target for reciprocal tariffs.
On Thursday evening, senior minister Pat McFadden said the government would not "overreact" but "wait and see" whether the tariffs "actually come to pass".
Sterling rose to USD1.2591 early Friday from USD1.2535 at the time of the London equities close on Thursday. The euro climbed to USD1.0481 from USD1.0439. Against the yen, the dollar faded to JPY152.70 from JPY152.97.
Friday's economic calendar has a eurozone gross domestic product reading at 1000 GMT.
"Ahead on Friday, the market will be on tariff watch, but there is also economic data to consider. There is nothing on the ticket for the UK, however, the recent bout of strength in the euro will face a test with the first reading of Q4 GDP for the currency bloc. The market expects flat growth, and a 0.9% expansion YoY. Any deviation from expectations is likely to trigger a market reaction, especially in the FX market," XTB analyst Kathleen Brooks commented.
"Right now, the FX market is not pricing in a negative outcome from any prospective tariffs. Emerging markets, the EU and the UK are all in the firing line for the new expanded reciprocal tariffs, yet their currencies have mostly rallied vs. the USD since the start of the month."
A barrel of Brent was largely unmoved at USD75.35 early Friday from USD75.10 at the time of the London equities close on Thursday. Gold rose to USD2,935.64 an ounce from USD2,917.47.
In London, NatWest shares fell 2.0%, though it reported annual results that topped expectations.
NatWest said total income in 2024 fell 0.3% to GBP14.70 billion in 2024 from GBP14.75 billion. Pretax profit, however, rose 0.3% to GBP6.20 billion from GBP6.18 billion. Total income topped consensus of GBP14.59 billion, and pretax profit beat consensus of GBP6.07 billion.
Chief Executive Paul Thwaite said: "NatWest Group delivered a strong performance in 2024 with income excluding notable items of GBP14.6 billion and a return on tangible equity of 17.5%, exceeding our upgraded guidance. Throughout the year, we made good progress against our strategic priorities by growing all three of our customer businesses, improving productivity and actively managing our capital. This performance is grounded in the support and services we provide to over 19 million customers, whether buying or refinancing their homes, helping them to invest or growing their businesses. Alongside this, we were also pleased to see an accelerated reduction in the government's shareholding."
Looking to 2025, it expects a return on tangible equity in the range of 15-16%. In 2024, it delivered a RoTE of 17.5%. Income excluding notable items to be in the range of GBP15.2-15.7 billion is expected. Looking to 2027, it expects a RoTE greater than 15%.
BAE Systems fell 2.0% on US defence spending worries. According to its 2023 annual report, over 40% of the defence contractor's sales stem from the US.
Beijing said on Friday the US should take the lead on reducing military spending after US President Donald Trump said he wanted to hold talks with Russia and China on the topic.
Trump, who has cast himself in his second term as a global peacemaker, said he wanted a summit with his counterparts Vladimir Putin and Xi Jinping "when things calm down".
"I want to say, let's cut our military budget in half," he told reporters in the Oval Office on Thursday.
Wood Group plunged 28% as it announced it has extended cost-cutting plans. It also predicts negative free cash flow of USD150 million to USD200 million for 2025 and the oilfield and engineering services provider CEO said he was "disappointed in our financial performance".
Elsewhere, Totally shed 21%. It said a contract with the NHS in England has not been renewed, and the provider of healthcare and wellbeing services now expects earnings for the next financial year to be "at a similar level" to the current one.
Totally said the NHS 111 National Resilience support contract was not renewed. The value of the deal was GBP13 million, with GBP12 million being booked in the current financial year, which ends on March 31.
"The company was not reliant on the extension of the NHS 111 Contract for the delivery of its FY25 forecast and therefore remains confident of delivering FY25 performance in line with expectations of GBP85 million revenue and GBP3.5 million Ebitda," it said.
However, it added expectations for financial 2026 did assume the pact would be renewed, but at a "reduced level".
Totally added: "Work will commence to redeploy workforce where possible along with securing new contracts with new providers, although exceptional costs are expected. Based on the current revenue run rate of the company, new contract wins and the current new business pipeline the board now expects the financial performance of FY26 to be at a similar level to that which is expected to be reported for FY25."
By Eric Cunha, Alliance News news editor
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