The London stock market clocked up a fourth day of gains and the pound rallied after Donald Trump’s right-hand man said there was a ‘good chance’ of a ‘great’ UK-US trade deal.
In another welcome boost for investors reeling from the US President’s on-off tariff war, the FTSE 100 jumped 1.4 per cent, or 114.78 points, to 8249.12.
That took gains since Thursday morning to more than 7 per cent, though the blue-chip index remains down over 4 per cent this month over fears a new era of protectionism will tip the global economy into recession.
Sterling was also on the march, rising as high as $1.3252, a level last seen in early October before Rachel Reeves’ £40billion tax raising Budget.
Danni Hewson, head of financial analysis at AJ Bell, said: ‘It’s been another strong day for London markets, and whether the softening of the White House stance on tariffs was part of some grand design or rapid and panicked back-pedalling, investors on this side of the Atlantic are feeling cautiously optimistic.’
The gains were echoed across Europe with the Dax up 1.4 per cent in Frankfurt while the Cac 40 ticked 0.9 per cent higher in Paris.
Bounce back: The FTSE 100 jumped 1.4% or 114.78 points to 8249.12, taking gains since Thursday morning to more than 7%
The rally follows a brutal sell-off on equity markets last week as an escalation in the trade war between the US and China sent shockwaves around the world.
Shares bounced back later in the week as Trump offered a reprieve to other nations by pausing the steepest ‘reciprocal’ tariffs for 90 days – though a baseline 10pc levy still applies along with other duties on sectors including steel and cars.
The mood on London trading floors was lifted a little further yesterday after Vice-President JD Vance said the US administration was ‘certainly working very hard’ with Sir Keir Starmer’s government on a trade deal.
‘I think there’s a good chance that, yes, we’ll come to a great agreement,’ he said.
But the outlook remains unclear and Wall Street bosses have lined up in recent days to warn Trump that he risks tipping the US – and possibly the world – into recession.
And a flurry of reports yesterday laid bare the damage Trump’s trade war has done to investor confidence.
A survey of fund managers by Bank of America found 82 per cent expect the global economy to weaken – the bleakest outlook for three decades.
Hargreaves Lansdown warned investor confidence has ‘plummeted across the board’ this month with a 35 per cent drop in North American markets and a 28 per cent slump in the UK.
Victoria Hasler, head of fund research at Hargreaves Lansdown, said: ‘The extent and level of tariffs imposed sent shockwaves through markets and our survey shows that investors lost confidence in droves.’
Morale among investors has also tumbled in Germany, according to the Zew institute.
‘The erratic changes in US trade policy are weighing heavily on expectations in Germany,’ said Zew president Achim Wambach.
Recruiter Robert Walters has warned that a new era of protectionism will cost jobs, as firms put off hiring.
‘Increased uncertainty regarding the flow of global trade due to tariffs is likely to be a further headwind to client and candidate confidence in the near term,’ said Robert Walters chief Toby Fowlston.
The warning comes a week after rival Page Group withheld its financial forecast, and outlined plans to cut costs due to ‘increasingly unpredictable’ conditions resulting from tariffs imposed by Trump.
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