Stocks in the UK exhibit diversity as investors scrutinize a multitude of corporate earnings and potential US-EU trade agreement developments
The US-EU trade deal has had a mixed impact on London's stock markets and specific companies in the FTSE 100 and FTSE 250, influenced by shifting investor sentiment and sector-specific tariff effects.
London's Stock Markets Benefit from Increased Investor Interest
London's stock markets overall have benefited from increased investor interest, partly driven by global investors perceiving the UK as a safer and more stable investment destination due to US political instability and Britain's post-Brexit political stability and the new US trade agreement. The FTSE 100 index reached a record high above 9,000 in July 2025, reflecting this inflow of foreign capital.
Sector-Specific Effects of the US-EU Trade Deal
The US-EU trade deal announced on July 27, 2025, imposes a 15% tariff on most European exports to the US, including autos, but excludes pharmaceuticals and metals from these tariffs. This had a dampening effect on some European stocks initially, particularly in autos and luxury goods, indicating investor caution about earnings impacts.
For UK-listed companies in the FTSE 100 and FTSE 250, the deal's effects vary:
- Pharmaceuticals such as AstraZeneca are not directly affected by the tariffs, which should help shield them from adverse impacts.
- Metals and mining companies like Glencore and Anglo American may benefit from quota systems allowing some steel and aluminium exports at lower tariff rates, providing a potential advantage despite the existing 50% tariffs on these products.
- Companies like Croda International, Games Workshop, Entain, Inchcape, and Greggs are in sectors less directly impacted by tariffs and may instead benefit from the broader macroeconomic stability and renewed investor confidence around the UK market.
Macroeconomic Impact of the US-EU Deal
The overall macroeconomic impact of the US-EU deal is expected to be small, with some disruption in specific sectors but an underlying supportive environment for European growth, supported by strong private sector balance sheets and expansionary fiscal policy. This environment benefits UK companies listed on London exchanges.
Market Performance
- Entain rose 1.4% after its U.S. sports-betting joint venture raised its full-year 2025 revenue and core earnings forecast.
- The FTSE 250 index was down 0.3% as of the same time.
- Industrial miners lost 1%, with Glencore and Anglo American down 2.4% and 1.2% respectively.
- Inchcape lost 9.6%, due to a 4% drop in first-half adjusted pre-tax profit at constant currency.
- Healthcare stocks rose 1.8%, with AstraZeneca up 2.8%.
- Games Workshop surged 6.3% after reporting a nearly 30% jump in annual pre-tax profit.
- Greggs fell 4.9% after reporting a 14% decline in first-half profit.
- Chemical stocks lost 2.5%, with Croda International down 5.1%.
Future Developments
A new 15% levy on most European Union goods is expected, significantly higher than pre-2025 levels. The Bank of England is expected to cut borrowing costs on August 7 for the fifth time since August last year. British shop prices rose by the most in over a year in the 12 months to July, with food prices growing more strongly.
The increased interest from global investors, partly fueled by the US-EU trade deal and UK political stability, has contributed to London's stock markets overall benefiting, as evident in the FTSE 100 index reaching a record high. In contrast, the sector-specific effects of the deal have varying impacts on companies in the FTSE 100 and FTSE 250, with pharmaceuticals like AstraZeneca remaining unaffected, metals and mining companies potentially benefiting from quota systems, and others in sectors less directly impacted by tariffs gaining from renewed investor confidence.
The US-EU trade deal also presents future challenges, such as the implementation of a new 15% levy on most European Union goods, which could impact various sectors depending on their exposure to the EU market, alongside potential monetary policy changes like the Bank of England's expected interest rate cuts.
