Welcome to the City AM FTSE 100 liveblog for Friday, 23rd January 2026. As the World Economic Forum in Davos draws to a close, capital markets have experienced a rollercoaster week of dramatic shifts and geopolitical tensions.
Market Turmoil Triggered by Trump's Tariff Threats
The FTSE 100 began Monday's trading session at 10,235.31 points, but quickly shed value as former President Donald Trump intensified pressure regarding potential tariffs on NATO allies. This development sent shockwaves through London's financial district, with investors initially clinging to hope that the situation might de-escalate.
The TACO Phenomenon and Investor Sentiment
Many market participants recalled the acronym TACO – "Trump Always Chickens Out" – a phrase that emerged following the US's 2025 'Liberation Day' tariffs. This sentiment reflected widespread investor belief that Trump might ultimately retreat from his aggressive stance. However, by Tuesday, such optimism faded dramatically after EU officials engaged in a heated exchange with Trump's representatives.
The European Union pledged an "unflinching" response to any new tariffs, while Trump countered that he would "100 per cent" impose levies on European nations unless an agreement was reached concerning Greenland. This escalation caused the FTSE 100 to plummet to lows of 10,055.57, with the index struggling to recover meaningful ground.
Thursday's Dramatic Reversal and Ongoing Uncertainty
The market landscape transformed abruptly on Thursday morning when Trump announced via Truth Social that a "framework" for a deal had been established, resulting in the proposed NATO tariffs being dropped. London's blue-chip index roared back to life on this news, though it surrendered some gains during later trading sessions.
With immediate tariff concerns temporarily alleviated, attention now turns to whether this represents a return to normalcy for City traders or merely a brief respite before another geopolitical surprise from the former president. The question remains: does Trump have additional wild cards to play that could further disrupt international markets?
Retail Sector Struggles Amid Economic Pressures
Compounding the geopolitical uncertainty, retail sales data revealed concerning declines, adding another layer of complexity to the UK's economic outlook. This combination of domestic weakness and international tension creates a challenging environment for investors navigating the FTSE 100's movements.
As we monitor developments throughout the trading day, we'll provide continuous analysis and breaking news coverage. The City remains watchful for any further statements from Davos or Washington that could influence market direction in these volatile conditions.
