A wave of optimism has swept across global markets, with the FTSE 100 leading the charge to an all-time high of 8,979 points. This record-breaking performance in London is largely fueled by what market participants are calling the “Taco trade”—a conviction that Donald Trump will ultimately back away from his aggressive tariff threats, as he has done in the past.
The London stock market’s ascent, now within touching distance of the symbolic 9,000-point mark and having surpassed its previous record of 8,908, signals a collective belief among investors that a full-blown trade war can be averted. This confidence is driving a broad-based rally, with traders positioning themselves for a more favorable trade environment.
The mining sector has been a standout performer in this rally. Major companies like Anglo American, Glencore, and Rio Tinto all saw their shares climb by nearly 4%. This surge in mining stocks is underpinned by rising global commodity prices, particularly for copper and gold, which have also benefited from a weakening US dollar, making them more attractive.
Despite Donald Trump’s explicit announcement of new tariffs set to take effect on August 1st, market sentiment has remained robust. Analysts consistently point to the “Taco trade” theory as the primary reason for this resilience, suggesting that investors have learned to anticipate a pattern of initial tough talk followed by eventual concessions or negotiations from the former President.
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