The FTSE 100 fell on Wednesday after the US announced it would impose controls on the export of chips to China by US tech giant Nvidia.
After a relatively benign start to the week, Donald Trump ignited a fresh wave of concern through equity markets by slapping restrictions on Nvidia that hit a range of US chip makers, sending them sharply lower in the US premarket.
The developments knocked investor sentiment globally, and London’s leading index was 0.3% lower at the time of writing.
“The FTSE 100 was firmly lower early on Wednesday as investors reacted to the latest developments on tariffs and trade,” says AJ Bell investment director Russ Mould.
“A warning from AI chips champion Nvidia that it will face a $5.5 billion hit from tightened US controls on exports to China marks a new chapter in the escalating tit-for-tat between Washington and Beijing, along with Chinese restrictions on ordering Boeing jets.
“The deteriorating relationship between the two countries means China’s better-than-expected GDP figures for the first quarter may not attract too much attention given they cover a period before the Trump administration unleashed its trade policy.”
The selloff of US tech shares also overshadowed an upbeat UK CPI reading that raised the chances of an interest rate cut at the Bank of England’s next meeting.
There was a noticeable bid in UK housebuilders on the back of UK CPI falling to 2.6%, with Persimmon and Barratt Redrow among the top gainers. Barratt Redrow’s steady-as-you-go trading update, which was also released on Wednesday, provided additional support for the sector.
A bumper price target upgrade for Endeavour Mining by Barclays analysts amid rising gold prices sent the miner to the top of the FTSE 100 leaderboard with a 6% gain.
Bunzl was the FTSE 100’s top faller, plunging over 20%, after announcing ‘revenue softness’ across its North American business and a reduction in its profit outlook.
“A profit warning and termination of a share buyback programme, the first such halt by any FTSE 100 firm since the dark days of Covid-19 and lockdowns, are both taking a heavy toll on shares in Bunzl and driving them to a four-year low,” Russ Mould explained.
“March’s full-year results had already got a cool reception owing to worries about a slowdown in the core US operations and a reliance on acquisitions for growth, and those issues have now come home to roost. The company has flagged slower-than-expected sales growth in the US and the UK and Ireland as well as the impact of these trends upon profit margins in 2025.”