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FTSE shares have reacted in each constructive and unfavorable methods to Trump successful the US presidency. Nonetheless, whereas some have loved features, many are down as markets battle to evaluate the implications of the information.
Total, the FTSE All Share index is down 1% since 5 November, with the FTSE 100 hitting a three-month low final week.
Many UK firms depend on gross sales to the US and the potential for brand spanking new tariffs imposed on overseas imports may spell catastrophe.
Whereas the rhetoric appears largely targeted on China and Mexico, tariffs of some kind are more likely to be imposed on all overseas items. A number of UK firms are additionally uncovered to Asian markets, which may undergo if China’s gross home product (GDP) declines.
I’ve recognized two FTSE shares specifically that may very well be damage by strict import tariffs.
Prudential
Insurance coverage big Prudential (LSE: PRU) is closely uncovered to Asian markets, having shifted focus in the direction of the area lately. Solely a month in the past, the inventory rose on information of Chinese language stimulus measures. These features had been short-lived after the measures failed to satisfy market expectations.
Then, after Trump’s win was introduced, the inventory crashed 10%.
It appears Prudential can’t catch a break. However the underlying firm’s nonetheless strong. New enterprise revenue elevated 11% within the newest third-quarter outcomes, with gross sales up 10% in comparison with Q3 2023.
Earnings are forecast to develop 28% a 12 months going ahead, with a ahead price-to-earnings (P/E) ratio of 8.44. These figures recommend the inventory has good development potential — however that will change if Trump’s tariffs come to gentle.
The tariffs — and Trump’s victory — weren’t solely sudden, so I believe Prudential already has a plan. In that case, it might be able to keep away from important losses. Nonetheless, it’s a inventory I’d keep away from till the eventual final result of the state of affairs’s clearer.
Anglo American
Anyone watching markets will know this week has been devastating for European mining shares. This was a two-fold hit coming from each US greenback development and China’s disappointing stimulus measures.
Anglo American (LSE: AAL), together with fellow miners Rio Tinto, Antofagasta and Glencore, fell almost 10% prior to now week. With mineral gross sales closely depending on Chinese language commerce, the mixed risk of low stimulus and commerce tariffs took its toll.
Gold and silver didn’t escape the sell-off, falling 4.4% and a pair of.8% respectively. Platinum, Anglo’s largest cash spinner, additionally took a 2.8% fall.
It’s not all doom and gloom. Anglo lately bought off £850m price of steelmaking coal property, serving to to shore up its steadiness sheet. With additional gross sales deliberate, it may claw its approach again to profitability. Earnings are forecast to show constructive within the coming months.
The falling worth might reignite curiosity from Australian mining big BHP, which tried a takeover of Anglo American earlier this 12 months. A contemporary supply may enhance share worth development.
For buyers searching for a cut price, the present low worth may very well be alternative to contemplate. However till Trump takes workplace on 20 January, the precise final result of his tariff plans is unclear.
