The FTSE 100 index experienced a modest uptick on Thursday, closing 11.96 points higher at 10,150.05, a gain of 0.1%. This positive movement came after US President Donald Trump stepped back from his threat to impose tariffs on European allies in relation to Greenland, providing a measure of relief to financial markets.
Trump's Tariff Retreat Calms Investor Nerves
Late on Wednesday, President Trump announced via Truth Social that he had established a framework for a future deal concerning Greenland and the wider Arctic region. Crucially, he stated that previously threatened tariffs against European countries resisting his Greenland acquisition ambitions were now "off the table."
Kathleen Brooks, Research Director at XTB, commented: "The tariff risk is now on the back burner, and this week's price action tells us that financial markets fear tariffs more than geopolitical risks." She noted that while markets have not fully reversed this week's losses, the recent selloff injected volatility without causing a rout, suggesting investors remain willing to buy dips amid strong fundamentals.
European and US Markets Outperform
While the FTSE 100's gains were restrained, other major indices posted stronger performances. The FTSE 250 climbed a significant 299.64 points, or 1.3%, to close at 23,370.93. The AIM All-Share index rose 9.08 points, or 1.1%, finishing at 817.67.
In continental Europe, the CAC 40 in Paris advanced 1.0%, and Frankfurt's DAX 40 gained 1.2%. Across the Atlantic, US markets were also higher at the London close, with the Dow Jones Industrial Average up 0.9%, the S&P 500 rising 0.7%, and the Nasdaq Composite climbing 1.0%.
Economic Data and Currency Movements
Supporting the positive sentiment, US third-quarter economic growth was revised slightly upwards. The Bureau of Economic Analysis reported annualised GDP growth of 4.4% for the quarter ending September 30, up from a prior estimate of 4.3%. The increase was attributed to rises in consumer spending, exports, government spending, and investment, alongside a decrease in imports.
In currency markets, the pound strengthened to $1.3498 against the US dollar at the London equities close, compared to $1.3437 on Wednesday. The euro also firmed to $1.1749 from $1.1707. The dollar traded at ¥158.27 against the Japanese yen, slightly higher than ¥158.18 previously.
UK Public Borrowing Falls Year-on-Year
Domestic economic data provided a mixed picture. UK public sector net borrowing rose to £11.58 billion in December, below market expectations of £13.5 billion. While this was above November's revised figure of £10.94 billion, it represented a substantial 38% decrease from December 2024.
Danni Hewson, Head of Financial Analysis at AJ Bell, observed: "The significant fall in government borrowing in December will be a relief for the Treasury, especially since January's numbers are likely to look even better with a surge in self-assessment receipts expected." She cautioned, however, that borrowing for the full financial year to date remains at elevated levels, with the deficit reducing at a "glacially slow" pace.
Sector Performance and Corporate News
On the FTSE 100, defence stocks BAE Systems and Babcock International declined 3.7% and 1.4% respectively, reflecting the reduced geopolitical tensions. Mining shares also weakened, with Antofagasta falling 2.2%, Glencore dropping 2.0%, and Anglo American easing 1.7%.
Insurer Admiral Group fell a further 4.6% following a downgrade by RBC Capital Markets. Energy giants BP and Shell dropped 1.9% and 2.2% respectively, weighed down by a softer oil price. Brent crude traded lower at $64.26 per barrel.
On the FTSE 250, Computacenter surged 10% after reporting better-than-expected trading for 2025. The Hertfordshire-based services provider now expects full-year adjusted pre-tax profit to be no less than £270 million, comfortably ahead of market expectations. Similarly, Senior rose 8.8% after boosting its profit guidance for the second time in three months, citing stronger-than-expected trading in its aerospace division.
On the AIM market, food wholesaler Kitwave soared 33% after accepting a £251 million takeover offer from New York investment firm OEP Capital Advisers.
Market Leaders and Laggards
The biggest risers on the FTSE 100 were St James's Place, Hikma Pharmaceuticals, JD Sports Fashion, Spirax, and ConvaTec. The largest fallers were Admiral Group, BAE Systems, ICG, Rio Tinto, and Shell.
Looking ahead, Friday's economic calendar includes flash composite PMI readings globally, an interest rate decision in Japan, plus UK consumer confidence and retail sales data. The UK corporate calendar features a trading statement from currency and asset manager Record.
