The FTSE 100 is expected to edge lower on Tuesday, with London markets showing caution as investors wait for key economic data from the United States and digest renewed global trade tensions.
Despite a positive session on Wall Street overnight, UK stocks are struggling to find momentum, reflecting broader uncertainty across Europe and mixed signals from Asian markets.
Why is the FTSE 100 under pressure this morning?
Futures pricing from IG suggests the FTSE 100 will open around 9 points lower, down 0.1% at roughly 9,857. This comes after the index ended Monday’s session 31.45 points lower, closing at 9,865.97.
The weakness highlights a growing disconnect between US and European markets. While American indices continue to benefit from resilient economic growth and strong tech performance, London-listed shares are facing headwinds from currency moves, global trade disputes, and a lack of exposure to high-growth technology firms.
Why didn’t Wall Street’s gains lift London markets?
US stocks closed firmly higher on Monday, with the Dow Jones, S&P 500, and Nasdaq all posting gains of around half a percent. However, this optimism failed to carry over into European trading.
Market analysts point out that Europe, and the UK in particular, is increasingly missing out on growth linked to artificial intelligence and large-scale tech innovation.
Swissquote analyst Ipek Ozkardeskaya noted that even the energy- and mining-heavy FTSE 100 struggled to advance, despite rising prices for oil and metals.
“Market mood in Europe was rather subdued, with major indices trading flat to negative. Europe is also missing the AI turn in real time and instead operates under a heavy regulatory framework,” she said.
How are global trade tensions affecting sentiment?
Investor confidence has also been dented by a fresh escalation in trade tensions between China and the European Union.
Beijing has announced new duties of up to 42.7% on certain EU dairy products, with the measures taking effect on Tuesday.
The European Commission has described the move as “unjustified”, warning it could damage trade relations further.
This dispute adds to an already strained relationship following earlier disagreements over electric vehicles and industrial subsidies.
European consumer goods companies felt the impact on Monday, with shares in French food giant Danone falling in Paris.
What’s happening in Asia and why does it matter to the UK?
Asian markets offered little reassurance overnight. Japan’s Nikkei 225 and China’s Shanghai Composite both edged slightly lower, while Hong Kong’s Hang Seng Index also slipped. Australia was the exception, with the S&P/ASX 200 rising more than 1%.
For UK investors, this mixed performance reinforces the sense that global markets are lacking a clear direction ahead of major US data later this week.
How are currencies and commodities influencing the FTSE 100?
Sterling strength is another factor weighing on the FTSE 100, which is heavily made up of multinational companies earning revenue overseas.
The pound climbed to $1.3493, its strongest level since early October, before easing slightly. A stronger pound can reduce the value of dollar earnings when converted back into sterling, pressuring share prices.
In commodities, gold continued its remarkable run, rising to around $4,476 an ounce after briefly touching a fresh record above $4,497 earlier in the day.
Brent crude oil prices were little changed at about $61.83 a barrel, offering limited support to energy stocks.
Why is US GDP data so important for UK markets?
The main focus for global investors is now US GDP data, due for release on Wednesday at 1:30pm UK time.
Economists expect growth to have slowed to 3.2% on an annualised basis, down from 3.8% in the previous quarter.
This figure will be closely watched for clues about the health of the US economy and the future path of interest rates.
Any surprise could ripple through global markets, influencing currencies, bond yields, and equity indices, including the FTSE 100.
