The FTSE 100 index today fell sharply on a “Manic Monday” first day of trading since Donald Trump announced tariffs on Mexico, Canada and China.
Meanwhile, the US dollar climbed against a basket of currencies as traders digested the consequences of the weekend move.
08:27 , Graeme Evans
Europe’s Dax and Cac 40 have fallen 1.5% after Donald Trump said he will “definitely” hike tariffs on European Union goods “very soon”
The FTSE 100 later settled 1.1% or 93.18 points lower at 8580.78.
Richard Hunter, head of markets at Interactive Investor, said: “Markets famously dislike uncertainty, and the fact that the UK could be within the President’s tariff sights was enough to send the main indices sharply lower at the open.
“The almost unanimous markdown of prices included particular weakness for China-exposed stocks such as the miners and Prudential, while Scottish Mortgage topped the loser board given its own focus on US tech.”
UBS does not believes that the 25% tariffs on Canada and Mexico will be sustained for a prolonged period.
In its base case, the bank said: “The Trump administration would not want to jeopardise US economic growth or risk higher inflation by leaving the tariffs in place for a sustained period, and significant stock market volatility could lead to a change in approach.
“We would expect industry groups representing companies on the northern and southern borders to file court challenges and lobby for their removal.”
08:10 , Graeme Evans
The FTSE 100 has opened about 1.3% or 112.55 points lower at 8561.41.
Global drinks giant Diageo has fallen 3% or 70p to 2349p while specialty chemicals firm Croda International is 3% or 95p cheaper at 3249p.
The UK-focused FTSE 250 index has declined by 1.7% or 352.45 points to 20,598.03. On currency markets, the pound is about 1% lower at $1.228.
07:54 , Graeme Evans
The 25% tariffs on imported goods from Mexico and Canada, and a 10% levy on imports from China, are due to be enforced tomorrow.
The plans also feature a mechanism to escalate if retaliatory measures are imposed on the US.
Peel Hunt chief economist Kallum Pickering said the unveiling of sudden huge tariffs on a major chunk of US imports seemed to contradict the hope in markets that the US may adopt a gradual approach.
He added: “This weekend’s news could thus seriously jar risk markets in the days ahead. As part of a broader risk-off mood, expect dollar strength, a spike in bond yields and possibly a pullback in risk assets like equities.”
