UK and US markets tumble as Trump tariffs spook investors
The S&P 500 fell to levels not seen since before the US election in early trading, while the FTSE 100 was still sharply down on Tuesday afternoon.
The FTSE 100 was sharply down on Tuesday afternoon after Wall Street also tumbled amid growing concerns over a global trade war.
London’s blue-chip index retreated from record highs on Monday to drop more than 109.4 points to 8,761.9, a 1.2% fall.
In the US, the S&P 500 plummeted more than 1.6% after opening – while the Dow Jones was 1.5% in the red.
It means S&P 500 returned to levels seen before November’s US election, with the so-called Trump Bounce, as coined by some investors, wiped out entirely.
The falls came after US President Donald Trump moved forward with planned tariffs against Canada and Mexico, and doubled the levy on Chinese imports.
After initially pausing the tariffs, Mr Trump said that starting just past midnight local time, imports from Canada and Mexico would now be taxed at 25%, with Canadian energy products receiving 10% tariffs.
In addition, the 10% tariff that Mr Trump placed on Chinese imports in February is doubling to 20%.
The move was followed swiftly by retaliatory action from Canada and China.
European stock indices saw even sharper drops, with the Dax in Germany sinking 3.3%, while the Cac 40 in France was 2.2% down.
In Asia, the Nikkei 225 dropped 1.2% but China’s Hang Seng Index held largely firm, down 0.3%.
Amid the falls, Sterling was up 0.1% against the US dollar at 1.2712 and down 0.2% against the Euro at 1.2093.
Mr Trump also paused US military aid to Ukraine in a major blow to its efforts to fight against Russia, following a heated exchange between the US president and Ukrainian President Volodymyr Zelensky, who was made to leave the White House early without signing a rare earth minerals deal.
Kathleen Brooks, research director at XTB, said: “Investors don’t like tariffs, and they are deeply uncomfortable with President Trump’s new world order, which is weighing om market sentiment.
“More tariffs are expected from the US in the coming weeks, including for the EU and reciprocal tariffs, which could keep investors on edge in the short term.”
Among stocks in London, blue chip oil giants BP and Shell were heavy casualties, with shares down 5.7% and 3.6% respectively as the cost of crude dropped.
Banks and airlines were also lower in the FTSE 100, with Barclays nearly 6% lower and British Airways owner International Consolidated Airlines falling 6%.
Despite Mr Trump’s move to suspend US military aid to Ukraine, UK defence stocks continued to rally higher after big gains on Monday.
Engine maker Rolls-Royce rose 0.2%, while BAE Systems lifted another 3.4% after both stocks were among those rebounding on Monday following Prime Minister Sir Keir Starmer’s Ukraine coalition aid talks at the weekend.
