On January 20, 2025, London's FTSE 100 index climbed 15 points to close at 8,520, setting a new record closing value after reaching an intra-day high of 8,524 earlier in the day. This surge reflects a positive sentiment in the market, particularly following reports that President Donald Trump will not impose immediate tariffs as part of his forthcoming executive orders [f8da58e2].
The index's recent rally comes after a period of volatility earlier in January, when it faced pressure due to rising oil prices and concerns over the Federal Reserve's interest rate policies. On January 13, the FTSE 100 had declined by 35 points amid a sell-off in US equities following disappointing employment data that suggested the Fed would not cut rates until late 2025 [6710a253].
As Trump prepares to sign executive orders on January 22, speculation surrounds potential easing of sanctions against Russia, contributing to a decline in oil prices, which have fallen below $80 per barrel. Brent crude, which peaked at $82.50 last week, has seen these fluctuations as market participants react to Trump's anticipated trade policies [f8da58e2].
In addition to oil market dynamics, the dollar has weakened following reports that Trump will not impose tariffs immediately on imports from China, Canada, and Mexico. This shift in trade policy could have significant implications for the UK economy, particularly as it navigates its own challenges [f4ce3e02].
The UK retail sector is also facing challenges, with unexpected drops in sales reported for December, reflecting ongoing economic strains. However, the weakness of the pound has benefited the FTSE 100, which comprises many multinational companies [96d5933b].
Top gainers in the FTSE 100 include Anglo American, Fresnillo, Melrose, Mondi, and Spirax, indicating a broad-based rally across various sectors [f8da58e2]. Meanwhile, European markets have also gained but experienced some pullback, highlighting a complex landscape of investor sentiment [f8da58e2].
In the corporate sector, shares of Entain PLC dropped by 1.25% amid an ongoing audit probe by KPMG, which has been the company's auditor since 2018. Notably, Entain had previously settled a £615 million investigation with HMRC in 2024 [f4ce3e02].
As the FTSE 100 and DAX reach new heights, market participants remain cautiously optimistic about the future trajectory of the global economy, while keeping an eye on geopolitical developments and domestic economic indicators [6710a253]. Benoit Anne from MFS Investment Management has introduced the concept of a 'Trumpilocks' macro regime, suggesting expected volatility in US politics and policy this week [f8da58e2].