Market report: Donald Trump’s tariff talk leaves traders pensive in the Square Mile

Shares drifted mostly lower on Friday morning, the FTSE 100 falling below 7000 as traders sat on their hands, wittering about Donald Trump.

This was low-level malaise rather than true caution.

Panic-selling was not in evidence; neither was buying of almost any sort. With the world’s leaders arriving in Argentina for the G20, the City was waiting to see what the President does next.

Dealers don’t want to trade on the back of what he says, but they know too many others will, so find temptation hard to resist.

Trader Steve said he was “waiting to see whether that loony Trump manages to agree anything with China on trade”, before he makes a move.

Whether he does could set the tone for markets for the rest of the year. “There is no reason whatever to trade before we know how that plays out,” added Steve. So the FTSE 100, one of the best-performing indexes yesterday, gave up those gains. It was down 53.40 points at 6985.55.

Most of that fall was down to the miners. Buyers were on strike in Antofagasta, off 20p at 817p, and Rio Tinto, down 38p at 3581p. That followed news that China’s manufacturing sector was on the slide in November.

Connor Campbell at SpreadEx said those figures came “unexpectedly, but, you know, not that unexpectedly given the country’s trade war with the US…that puts even more pressure on President Xi Jinping to try and move in the right direction with Trump.”

One day after at least three brokers advised clients to pile into big UK banks, the second-tier lenders were feeling the pressure: CYBG lost 7.6p to 203.2p and Metro Bank followed, off 66p at 2111p.

At some point, shares in Thomas Cook will surely look cheap. Not yet though — they fell 1.46p to 32.24, another 4% down.

Also looking weak of late is Fevertree, the seller of fancy mixers.

Today shares rose 63p to 2405p after a note from Morgan Stanley where Richard Felton said although UK growth has slowed, the business remains strong and shares are now priced reasonably for anyone who wants to apply a tonic to their portfolio.

There were signs of life at least at Babcock, which won a 10-year contract for aerial firefighting from Canada. That’s its first fire-fighting contract outside Europe. Shares fell 7p to 575p.

Small-cap spotlight

Is Avanti Communications risen from the near dead? The satellite operator shares were well above 200p just three years ago. Today they moved up slightly to 3p, giving it a market cap of £64 million.

The firm said today it expects “strong growth in bandwidth revenues” in the last part of the year.