The FTSE 100 brushed aside fresh tariff concerns on Friday, rising 0.15% as strong domestic inflation and retail sales data gave UK-focused investors reasons to hold their nerve.
Oil prices hovering near $100 a barrel and a new round of US tariffs weighed on global sentiment, yet the index closed modestly higher, with housebuilders and retailers leading the gainers.
Tariff concerns return as White House imposes new levies
AJ Bell investment director Russ Mould said tariffs had moved back to the top of global investors’ worry lists. ‘Tariffs are back on the list of concerns for global stock markets as the White House brings in a new swathe of levies to replace temporary measures which had just expired,’ he said.
Mould added that the move was not entirely unexpected. ‘The Trump administration was always likely to look for another route to introduce a new round of tariffs after the ruling in February from the Supreme Court that the previous set were illegal.’
He said uncertainty was compounding. ‘While the outcome won’t come as a complete shock to markets, it is nonetheless another unwelcome source of uncertainty as sentiment is buffeted by the renewed conflict between the US and Iran and concerns about levels of expenditure in the tech sector.’
Oil’s move toward $100 adds to the pressure. Brent crude was trading near that level on Friday, a sharp reversal from the $70 a barrel it touched just weeks earlier. The scale of the reversal raises questions about whether equity markets have fully priced in the prospect of interest rate rises at major central banks.
UK inflation and retail data ease rate-rise pressure
Against that backdrop, a run of better-than-expected UK data provided some shelter for domestic stocks.
UK headline CPI inflation fell to 2.6% in June 2026, down from 2.8% in May 2026 and below the market consensus of 2.7%, according to Trading Economics. That was the lowest reading since March 2025. The largest downward contributions came from transport, reflecting lower diesel and petrol prices, alongside clothing and food.
Core CPI, which strips out energy, food, alcohol and tobacco, held steady at 2.6% in June 2026, according to the UK Parliament Library. Core inflation has fallen from 3.1% in January 2026, though the pace of decline has slowed.
BBC News reported that the UK’s 2.6% rate runs below the EU average of 2.9% for the year to June 2026, though Germany and France both post lower readings individually.
AJ Bell head of financial analysis Danni Hewson said the inflation reading gave the Monetary Policy Committee room to hold. ‘June’s unexpectedly large fall in the UK’s headline CPI rate to 2.6% is widely expected to provide MPC members with enough cover to continue their wait and see approach, and looking at market expectations today, only a few investors are pricing in a surprise hike.’
Retail sales added to the positive picture. Volumes rose 1.0% month-on-month in June 2026, defying a consensus forecast for a 0.3% fall, according to Trading Economics. On an annual basis, sales climbed 4.2%, the strongest growth since January 2026 and well above the 2.3% analysts had forecast. Hot weather and the World Cup were credited as drivers.
The Office for National Statistics separately reported that retail sales volumes rose 0.6% in the second quarter of 2026 compared with the first, with non-store retailers benefiting from warm weather and sales promotions in May and June.
Movers: JD Sports leads, Airtel Africa falls
JD Sports topped the FTSE 100 leaderboard, with shares rising 3%. The better-than-expected retail sales figures bolstered the case for consumer-facing names. Housebuilders also posted respectable gains, aided by the reduced near-term rate-hike probability.
Airtel Africa was the session’s top faller, shedding 3.8%.
Equity traders now face a binary choice: sell ahead of a potential rate-driven slowdown later in the year, or hold for a geopolitical resolution that history suggests can drive sharp, rapid rallies. The next MPC decision will test whether the June inflation print has genuinely closed the door on a summer hike.
