- FTSE 100 up 15 points to 9,442.87
- Defence shares down on Israel peace deal
- Lloyds rises after confirming extra provisions
- AstraZeneca dips on US drug pricing deal
Close: Markets find their chill as Trump’s TACO trade cools the heat
After Friday’s tariff tantrum, markets have calmed almost as quickly as they flared. The FTSE 100 shook off its mid-afternoon slump to close 15 points higher, helped by a buoyant Wall Street, where the Dow is up 1.3% and the Nasdaq nearly 2%.
Donald Trump’s weekend reassurance that “it will all be fine” has reignited the so-called TACO trade (Trump Always Chickens Out), soothing nerves after his threat of 100% tariffs on Chinese goods sent traders scrambling on Friday.
Gold continues its record-breaking run, rising for the ninth straight week as investors hedge against another potential White House mood swing.
Washington’s ongoing shutdown is also keeping a lid on the dollar’s gains, with no major data due and whispers of a delayed inflation print.
As the IMF meetings get underway and Jerome Powell prepares to speak, traders might be forgiven for keeping one eye on Beijing... and the other on Trump’s social feed. Calm, it seems, remains a relative term.
15.48pm: Back in the green - but only just
The FTSE 100 was rescued from the red by a buoyant start on Wall Street, with the Dow up just under 1% and the tech-focused Nasdaq recouping some of Friday's losses with a 1.4% gain.
Frayed nerves over Trump's tariff backlash against China appear to have been soothed by a more conciliatory tone from the President on Monday.
13.48pm: Margin call
With gold and silver continuing to power higher, this suggests some people are still "feeling nervous", says AJ Bell investment director Russ Mould.
With the sharp sell-off of stocks and cryptocurrencies at the of last week, "you can understand why that might be the case", he says, pointing to heavy losses in the crypto community from "just one wobbly day’s trading".
"This suggests the foundations of the bull run may not be as strong as you would like them to be."
Mould has been delving through the book ‘A Demon of Our Own Design,’ by Richard Bookstaber, which picks out three main facets that lead to market storms, panics and crashes.
These are debt, complexity and opacity.
"Sceptics will argue that the crypto universe offers all three, especially as many traders and owners of cryptocurrency use leverage, or positions funded by margin, to gear up their returns."
Stock market participants are borrowing heavily, too, according to the latest FINRA data, that shows $1.1 trillion in margin debt, a third higher than the same month in 2024 and represented a new all-time high for the amount of money borrowed by investors to fund their portfolio positions.
"This is all well and good when markets are rising, as higher asset valuations cover the borrowing. It is not good if markets are falling, as the investor is left with a liability that they have to fund, and one that is associated with a security that may be worth less than when they bought it.
"If they are unable to post enough cash to fund any shortfall, they can find themselves on the wrong end of a margin call and be obliged to sell assets to meet the gap.
"If many investors are in the same position at the same time, the result can be a cascade of forced selling which quickly becomes self-reinforcing."
12.51pm: US futures point to big gains
US stock futures have come back a bit, with those for the Nasdaq 100 now up 1.5% compared to almost 2.2% earlier.
S&P 500 futures are up 1.1%, while the Dow Jones is currently seen opening up 0.8%.
In the background currently, President Donald Trump is speaking about Gaza's rebuild and peace in the Middle East, while his Treasury Sec Scott Bessent is talking to Fox News about trade, China and the government shutdown.
Bessent said Trump's Friday social media post "turned the tables" and that China "made a miscalculation" with its threat on rare earth minerals.
He says Presidents Trump and Xi need time to meet for talks.
11.40am: Big Yellow bid interest from Blackstone
Big Yellow Group PLC (LSE:BYG) shares are up 18% after Blackstone says it is considering a possible offer.
The US group's evaluation "is at a preliminary stage" it stressed.
It also said in its statement that its considerations included "the macro-economic environment including the potential impact of the upcoming UK budget as it relates to the self-storage sector".
11.11am: Defence stocks selling
Defence stocks are continuing to fall today, with Babcock International and BAE Systems down 2.5% and 1.2%, while QinetiQ and Melrose Industries and Avon Technologies are down 1.4%, 0.6% and 0.1% respectively.
This is presumably connected to the Israel-Hamas ceasefire.
This continues a trend seen at the end of last week. Over five days, Babcock is down 6.5%, while BAE, Melrose, Senior, Rolls, Qinetiq and Chemring are all down between 3% and 2%, with Avon down 1.1%.
The ceasefire "is being seen as a ‘risk-premium release value’ rather than as a strategic driver", according to market analyst Daniela Sabin Hathorn at Capital.com.
As well as hailing the release of all remaining Israeli hostages held by Hamas in Gaza, President Donald Trump made a formal address to Israel’s parliament, the Knesset, just as the last of Israel’s surviving hostages are returned home after 737 days in captivity.
Last week saw oil prices slide, which the analyst puts down in part to the Middle East supply scare fading.
She continued, "One thing to consider is the deal is phased and contingent. Any snag in the hostage handovers or rocket fire flare-ups would quickly reprice premium back in. Early releases under the framework have started, but officials are cautioning that unresolved issues remain."
10.29am: Crypto bounce
The price of bitcoin is recovering a little from the Friday sell-off, up 2.7% to $114,915.
Selling was seen across the board on Friday, "the most dramatic we have seen in weeks," says market analyst Chris Beauchamp at IG.
The liquidation on Friday and Saturday was the largest on record in dollar terms, at over $19 billion.
On Saturday, bitcoin returned below $110,00 and ether tumbled to a two-month low below $3,500.
"But signs of a recovery have been seen in early trading, as the shock of Friday’s Trump post on Truth Social fades and signs of détente emerge in the US-China trade spat," says Beauchamp.
The UK angle last week was that a ban on crypto exchange-traded notes was lifted, allowing retail investors to buy bitcoin and ether ETNs for the first time through regulated exchanges such as the LSE.
Turning to this morning's stock market moves, Beauchamp says "much now depends on whether Trump remains focused on the Middle East and leaves China on the back burner for the time being".
Earnings season gets underway in earnest too this week, kicking off tomorrow with a raft of US banks reporting.
This will be "key for risk appetite in the near-term for both stocks and crypto currencies", says Beauchamp.
"After the magnitude of the falls in crypto prices, signs of renewed appetite via increased inflows into the space will be closely scrutinised."
9.26am: Netherlands takes over China owned chipmaker
Reports have come in this morning that the Dutch government has taken control of China-owned chipmaker Nexperia, citing concerns over the transfer of critical technology to its Chinese parent company, Wingtech, and risks to European economic security.
The Netherlands said the “highly exceptional” decision followed “acute signals of serious governance shortcomings” at Nexperia.
The move allows the government in The Hague to reverse or block management decisions deemed harmful, though production will continue.
Wingtech’s shares fell 10% in Shanghai following the announcement, and the firm said it will seek legal and government support.
The action comes amid growing Western scrutiny of Chinese investments in strategic industries, such as the UK government taking control of British Steel in April, even though it continued to be owned by China's Jingye.
9.23am: Some AstraZeneca questions answered
Following AstraZeneca PLC (LSE:AZN, NASDAQ:AZN) Friday agreement on MFN drug pricing, analysts at UBS have talked to the company to clarify some questions about the deal.
For current drugs in Medicaid, the company will provide MFN prices on the majority of its portfolio, with full details confidential.
"We understand Medicaid represents less than 5% of US sales at AstraZeneca," UBS said, with the deal expected to cover biopharma and oncology medicines.
"It is unclear to us if Rare Disease drugs will be included, especially given the recent steps in President Trump's Big Beautiful Bill to expand orphan drug protections in the US."
MFN pricing will be calculated using a basket of pricing from countries including the UK, Canada, Denmark, France, Germany, Italy and Japan, which is more limited than originally proposed by President Trump and "we believe should lead to a modestly-higher MFN price".
"It is unclear to us if the calculation will take the absolute lowest price or whether a GDP-adjusted lowest price will be used, which could further mitigate the price differential with the US."
9am: Motor finance saga has further to run
The time taken for Lloyds to update on its provisions after the FCA’s announcement last week has shown that "this was never a simple case" of adding numbers to a spreadsheet, says analyst Rae Maile at Panmure Liberum.
This morning's £800 million of new provisions came with comments that in its current form, the FCA’s proposals are at "the adverse end of the range of previously expected outcomes".
Maile notes thaty the provisions are still only a "best estimate" but does reflect that the level of redress is higher than Lloyds had previously expected.
With Lloyds also making the case that the FCA’s proposals are not wholly aligned with the Supreme Court ruling, the analyst says "this saga has further to run".
8.52am: TACO for breakfast?
The FTSE 100's up 0.25%, while on the European mainland, Germany's DAX is up 0.8% and France's CAC 40 0.9%.
This is despite ongoing turmoil in the French parliament, where a motion has been tabled to bring down the attempted new government of Prime Minister Sébastien Lecornu.
US equity futures are pointing to even bigger gains, with Nasdaq 100 futures up over 2% to recoup most of Friday’s sell-off.
This comes as Donald Trump moved to de-escalate the latest round of the trade war with China, with a social media post on Sunday afternoon.
"Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The USA wants to help China, not hurt it," he posted on his Truth Social platform.
Market analyst Kathleen Brooks at XTB said this "seemed to backtrack on his threat to impose a further 100% tariff rate on China after it applied controls to rare earth mineral exports".
She says the message "seems fairly conciliatory, even if Trump will not take responsibility for escalating this latest trade war.
"However, this tweet does not suggest that there has been a solution to the latest trade spat between China and the US, and instead Trump appears to be suggesting that financial markets have overreacted to his threat of 100% tariffs.
"Thus, even if there is a stock market recovery today, investors could still remain edgy this week and continue the sell off if the situation deteriorates."
She says the 'TACO trade', standing for Trump Always Chickens Out, fueled the recovery rally in April, "so if it looks like the same will happen again, then we could see markets absorb Trump’s tariff threats relatively quickly, and volatility could retreat at the start of this week."
8.31am: Mid-cap movers
On the FTSE 250, IP Group PLC (LSE:IPO) is leading the early risers, up 10% after it flagged possible future royalty income from a new wave of obesity drugs being developed by Metsera, a biotech company that Pfizer has agreed to buy for up to $7.3 billion.
The deal, announced last month, includes $4.9 billion in upfront cash and gives the US pharmaceutical giant control of a portfolio of next-generation obesity treatments.
IP Group has an indirect financial interest in several of Metsera’s drug candidates, including leading drug MET-097i, which has shown promising results in clinical trials and is designed to require just one injection a month, compared with the weekly jabs that dominate the market today.
At the other end of the mid-caps, Oxford Instruments PLC (LSE:OXIG) shares are down 10.6% after it reported order intake affected by tariffs and global economic uncertainty, having a greater impact on its Imaging and Analysis division than previously anticipated.
However, market tailwinds in the semiconductor market are supporting the Advanced Technologies division, driving strong order growth.
First-half revenues are expected to be down 10%.
8.15am: Miners lead FTSE higher
The FTSE 100 has started the week by marching 18 points higher to 9,444.9, led by gold and silver miners.
Fresnillo PLC (LSE:FRES), up 6.1%, and Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF), up 5.3%, are gleaming at the top of the early leaderboard, followed by base metals miners Anglo American PLC (LSE:AAL) and Antofagasta PLC (LSE:ANTO), both up around 2%.
The gold spot price hit a new record high this morning, above $4,078 per troy ounce, and currently up 1.4% at $4,068 as it resumes its upward move after dropping at the back end of last week, with silver is up 2.75% at $51.66 an ounce
Copper is storming higher too, up 3.6% to $4.97 a pound, recovering from a fall on Friday.
Lloyds is up 1.1%.
7.55am: AstraZeneca confirms US drug discount deal
On Friday, after the London and New York markets had closed, AstraZeneca PLC (LSE:AZN, NASDAQ:AZN) revealed it had become the second giant drugmaker to agree a 'most favoured nation' (MFN) drug pricing deal with the US government, after Pfizer's deal two weeks ago.
Pascal Soriot, the CEO of the Anglo-Swedish pharmaceutical group, met President Donald Trump to confirm that discounts of up to 80% would on its medicines under prescriptions for chronic diseases and making its drugs available on the TrumpRx.gov direct purchasing platform.
A three-year delay to Section 232 tariffs has been agreed after the FTSE 100- and Nasdaq 100-listed company committed to manufacturing all its US-sold medicines in America, which is its largest market by sales.
AstraZeneca confirmed the deal with an RNS statement this morning.
The White House statement on Friday reveals that for patients purchasing the drugs direct, there will be a 654% discount on the Bevespi Aerosphere inhaler used to treat chronic obstructive pulmonary disease, and over 95% discounts on the Breztri and Airsupra inhalers.
7.34am: Lloyds bumps up motor finance provisions to £2bn
Lloyds Banking Group PLC (LSE:LLOY) will take an extra £800 million charge for the motor finance redress scheme, bringing its total provisions to £1.95 billion.
While announcing this change, the lender also questioned the Financial Conduct Authority's proposed methodology, announced a week ago, saying it does not reflect actual customer loss or align with the Supreme Court's judgment in early August.
Lloyds said its additional charges reflects a higher likelihood of redress for a larger number of historical cases, particularly those involving discretionary commission arrangements dating back to 2007.
7.24am: China-US one of many spinning plates for markets
"It's hard to know where to start this morning with a continued US shutdown seemingly the least of our concerns these days," says Deutsche Bank's macro strategist Jim Reid.
He points to various "plates currently spinning in markets" including the resumption of trade hostilities between the US and China on Friday, the reappointment of Lecornu as French Prime Minister late on Friday "but with no obvious signs that he'll find life any easier than what promoted him to resign a week before", the collapse of the governing coalition in Japan on Friday just a week, the US intervening to prop up the Argentinian peso, the London silver market seeing one of the biggest short squeezes in history, Isreal's peace deal with Hamas, "signs of weakness in US credit" after the collapse of First Brands, and the large fall in crypto late on Friday, including a $10,000 fall in bitcoin in just a few hours.
Friday’s sell-off saw the S&P 500 endure its biggest drop since April's shower of tariffs, but US futures are bouncing today though on what Reid says are "hopes that US and China can negotiate through their disagreements".
He says he feels the recent "mood music" has been notably more positive between China and the US, "and it’s still very possible, maybe even likely, that both sides are simply trying to strengthen their near-term negotiating positions.
"However, these tensions will probably be a recurring theme in the years ahead as both sides compete on the global stage for dominance.
"China currently holds considerable leverage in the rare earths market and seems keen to use it to secure a better deal – particularly in the chip sector, where the US has imposed export controls.
"So, this battle is shaping up as rare earths versus AI chips."
He points to data this morning showing that China is diversifying exports, with goods sent to the US decreasing 27% year-on-year in September, marking the sixth consecutive month of double-digit declines, growth in its global exports reached a six-month high of +8.3%, up from a 4.4% increase recorded in August.
Imports rose by +7.4% in September, exceeding the forecast of +1.8%, resulting in a surplus of $90.5 billion.
7.15am: Could FTSE be island in sea of red?
The FTSE 100 is predicted to see a small bounce on Monday after the past week ended on a sharp downswing after Donald Trump's threat of new tariffs.
A gain of 5 points for the London index is being indicated on the futures market, after last Friday was on course to see the week finish in positive territory before the US President threatened a "massive" tariff increase for China, resulting in the loss of 81 points to close at 9,427.47.
Wall Street sold off even more violently, with the Nasdaq plunging 3.6%, the S&P 500 falling 2.7% and the Dow Jones dropping 1.9%.
Asian markets are a sea of red as they play catch-up this morning, with the sharpest losses being seen in Hong Kong where the Hang Seng is down 2.5%.