The FTSE 100 was firmly in the red on Monday as global equities sank ahead of Donald Trump’s ‘liberation day’ on 2nd April, when a raft of global trade tariffs are set to come into force.
The hope that Donald Trump was using the threat of tariffs as a negotiating tactic has evaporated, and market complacency has been replaced with mild panic.
With the US President showing little sign of backing down, tariffs on countries such as China, Canada and Mexico will come into effect on Wednesday.
Asian equities sank overnight after a sell-off of US equities on Friday, leading to European stocks trading deep in the red. The FTSE 100 was down 0.8% at the time of writing.
“The last day of March is spring-loaded with uncertainty on financial markets. Unease about the effect of Trump’s tariffs has been amplified, causing sharp moves at the start of the week. London-listed stocks will not be immune to the tariff fall out, with the FTSE 100 set for a difficult start to the week as investors brace for the debilitating effect of widespread tariffs,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
The sharp decline in the FTSE 100 on Monday reflects concerns in some quarters that the UK may be on the hook for Trump tariffs.
Despite the heavy selling at the end of last week and today’s decline, London’s leading index is still higher by 3% year to date compared to a 5% decline for the FTSE 100.
London’s losses were broad on Monday with only a splattering of utility companies and tobacco stocks making gains.
“When things are looking bleak, it’s natural for investors to hide in certain parts of the market that either act as safe havens or industries whose demand should be unaffected by fluctuations in the economy,” said AJ Bell’s Russ Mould.
“The FTSE 100 slipped 0.9% as commodity producers and banks weighed on the index, both economically sensitive sectors.”
Miners Glencore, Anglo American and Rio Tinto all fell more than 3%.
Primark-owner AB Foods shares fell after Primark’s boss resigned following an investigation that revealed inappropriate behaviour. AB Foods shares fell 2%.
IAG, JD Sports, and Entain were affected by fears about consumers’ discretionary spending as tariffs threatened economic activity.
Imperial Brands was the top riser as investors bought into the relative safety of nicotine addiction. Shares were 1% higher.