FTSE 100 Index Edges Up As Tariff FUD Cools Down

Summary:
• The US has conjured up a compromise in the tariff war against Canada and Mexico. What does this mean for FTSE 100 Index with China countering?

The FTSE 100 Index edged higher on Tuesday as tariff-driven selloff cooled. The index was up by 0.15% to 8,567 points at the time of writing. Notable gainers of the day included IAG Group stock price which was up by 1.38%, Glencore (+0.98%), Tesco (+0.91%), Entain PLC (+2.13%) and Marks and Spencer (+1.97%). The FTSE 100 Index had been under strain for the last two sessions as US tariff rhetoric injected sour sentiment in the markets.

On Monday, the United States eased from its 25% tariff imposed against Canada and Mexico over the weekend following talks between leaders of the respective countries. Implementation of the tariffs and counter-tariffs has been suspended for at least 30 days, giving traders reprieve that a solution could be worked out.

However, there remains a 10% tariff by the United States against China, which has attracted a retaliatory counter-tariff as of Tuesday. An escalation of that confrontation could potentially bring downward pressure on equities markets, including the FTSE 100 Index (INDEXFTSE: UKX). Also, there is no clarity on whether the Trump administration could readjust its trade relations with the UK. Such a move could potentially exacerbate the FUD sentiment.

Despite the tariff headwinds, the underlying sentiment in the FTSE 100 Index is bullish-leaning. The Index hit record high levels of 8,699 points last week, and action near the psychological 8,600 points level will raise the prospect of hitting another record high in the near term. The absence of high-impact data from the UK on Tuesday means that greater attention will be on the US-China tariff discussions.

FTSE 100 Index

The FTSE 100 Index pivot mark is at 8,556 points, and the upside will prevail if action stays above that point. The momentum will likely push the index to encounter the first resistance at 8,593. An extended control will break above that level and potentially test the next hurdle at 8,629.

Alternatively, moving below 8,556 points will shift the momentum to the downside, with the first support likely to be at 8,521. Breaking below that level will invalidate the upside narrative. Furthermore, such momentum could send the action lower and potentially test 8,496.