FTSE 100 retreats as Trump-Juncker meeting may ‘dampen sentiment’

U.K. stocks pulled back Wednesday, giving back the prior day’s gain as investors took a cautious stance before a key trade-related meeting between U.S. President Donald Trump and European Union President Jean-Claude Juncker.

A disappointing update from miner Fresnillo PLC also weighed on Britain’s blue-chip benchmark.

How markets are moving

The FTSE 100












UKX, -0.59%










retreated by 0.6% to 7,661.42, erasing most of Tuesday’s 0.7% rise, which came as a promise of new stimulus by China spurred gains for mining stocks. The British equity gauge is up 0.3% in July, but down 0.4% for the year.

The pound












GBPUSD, +0.1369%










traded at $1.3162, up modestly from $1.3144 late Tuesday in New York. The currency is down 2.5% for the year and far below the $1.50 level that it was trading around before the U.K.’s 2016 Brexit vote in favor of leaving the European Union.

What’s driving the market

Investors in the U.K. and worldwide have worried about a potential global trade war, but those concerns have been offset by some encouraging earnings reports. A softening pound also has been boosting the FTSE 100, as the index’s multinational companies generate most of their sales in other currencies.

Investors are watching for more developments on the trade-tensions front on Wednesday, as Juncker, the European Union’s top official, meets Trump at the White House to try to de-escalate the president’s trade dispute with the EU.

Read: Europe counting on EU’s Juncker to try to calm trade fight with Trump

And see: Tariffs are ‘the greatest,’ Trump says ahead of EU chief’s visit

What analysts are saying

“Stock traders are taking a cautious approach ahead of the Trump-Juncker meeting, as the stakes are high,” said Konstantinos Anthis, head of research at ADS Securities, in a note.

“A positive meeting with promises about removing trade levies will help stocks continue higher, while a disagreement and an exchange of threats will dampen sentiment and equities will shed their recent gains,” Anthis added.

Opinion: How the Trump-Juncker meeting could lead to a trade-war truce

Stocks in focus

Shares in Fresnillo












FRES, -4.75%










dropped 4% for the FTSE 100’s biggest drop. The miner reported a rise in second-quarter gold and silver production, but lowered its full-year forecast for silver output.

Shares in Vodafone Group PLC












VOD, -1.32%










fell 1% after the wireless carrier said first-quarter revenue declined due to currency headwinds and the adoption of new accounting standards. The company also backed its full-year guidance.

Shares in ITV PLC












ITV, +1.50%










tacked on 1% after the broadcaster reported a rise in first-half pretax profit, while also unveiling plans to boost investment to become a more integrated producer-broadcaster.