London midday: FTSE extends gains as investors shrug off Trump tariffs; PCE eyed

London stocks had extended gains by midday on Friday as investors shrugged off a fresh tariff announcement from US President Donald Trump and looked ahead to the latest US PCE reading.

The FTSE 100 was up 0.3% at 9,244.80, with markets calm in the wake of Trump’s announcement that the US will impose 100% tariffs on imported branded drugs, 25% tariffs on imports of heavy-duty trucks and 50% tariffs on kitchen cabinets.

Neil Wilson, UK investor strategist at Saxo Markets, said: "The tariff news ought to add to the bearish narrative we’ve seen take hold in equity markets this week, but so far European equity markets are rising and US futures are a bit higher."

Questions about the US Federal Reserve’s next move on rates continued to play on investors’ minds after the release of better-than-expected jobless claims figures and an upward revision to US GDP on Thursday.

Richard Hunter, head of markets at Interactive Investor, said: "There have undoubtedly been signs of weakness in the labour market which have led to expectations of further interest rate cuts being ratcheted up. However, the latest jobless claims number was solid in that the decline was more than expected. In addition, GDP growth was revised up to 3.8% from a previous 3.3% for the second quarter, with consumer spending and business investment providing a strong base.

"This show of economic strength could in turn lower the need for further cuts from the Fed, which would remove a major plank of the bull case. Sentiment was also hampered by the White House announcing a new raft of tariff measures which, all things being equal, will be inflationary and to the detriment of consumers as prices rise.

"As such, the release of the personal consumption expenditures index later, the Fed’s preferred measure of inflation, will take on added significance. A rise of 0.3% for August is expected, annualised to 2.7%, and any upward surprises will equate to downward pressure on share prices as the likelihood of cuts lessens."

The PCE data for August is due at 1330 BST.

In equity markets, AstraZeneca and GSK both ticked higher as Trump’s new pharma tariffs will not apply companies building new sites in the US.

Kathleen Brooks, research director at XTB, said AstraZeneca could be better placed than some of its European rivals, due to promised extra investment in the US that has already been announced, and the President’s promise to treat the UK differently when it comes to pharma tariffs.

"Thus, the FTSE 100 could be a relative ‘safe haven’ in the middle of this latest tariff storm," she said.

Elsewhere, InterContinental Hotels shot to the top of the FTSE 100 after JPMorgan double upgraded the stock to ‘overweight’ and hiked the price target to 10,400 from 8,500p.

Pennon Group was flat after saying it remained on track to return to profitability, despite the hot summer weather ramping up costs.

Updating on trading, the owner of South West Water said there had been particularly high demand for clean water during the hotter-than-usual summer months.

That had been more than offset in revenues, however, by increased meter optants and the profiling of tariffs to smooth customer bills, deferring revenue into 2026/27.

Market Movers

FTSE 100 (UKX) 9,244.80 0.33%
FTSE 250 (MCX) 21,587.85 0.00%
techMARK (TASX) 5,385.38 -0.16%

FTSE 100 - Risers

InterContinental Hotels Group (IHG) 9,024.00p 2.85%
NATWEST GROUP (NWG) 515.80p 2.10%
Convatec Group (CTEC) 225.40p 1.90%
Hikma Pharmaceuticals (HIK) 1,622.00p 1.88%
Kingfisher (KGF) 297.70p 1.67%
Weir Group (WEIR) 2,678.00p 1.52%
Phoenix Group Holdings (PHNX) 632.00p 1.44%
Babcock International Group (BAB) 1,251.00p 1.38%
Tesco (TSCO) 440.40p 1.33%
Relx plc (REL) 3,507.00p 1.33%

FTSE 100 - Fallers

Rio Tinto (RIO) 4,830.50p -1.74%
Metlen Energy & Metals (MTLN) 47.33p -1.20%
Bunzl (BNZL) 2,332.00p -1.19%
Spirax Group (SPX) 6,795.00p -1.16%
Diageo (DGE) 1,749.00p -0.96%
Fresnillo (FRES) 2,252.00p -0.88%
DCC (CDI) (DCC) 4,674.00p -0.85%
Diploma (DPLM) 5,270.00p -0.85%
Informa (INF) 895.40p -0.82%
Smurfit Westrock (DI) (SWR) 3,171.00p -0.78%

FTSE 250 - Risers

Kier Group (KIE) 212.50p 2.16%
PayPoint (PAY) 666.00p 1.99%
Johnson Service Group (JSG) 146.20p 1.95%
W.A.G Payment Solutions (EWG) 97.80p 1.88%
Caledonia Investments (CLDN) 377.50p 1.62%
Dr. Martens (DOCS) 92.85p 1.48%
Assura (AGR) 46.80p 1.47%
Close Brothers Group (CBG) 497.00p 1.43%
Greggs (GRG) 1,534.00p 1.32%
Grainger (GRI) 184.60p 1.32%

FTSE 250 - Fallers

Oxford Biomedica (OXB) 542.00p -5.41%
Pinewood Technologies Group (PINE) 422.50p -2.76%
Partners Group Private Equity Limited. (EUR) (PEY) 10.05p -1.95%
Ashoka India Equity Investment Trust (AIE) 259.50p -1.89%
Bridgepoint Group (Reg S) (BPT) 301.40p -1.82%
Oxford Instruments (OXIG) 1,860.00p -1.80%
THG (THG) 34.78p -1.75%
Future (FUTR) 651.00p -1.74%
Victrex plc (VCT) 684.00p -1.58%
Hochschild Mining (HOC) 335.80p -1.47%