The FTSE 100 rose to within a whisker of 9000 for the first time yesterday as Brexit Britain was branded a ‘clear winner’ in Donald Trump’s trade war.
In a boost for investors with money tied up in shares through their pensions and other savings, the blue-chip index climbed to a record high of 8999.22 before closing up 0.6 per cent at 8998.06.
That topped last week’s previous record close of 8975.66 and leaves the blue-chip index just shy of the 9000 mark.
The gains in London came as shares in Europe fell with the Dax down 0.4 per cent in Frankfurt and the Cac off 0.3 per cent in Paris after the US president threatened to slap 30 per cent tariffs on goods imported from the EU.
This compares with a 10 per cent tariff on most imports to the US from the UK – with British cars and aerospace goods getting no extra levies at all thanks to a trade deal with Trump.
Analysts said UK stocks should outperform those in Europe thanks to the deal which has been hailed a ‘Brexit dividend’.
Record run: In a boost for investors, the blue-chip index climbed to a record high of 8999.22 before closing up 0.6% at 8998.06
Meanwhile, European leaders warned trade between the EU and US will be ‘almost impossible’ if 30 per cent tariffs are imposed on August 1 as planned.
German and French bond yields rose as investors fretted over the prospect of a transatlantic trade war between the US and EU.
‘Trump’s tariffs on the EU have one clear winner: the UK,’ wrote Panmure Liberum research analyst Joachim Klement in a report.
And in a message to investors, he added: ‘As the world stands today, there is one clear recommendation: Buy UK.’
The report noted ‘a significant arbitrage opportunity’ for European firms to ‘ship goods from the EU to the UK, slightly alter them in the UK to turn them into “Made in the UK” goods and then ship them to the US’.
It said this ‘could boost the UK economy’ as firms invest in factories and warehouses. Klement said: ‘It could turn the UK into a long-term winner from the trade war.’
Accountancy and business advisory group Lubbock Fine also said Britain’s ‘substantial tariff advantage’ could see European manufacturers relocating to the UK to avoid the 30 per cent levy.
‘The UK could be a big indirect winner,’ said Lubbock Fine partner Alex Altmann, who is also vice president of the British Chamber of Commerce in Germany.
He added: ‘If the tariff rate for the EU finally ends up anywhere near this 30 per cent level then the UK’s much lower US tariffs would offer a major incentive for EU companies to shift some of their manufacturing to the UK or to expand their existing UK facilities.’
European trade ministers held crisis talks yesterday as they scramble to secure an agreement with Trump to avoid the punishing levies.
EU trade commissioner Maros Sefcovic said: ‘If you’re talking about 30 per cent or 30 per cent-plus, there will be a huge impact on trade. It will be almost impossible to continue trading as we are used to in a transatlantic relationship.’
The bloc is preparing a fresh round of retaliatory tariffs on US goods worth more than £60billion if a trade deal cannot be salvaged.
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