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History shows us that staying invested in FTSE 100 stocks during tough times like these have paid off. The Footsie has recovered from multiple crises down the years — a pandemic, Brexit, and a global banking crisis, to name just a few — demonstrating its resilience and potential for long-term growth.
However, not all FTSE stocks are equal. And an already poor outlook for some companies has been worsened by the impact of US trade tariffs and counter action from other major economies.
With this in mind, here are two FTSE 100 stocks I’m steering clear of.
Lloyds
Resilience in the UK homes market has provided Lloyds (LSE:LLOY) with something huge to cheer about in 2025. It’s the country’s biggest mortgage provider, so healthy housing demand is essential for profits.
Further likely interest rate cuts should continue to support strength here. But broadly speaking, the outlook for the bank is pretty poor, I believe. Interest rates are tipped to fall at least two or three more times this year, according to analysts, reducing its net interest margins (NIMs) to a sliver.
Lloyds also faces revenues and margin pressures as market competition heats up (and especially so in the critical mortgages arena). And while it doesn’t have operations in the US, it also stands to be a big loser as so-called Trump Tariffs weigh on the British economy.
On Tuesday (21 April) the International Monetary Fund (IMF) slashed its UK growth forecasts, tipping expansion of just 1.1% in 2025 and 1.4% next year. It also tipped inflation of 3.1% this year, representing the highest level among the world’s advanced economies.
With tariffs tensions escalating, I fear the threat to Britain’s economy — and therefore to cyclical shares like banks — will continue to grow. Lloyds faces a double whammy of weak income and rising impairments.
With a price-to-earnings (P/E) ratio of 9.5 times, Lloyds’ share price is dirt cheap. I think this reflects the high level of risk the company poses to investors.
BP
The IMF’s intervention this week also suggested darkening clouds for firms with global operations like BP (LSE:BP.). The body slashed its growth forecasts for the world economy to 1.8%, down almost a full percentage point.
This suggests that weakening energy demand could intensify, pulling Brent crude — which recently dropped to four-year lows — even lower.
But BP’s not only under pressure as trade tariffs put further strain on energy consumption. Rising oil production from major producers like Brazil and Canada, combined with steps by the OPEC+ cartel to unwind output constraints, also threaten a supply glut that could dent prices.
Against this backdrop, Goldman Sachs analysts believe Brent will average $63 and $58 a barrel in 2025 and 2026 respectively. It even warned the black stuff could topple from current levels around $68 to below $40 in an extreme scenario.
This would be especially damaging to BP given the huge amounts of debt on its books. Net debt is expected around $27bn as of the end of March.
This explains why the company’s forward P/E ratio is also ultra low, at 9.1 times. On the plus side, plans to intensify cost-cutting could give earnings a boost, while soaring energy consumption from the tech industry could also support the bottom line.
But on balance, I think the FTSE company is far too risky.
