The FTSE 100 has soared to an unprecedented peak of 8,979 points, propelled by a unique market phenomenon dubbed the “Taco trade.” This refers to the prevailing investor belief that despite Donald Trump’s tough talk and recent tariff announcements, he will ultimately retract or soften his protectionist policies, leading to market relief. The London index’s rally past its previous 8,908 record signals strong underlying optimism.
Global markets are exhibiting a similar pattern of resilience, largely shrugging off the specter of a full-scale trade war. Traders are making calculated bets that Trump’s aggressive posturing is primarily a negotiation tactic, and that either delays in tariff implementation or successful trade agreements will ultimately prevail. This sanguine outlook has ignited a broad-based rally across numerous sectors.
The mining industry, in particular, has seen significant gains, with heavyweights like Anglo American, Glencore, and Rio Tinto experiencing nearly 4% increases in their share prices. This sector-specific surge is further supported by a robust rise in commodity prices, with both copper and gold showing strength. A weakening US dollar has also contributed to the attractiveness of these dollar-denominated commodities for international investors.
Even in the face of new tariffs explicitly announced by Trump for an August 1st effective date, the market has maintained its upbeat trajectory. This demonstrates a deep-seated conviction among analysts and investors alike that Trump’s historical pattern of announcing stringent measures only to later retreat or negotiate will repeat itself, allowing markets to continue their upward climb.