London’s FTSE is in a footloose mood again, with higher metals prices buoying mining stocks and corporate results from financial giants surprising on the upside.
The index has scaled fresh heights in early trade, with investors showing enthusiasm for London-listed stocks amid global uncertainty. HSBC’s bullish outlook provided cheer, with shareholders enthused about the revised guidance and increased revenues for the year, despite one-off costs denting annual profits by more than expected. St. James’s Place is on the road to recovery after recent AI-induced jitters and longer-term worries over fees. It’s notched up a record high for funds under management, showing increasing customer confidence in the wealth manager. While cheaper rivals are springing up, it’s clear that investors are willing to pay for guidance in life’s big financial decisions.
Mining stocks have ramped higher, with tense trade and geopolitics keeping up enthusiasm for precious metals, while demand for copper has increased. Silver, in particular, has seen another surge, rebounding from the lows reached earlier in the month. Trade policy is colliding with industrial demand and structural undersupply to put fresh upwards pressure on prices. Copper has also risen, pushing up Antofagasta in early trade after the end of the Chinese lunar holiday saw a raft of buying. Traders are continuing to see upside for copper, given that, under current new US tariffs, China’s metal exports will benefit from lower duties.
There were no big surprises in President Trump’s State of the Union address – just a doubling down on his MAGA rhetoric. He reiterated that tariffs were here to stay, calling the Supreme Court’s ruling disappointing, and vowed levies would remain in place under alternative legal statuses. His unwillingness to change course from capricious US trade policy, which is proving unpopular at home and abroad, saw the dollar fall back against a basket of currencies, with the Dollar Index hovering at the lowest level in four years. President Trump has made no secret that he wants a cheaper dollar, believing it will boost American exports, but the downside is that imports become more expensive. This adds more pain to millions of lower- and middle-class American consumers who are already suffering in America’s K-shaped economy, with wealthier citizens holding up spending.
There’s set to be a muted reaction to the President’s speech on equity markets, with Wall Street looking set to open flat. The rebound we saw after Monday’s losses risks running out of steam, with no change in direction from volatile politics and uncertain economics. The path of interest rate policy remains a driver of sentiment. Comments from Fed decision-makers that the current hold policy is appropriate may dampen down hopes of rate cuts this year, although three are still being priced in by markets.
While cheerleading American patriotism was the main theme of Trump’s speech, he issued another warning to Tehran, saying that while his preference was diplomacy, he would “never” allow Iran to develop a nuclear weapon. His choice of words has meant the outcome of negotiations this week remains unpredictable, pushing up the price of crude oil. Supply concerns continue to swirl about fresh military strikes on Iran. The worry is that conflict could seriously disrupt the flow of oil through the key channel, the Strait of Hormuz, where 20% of the world’s crude supplies are transported.
By Susannah Streeter, Chief Investment Strategist, Wealth Club
