The FTSE 100 fell again on Monday as trade concerns continued to weigh on cyclical sectors including banks and miners.
Selling pressure in US futures dragged as the session progressed with the FTSE 100 down 0.5% at the time of writing.
London’s leading index had its worst week for some months last week as the threat of Donald Trump’s trade war eventually eroded sentiment and sent the index below 8,700 on Friday.
Just days before, the index had been closing in on record highs as defence stocks rallied on positioning for higher European defence budgets.
However, uncertainty set in as the week progressed, and investors began reducing positions in UK-listed stocks as sentiment soured.
The US Non-Farm Payroll released on Friday helped steady the ship, but underlying fears of how the global trade war will play out prevented stocks from rebounding on Monday.
“The big issue for financial markets right now is not necessarily the Trump Admin’s policies themselves, but the degree of uncertainty associated with them, and the fact that the policies in question change almost as often as the direction of the wind does,” said Michael Brown Senior Research Strategist at Pepperstone.
Brown continued to explain that investors hoping for the famous ‘Trump put’ to kick in are likely going to be disappointed with the President who is seemingly unphased by the rout in US stocks.
“The real ‘Trump put’ would, at this point, be to take the President’s microphone away, throw his phone in the Potomac, and pack him off to play golf for a couple of weeks to let businesses, consumers, and markets, adjust to the new policy regime.
“That seems about as likely as pigs flying, though, in all honesty, meaning that headwinds facing the US equity market are only likely to intensify, with the bears retaining the upper hand.”
The declines were broad on Monday in London with most industry groups down.
Those stocks that enjoyed gains towards the beginning of the year were hit by profit taking. Banks and miners suffered the most. Ashtead and Melrose continued their purple patches and were again among the losers.
There was interest in JD Sports in early trade and the risk off tone was underscored by notable gains in utility stocks.