The FTSE 100 fell for the second day in a row on Tuesday, albeit far less sharply than on Monday, after a temporary watering down of US President Donald Trump’s trade tariffs.
London’s blue-chip index dropped 13 points to finish the day at 8,571, or a 0.2% fall.
Tuesday was a more gradual drop for the FTSE than Monday, which saw its steepest one-day drop of 2025 so far.
That is partly because Mr Trump agreed to delay 25% tariffs on Mexico and Canada, which had been announced at the weekend, after negotiations with the two countries.
But China is still moving ahead with retaliatory measures after the US imposed 10% tariffs on imports from the country, which start at midnight on Tuesday.
“Tariff Tuesday could easily have followed Manic Monday but instead an eerie sort of calm seems to have settled on global indices,” says Danni Hewson, head of financial analysis at AJ Bell.
“A tit-for-tat trade war between Canada, Mexico and the United States might have been fended off for now, but China’s retaliatory strike is a reminder that tariff woes are far from behind us.
“Perhaps it’s because investors simply can’t figure out what might happen next, meaning it makes sense to take a pause and try to price in risk.
“This could be why mega-caps seem to be back in favour, and in the absence of a Trump twist there’s been plenty of business as usual to contend with as earnings season continues apace.”
In Europe, France’s Cac 40 rose 0.7%, and in Frankfurt the Dax was up 0.4%.
On Wall Street, the S&P 500 was 0.3% up and the Dow Jones was roughly flat.
The pound had gained against the dollar, up 0.4% to 1.248, after markets closed. It was 0.1% down against the euro at 1.203.
In company news, Johnnie Walker and Guinness maker Diageo warned that Mr Trump’s proposed US tariffs could deal a 200 million dollar (£161 million) blow to profits.
The spirits giant scrapped a key sales target because of growing uncertainty linked to the tariffs and volatile consumer demand.
Shares in the drinks company fell 1.7% on Tuesday.
Vodafone revealed a rebound in UK revenues as it eyes the completion of its £15 billion mega-merger with Three UK in the coming months.
But Germany – its largest market which accounts for a third of revenues – saw worsened trading as total sales fell by 7.6%.
The German division has been hit by a law barring housing associations from bundling TV packages with rent.
Shares in Vodafone plunged 7.4%.
The biggest risers on the FTSE 100 were Entain, up 39.8p to 734.8p, Marks & Spencer, up 9.8p to 345p, Scottish Mortgage Investment Trust, up 26p to 1067.5p, IAG, up 6.5p to 347.1p, and Glencore, up 6.5p to 348.6p.
The biggest fallers were Vodafone, down 4.92p to 65.1p, AstraZeneca, down 246p to 11030p, Ashtead, down 112p to 5042p, Compass Group, down 47p to 2758p, and BAE Systems, down 20.5p to 1210.5p.
