London close: Stocks rebound from Trump tariff sell-off

London stocks staged a strong recovery on Tuesday, rebounding from heavy losses in the prior session as investors appeared to look past heightened US-China trade tensions.

The FTSE 100 index jumped 2.71% to close at 7,910.53 points, while the more domestically-focussed FTSE 250 surged 3.29% to 18,349.15 points.

In currency markets the pound also edged higher, with sterling last up 0.3% on the dollar to trade at $1.2762, as it gained 0.25% against the euro, changing hands at €1.1698.

“Following three days of intense selling, global stock indices bounced back as investors took advantage of lower valuations and grew more optimistic about US tariff negotiations,” said IG senior technical analyst Axel Rudolph.

“Treasury secretary Scott Bessent revealed that over 70 countries had been in touch with the White House to begin talks about tariffs.

“Nonetheless, tensions between the US and China remain elevated after Beijing vowed to ‘fight to the end’ in response to president Trump’s threat of imposing new 50% tariffs unless China rapidly removed its retaliatory measures.”

Rudolph noted that US yields swiftly recovered from their six-month lows, helping the greenback recover from its seven-month low.

“The oil price still hovers above Monday's near four-year low, though, as fears of a global recession linger while the gold price recovered slightly.”

UK said to be in good position on US tariffs, as US-China tensions tighten

On the US tariff front, the UK was said to be relatively well positioned to absorb the shock of rising US tariffs, according to Berenberg, as global markets continued to reel from escalating trade tensions between Washington and Beijing.

In a note published earlier, the bank argued that although a global recession would inevitably hit the UK, its exposure to US tariffs was limited.

UK goods exports to the US accounted for less than 2% of GDP, with the new 10% tariff rate representing the lower end of the spectrum.

Berenberg said strong consumer finances, falling interest-rate expectations, and lower energy costs should help cushion the blow.

“Some UK producers may gain US market share from worse-hit competitors, and international companies could relocate operations to the UK to avoid higher charges,” said senior UK economist Andrew Wishart.

“Admittedly, the spillover from slower growth in economies worse affected by US tariffs will ensure that, in absolute terms, UK growth is weaker than it otherwise would have been.”

Tensions between the world’s two largest economies worsened, however, after US president Donald Trump threatened an additional 50% tariff on Chinese imports overnight.

China swiftly condemned the move, vowing to “fight to the end” and implement its own countermeasures, including a 34% duty on US goods effective Thursday.

The Chinese Commerce Ministry warned there would be “no winners in a trade war” but reiterated its preference for dialogue.

Despite recent volatility, Asian markets showed signs of recovery, with Tokyo’s Nikkei 225 rebounding more than 6% following talks between Japanese prime minister Shigeru Ishiba and Trump, while shares in Nippon Steel jumped over 10% on news that Trump had reopened a review of its proposed takeover of US Steel.

Hong Kong and Shanghai also gained, the latter supported by a pledge from China’s central bank to back state-owned fund Central Huijin Investment to stabilise markets.

Meanwhile, oil prices edged up, even as Goldman Sachs warned that prices could fall below $40 in the coming years if global growth slows significantly or OPEC+ increased output more than expected.

The bank’s base case saw Brent at $62 per barrel by year-end, falling to $55 by late 2026.

It cautioned that any deeper economic downturn or full unwinding of production cuts could push prices down further, though sustained sub-$40 levels remained unlikely due to market floor effects and relatively sound US economic fundamentals.

In the US, small business sentiment fell to a five-month low in March, reflecting growing uncertainty over trade policy.

The NFIB’s optimism index dropped to 97.4, below its long-term average, with a sharp decline in the number of firms expecting better conditions.

More businesses cited taxes as their top concern, while expectations for sales volumes declined for a third consecutive month.

Defence sector in the green, BT slips on broker opinion

On London’s equity markets, Rolls-Royce soared 7.74%, with BAE Systems and Babcock International close behind, up 6.91% and 5.95% respectively.

The rally followed US president Donald Trump's announcement of a proposed $1trn defence budget, which lifted sentiment across the sector.

Scottish Mortgage Investment Trust gained 4.92%, reflecting strength in the US tech sector to which it is heavily exposed, while JPMorgan Japanese Investment Trust rose 6.69%, supported by investor hopes for progress in US-Japan trade talks.

International Consolidated Airlines Group jumped 7.04% as investors moved in on the British Airways parent after recent share price weakness.

Richard Hunter of Interactive Investor described the move as a bout of bargain hunting.

In corporate updates, Hilton Food Group advanced 0.71% after reporting a 25% increase in annual pre-tax profits to £61m and a 7.8% dividend hike.

The company said it remained on track to meet 2025 earnings guidance, crediting strong performance in its core retail meat division.

Howden Joinery rose 1.54% as it announced the retirement of chief financial officer Paul Hayes, with Jackie Callaway of Coats Group named as his successor.

Recruiter Hays gained 6.62% following an upgrade to ‘equalweight’ from Morgan Stanley, which cited a more balanced risk-reward profile.

JTC edged up 0.25% after the fund administrator posted an 18.6% rise in annual revenue to £305.4m and confirmed plans to double its business size by 2027.

On the downside, BT Group slipped 1.7% after UBS reiterated its ‘sell’ rating, warning that the market continued to underestimate the impact of losing Sky as a broadband customer.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,910.53 2.71%
FTSE 250 (MCX) 18,349.15 3.29%
techMARK (TASX) 4,292.74 2.86%

FTSE 100 - Risers

Flutter Entertainment (DI) (FLTR) 17,280.00p 6.93%
Rolls-Royce Holdings (RR.) 679.20p 6.83%
Experian (EXPN) 3,251.00p 6.05%
Hiscox Limited (DI) (HSX) 1,110.00p 6.02%
International Consolidated Airlines Group SA (CDI) (IAG) 237.70p 5.93%
Games Workshop Group (GAW) 13,120.00p 5.72%
Beazley (BEZ) 863.00p 5.48%
Rightmove (RMV) 680.80p 5.45%
Babcock International Group (BAB) 691.00p 5.42%
London Stock Exchange Group (LSEG) 10,875.00p 5.33%

FTSE 100 - Fallers

BT Group (BT.A) 151.60p -3.14%
Standard Chartered (STAN) 922.80p -1.54%
Kingfisher (KGF) 245.60p -1.13%
JD Sports Fashion (JD.) 63.16p -0.50%
Rio Tinto (RIO) 4,215.50p -0.43%
HSBC Holdings (HSBA) 735.20p -0.35%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 0.00%
Vodafone Group (VOD) 65.48p 0.40%
Convatec Group (CTEC) 237.40p 0.42%
Antofagasta (ANTO) 1,389.50p 0.47%

FTSE 250 - Risers

Oxford Nanopore Technologies (ONT) 107.60p 8.94%
Carnival (CCL) 1,224.00p 7.94%
Vistry Group (VTY) 550.40p 7.75%
ICG Enterprise Trust (ICGT) 1,150.00p 7.48%
NB Private Equity Partners Ltd. (NBPE) 1,384.00p 7.47%
Allianz Technology Trust (ATT) 329.00p 7.17%
JPMorgan Japanese Inv Trust (JFJ) 526.00p 6.69%
Hammerson (HMSO) 235.00p 6.62%
Hays (HAS) 69.30p 6.62%
Ibstock (IBST) 164.40p 6.61%

FTSE 250 - Fallers

Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 285.00p -2.90%
Diversified Energy Company (DEC) 862.50p -2.32%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 383.50p -1.92%
Vietnam Enterprise Investments (DI) (VEIL) 471.00p -1.57%
Harbour Energy (HBR) 169.60p -0.93%
Aston Martin Lagonda Global Holdings (AML) 59.85p -0.75%
Spectris (SXS) 1,990.00p -0.05%
Tami Senior Securitisation 2 Ltd Cls A-2 Mb Fxd Rte Nts 31/12/23 (Reg S) (BP00) 0.00p 0.00%
Schroder Oriental Income Fund Ltd. (SOI) 247.00p 0.00%
International Distribution Services (IDS) 365.40p 0.11%