The FTSE 100 sank with global equities on Thursday as investors reacted to the most severe US trade tariffs on its partners for over 100 years.
Donald Trump has taken an axe to years of globalisation and in the process wiped off billions in global equity value.
London’s leading index was trading down 0.9% at the time of writing. However, the FTSE 100 got off lightly compared to other major equity indices after the UK was hit by tariffs of only 10%. The EU was slapped with a 20% tariff.
The Japanese Nikkei shed 2.7% while S&P 500 futures tumbled 3%. Germany’s DAX lost 1.3%.
“Trump’s bold attempt to reshape international trade has sent shockwaves through global markets,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“The effects of ‘Liberation Day’ are being felt far and wide, with Asian markets down overnight, European stocks under pressure in early trading, and US futures pointing to a big drop later today.
“With tariffs reaching levels unseen in over a century, the US is poised to rake in an additional $600bn in tariff revenue in an optimistic scenario, or put that another way, that’d be a $600bn added cost for businesses or consumers to stomach.”
There was a clear divide in the performance of FTSE 100 companies on Thursday. Those with substantial overseas exposure or close ties with the US were heavily hit, while those that have more of a grounding in the UK tended to be ok, or even gained.
Standard Chartered, a bank with operations focused on Asia, was the FTSE 100’s top faller, losing over 6%, as investors reacted to an additional 34% tariff on China.
HSBC lost 5% on the same sentiments.
JD Sports shares tumbled over 5% on supply chain concerns after countries such as Thailand and Vietnam were hit with some of Trump’s highest tariffs. The company’s North American growth ambitions have now also become more complex.
UK-centric property companies were enjoying hopes of lower interest rates as a result of trade tariffs. Student accommodation specialist Unite Group rose 3% with other REITs, Land Securities and Londonmetric, rising over 2%.
Taylor Wimpey and Persimmon were over 1% higher.
Utility companies jumped on a safe-haven trade. Severn Trent was the top riser at the time of writing, with United Utilities not far behind.