FTSE 100 and Gold Hit Record Highs, Tariff Deadline on Feb 1

The FTSE 100 struck a record high, breaking through the 8,600 level with gains also seen across other European indices. Gold also hit a record high despite strength in the US dollar. The Japanese yen was set for its best January in seven years, driven by expectations of further Bank of Japan rate hikes, while the Mexican peso and Canadian dollar weakened ahead of Donald Trump’s self-imposed tariff deadline of February 1.

Equities

The FTSE 100 rose 1% to close at a record high of 8,646.88, breaking through the 8,600 level as investors responded to strong corporate updates. Precious metal miners supported the gains, with Endeavour Mining jumping 7.2% following its 2024 production report.

Gold prices also reached record levels, boosting the sector. Shell climbed 2.6% after announcing a $3.5 billion share buyback alongside its fourth-quarter results. St James’s Place gained 6.7% on better-than-expected managed funds for the year, while Airtel Africa surged 10.9% after posting positive nine-month revenue figures.

Watches of Switzerland added 4%, lifting the personal goods sector by 5.9%. In contrast, Wizz Air fell 5.5% after issuing its second profit warning in six months. The FTSE 250 advanced 1.2%, reaching its highest level in nearly a month.

In the US, the S&P 500 climbed 0.5% to 6,071.17, while the Dow Jones Industrial Average added 0.4% to 44,882.13. The Nasdaq Composite rose 0.3% to 19,681.75. Tesla shares increased 2.9% after Elon Musk confirmed plans to launch lower-cost models in early 2025 and introduce an autonomous ride-hailing service in June.

Meta gained 1.6% after reporting fourth-quarter revenue ahead of expectations, though it warned that first-quarter sales may be weaker. IBM surged 13%, its biggest daily gain since 1999, after exceeding profit forecasts. Microsoft fell 6.2% following a disappointing outlook for its cloud computing business. UPS dropped 14.1% after forecasting lower-than-expected 2025 revenue, weighing on the Dow Jones Transportation Average.

Investors also reacted to policy comments from central banks. The Federal Reserve kept interest rates steady, with Chair Jerome Powell suggesting no urgency for changes, while the European Central Bank cut rates by 25 basis points. Upcoming economic data includes US personal consumption expenditures inflation figures for December and UK house price data for January.

Forex & Commodities

The US dollar strengthened as traders assessed the impact of potential tariffs on Mexico and Canada, which could take effect this weekend. The Mexican peso and Canadian dollar remained under pressure ahead of the deadline. The Japanese yen was set for its best January since 2018, gaining 1.9% for the month amid expectations of further rate increases from the Bank of Japan.

Gold reached a record high of $2,799.71 per ounce and was on track for a 6.5% rise in January, its best monthly gain since March 2024. Concerns over US import tariffs drove demand for the metal, while traders awaited the December US personal consumption expenditures (PCE) inflation report. Silver and platinum were also on course for weekly gains.

Brent crude rose 0.4% to $77.21 per barrel, while US crude increased 0.8% to $73.31. For the month, Brent was set to gain 3.35%, its strongest performance since June, while US crude was up 2.04%. The market remained cautious over potential supply disruptions, with the US considering new sanctions on Russia, Venezuela, and Iran. The possibility of tariffs on Canadian and Mexican oil added to uncertainty.