(Alliance News) - London's FTSE 100 moved off session lows but was still in the red midday Tuesday, with tariff worries stifling its progress, though European peers outperformed.
The FTSE 100 index fell 18.14 points, 0.2%, at 8,565.42. The FTSE 250 declined 34.46 points, 0.2%, at 20,677.30. The AIM All-Share fell 0.72 of a point, 0.1%, at 711.41.
The Cboe UK 100 was down 0.2% at 857.34, the Cboe UK 250 fell marginally to 18,082.80, and the Cboe Small Companies was up 0.2% at 15,535.16.
The pound was flat at USD1.2416 early Tuesday afternoon from USD1.2414 late Monday. The euro rose to USD1.0326 from USD1.0307. Against the yen, the dollar rose to JPY155.31 from JPY154.61.
Analysts at Lloyds Bank commented: "The second Trump presidency is just two weeks old and in that time there has already been a fair amount of ping pong in market expectations for tariffs back and forth between 'they are definitely happening' to 'they are just a negotiating tool'. After the last minute pause in implementation for Mexico and Canada yesterday it is back to thinking about the levies more as a threat.
"Even if more of the noise on tariffs turns out to be the threat of additional trade costs rather than the actuality of implementing them, it looks like that is in itself nevertheless feeding its way into Fed analysis on the rate path. For instance, overnight Goolsbee (Chicago, voter) indicated his view that working through all the uncertainty will result in slowing the pace of easing. Meanwhile, Bostic (Atlanta, non-voter) put the focus on how inflation expectations are affected by the situation with tariffs, suggesting that there would need to be a policy response to an increase in expectations."
China said Tuesday it would slap tariffs on imports of US energy, vehicles and equipment, firing a return salvo in an escalating trade war between the world's two biggest economies.
On Tuesday it unveiled 10% tariffs on imports of crude oil, agricultural machinery, big-engined vehicles, and pickup trucks.
The new measures were in response to the "unilateral tariff hike" by Washington over the weekend, Beijing said.
Diageo reported it has made "considerable contingency planning" in recent months in regard to potential US tariffs, which it said will may affect its tequila portfolio and Canadian whisky.
"Given our extensive supply chain and broad and advantaged portfolio, there are a number of possible actions to help mitigate the potential impact including pricing and promotion management, inventory management, supply chain optimisation and re-allocation of investments. Some of these actions can be implemented rapidly and others will take time. We will continue to be agile and respond with speed as key details are confirmed," the brewer and distiller said.
Diageo removed medium-term guidance due to the current macroeconomic and geopolitical uncertainty in many of its key markets impacting the pace of recovery. Instead, it plans to provide more regular near term guidance.
Diageo had previously guided to medium-term organic sales growth of 5% to 7%.
Shares in the company fell 2.7%.
One London listing that was more confident over how it would fare in the face of tariffs was VH Global Energy Infrastructure. The investor in energy infrastructure said it does not expect the flow of slurry from Mexico to Texas to be impacted by possible trade curbs between the US and Mexico.
The stock rose 5.5%.
Elsewhere in London, Vodafone shares slumped 7.1%. The telecommunications firm continued to struggle in Germany.
Total revenue in the third-quarter to December 31 increased 5.0% to EUR9.81 billion from EUR9.35 billion a year prior. Service revenue alone advanced 5.2% on-year on an organic basis, picking up speed from a 4.2% advance in the second-quarter.
Organic service revenue in the UK rose 3.3% in the third-quarter, after a 1.2% rise in second. In Germany, however, it fell 6.4%, "primarily due to the impact of the TV law change". A law change in Germany last year saw the end of bulk TV contracting in multi dwelling units.
"Vodafone's long decline shows no sign of letting up. While there are some reasons for encouragement in the UK market ahead of the now-approved merger with Three, and robust performance in other geographies too, the market has tuned these out and is focused on the growing problems in its German operation," AJ Bell analyst Russ Mould commented.
"This is understandable given it is the company's single largest market and the impact of regulatory changes affecting television services continues to mount up. Vodafone is struggling to remain relevant and asset sales and mergers will only take it so far. The company will hope to win investors over with share buybacks this year but, again, it needs to demonstrate it can achieve sustainable growth. Until then, everything else it does looks like tinkering at the edges."
In Frankfurt, the DAX 40 was up 0.1%, while the CAC 40 added 0.2%.
Supporting the blue-chip benchmark in Paris, BNP Paribas and Dassault Systemes rose 1.6% and 5.9% on well-received earnings.
Chipmaker Infineon Technologies added 9.3% in Frankfurt as it boosted guidance.
A barrel of Brent fell to USD74.99 early Tuesday afternoon, from USD75.65 at the time of the London equities close on Monday. Gold traded at USD2,816.22 an ounce, falling slightly from USD2,819.29. The precious metal spiked above the USD2,830 mark on Monday, its best ever level, boosted by tariff uncertainty.
ActivTrades analyst Ricardo Evangelista commented: "Washington has not backed down on tariffs for Chinese imports, and as Beijing retaliates, the risk of an all-out trade war increases. This scenario casts a dark shadow over global economic growth prospects. Against this backdrop, demand for haven gold is naturally rising, creating scope for further price gains."
In New York, stocks are called to open lower. The Dow Jones Industrial Average is called down 0.3%, the S&P 500 down 0.2% and the Nasdaq Composite 0.1% lower.
On the up, however, Palantir Technologies surged 19% in pre-market trade. The software provider for data analytics overnight posted a 36% jump in fourth-quarter revenue.
AJ Bell's Mould commented: "It's yet another company to be riding the AI wave, benefiting from multiple industries pressing the button on big investment to improve their technological capabilities. From military and healthcare to transport and mining, Palantir is helping clients across a wide range of sectors to address problems previously deemed too complex to handle. Having generated a 341% return for shareholders in 2024, investors are now wondering if Palantir is the new Nvidia as the tech stock with the ingredients to keep delivering supersized gains."
By Eric Cunha, Alliance News news editor
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