The FTSE 100 has plunged to a one-year low minutes after opening as markets plummet across the globe, increasing fears of an international trade war as investors ramp up bets on the risk of recession.
Monday’s rout extends a two-day sell-off that wiped trillions of dollars from equity values after Donald Trump‘s administration announced sweeping tariffs last week.
The US president said overnight on Monday that he did not want global markets to fall, but also that he was not concerned about the major sell-off, adding: “Sometimes you have to take medicine to fix something.”
Global markets are braced for another dire day as the UK’s FTSE 100 index plunged more than 5 per cent within the first 10 minutes of trading, marking a one-year low.
The panicked mood was felt across Europe, with Germany’s Dax index recording a drop of about 6.5 per cent, and France’s Cac 40 down around 5.3 per cent in the morning.
As Asian markets also tumbled, Hong Kong’s Hang Seng index slumped more than 12 per cent in morning trade, which, if sustained, would make for the benchmark’s largest daily fall since the 2008 global financial crisis.
UK prime minister Sir Keir Starmer warned the “world as we knew it has gone” in the wake of Mr Trump’s tariffs.
Analysis: What today’s FTSE 100 drops mean in real terms
Business and money editor Karl Matchett writes:
Some context for today’s FTSE 100 drops, then. The index, which tracks the performance of the UK’s 100 biggest listed companies, is at a (slightly longer than a) one-year low, around 7674 today – March 2024 was the last time it was about this level. That’s obviously a fairly notable milestone, but what does that mean in real terms? Is it a shocking plunge, is it insurmountable, is the end near?
Well, the FTSE 100 has performed relatively well over the past few years, and is up 34 per cent across the last five years. So although yes, this drop has wiped out the gains over the past 12 months and that’s not a great thing, the drop is 6.35 per cent year-to-date. In investing terms, it’s not a long timeframe, nor is it an eventually-insurmountable level to claw back…though, as to when that will begin is anyone’s guess right now.
The EU response, the UK’s own reaction and how businesses themselves overcome the tariffs and potential losses of revenue through them will all dictate if earnings recover, and that in turn – plus investor risk tolerance – will inform whether share prices start to rise again.
Fearing further market meltdown, Germany’s Merz calls for swift action on tariffs
Chancellor-in-waiting Friedrich Merz has called for swift action to secure Germany’s competitiveness in response to sliding stock and bond markets, following US President Donald Trump’s announcement of sweeping tariffs.
“The situation on the international equity and bond markets is dramatic and threatens to deteriorate further. It is therefore more urgent than ever for Germany to restore its international competitiveness as quickly as possible,” Merz said in an emailed statement to Reuters.
“This issue must now be at the centre of the coalition negotiations,” he added of his conservative bloc’s talks to form a government with the Social Democrats, repeating his party’s calls for tax cuts, a reduction in red tape and lower energy prices.
Major stock indexes plunged on Monday as Trump showed no sign of backing away from his tariff plans, and investors bet the mounting risk of recession could see the Federal Reserve cutting interest rates as early as May.
Together with other European Union countries, Germany faces 25 per cent import tariffs on steel and aluminium and cars, and “reciprocal” tariffs of 20 per cent from Wednesday for almost all other goods.
The tariffs only add to Germany’s economic headache, muddying attempts by the prospective new coalition government to haul Europe’s largest economy out of a two-year-long recession.
Tusk calls stock market reaction to Trump’s tariffs ‘predictable’
Poland’s Prime Minister Donald Tusk has said the stock market reaction to the US President’s tariffs was “predictable”.
“The stock market earthquake from Japan through Europe to America must be survived without nervous decisions,” he wrote on social media, adding that the Polish stock market was also hit.
He added: “but political and economic stability are our assets in this difficult time. We will calmly persevere!”
Global stocks slide on tariff turmoil as recession fear mounts
World stocks plunged on Monday as US President Donald Trump showed no sign of backing away from his sweeping tariff plans, and investors bet the mounting risk of recession could see the Federal Reserve cutting interest rates as early as May.
Monday’s rout extends a two-day selloff that wiped trillions of dollars from equity values after US President Donald Trump’s administration announced sweeping tariffs last week.
Japan’s blue-chip Nikkei slid almost 8 per cent, European shares were down 6 per cent, US stock futures pointed to a sharp selloff on Wall Street later on and the VIX stocks volatility gauge jumped to its highest since August.
Trump’s tariff ‘medicine’ sends global markets into spasms
US President Donald Trump warned foreign governments they would have to pay “a lot of money” to lift sweeping tariffs, characterising the duties as “medicine” and delivering more pain for global financial markets on Monday.
Speaking to reporters aboard Air Force One on Sunday, Trump indicated he was not concerned about losses that have wiped out trillions of dollars in value from world stock markets.
“I don’t want anything to go down. But sometimes you have to take medicine to fix something,” he said as he returned from a weekend of golf in Florida.
France’s Cac 40 down more than 5 per cent in morning’s trading
France’s Cac 40 was down around 5.3 per cent in the morning’s trading.
The panicked mood triggered by Donald Trump’s sweeping tariffs was felt across Europe on Monday morning.
FTSE 100 hits one-year low as market fears deepen after Trump stands by tariffs
The UK’s FTSE 100 has plunged to a one-year low as fears deepen over the global impact of Donald Trump’s tariffs, despite Sir Keir Starmer promising new measures to support under-pressure manufacturers.
Analysts have warned that the scale of disruption in global financial markets is one of the worst to be felt in decades.
The index, which tracks the country’s top 100 listed firms, dropped by about 5 per cent in early trading on Monday as a sharp sell-off kicked in shortly after markets opened.
The panicked mood was felt across Europe, with Germany’s Dax index recording a drop of about 6.5 per cent, and France’s Cac 40 down around 5.3 per cent in the morning.
Overnight, Asian stocks across the board were sinking to new lows after Mr Trump said he will not back down on his sweeping import taxes unless countries even out their trade with the US.
The prime minister has promised to make a raft of reforms designed to provide “certainty” and “support for industry” as firms grapple with the impact of new rules from the White House.
Under new measures to be announced on Monday, rules around fines for manufacturers who do not sell enough electric cars will be relaxed, and supercar firms will be exempt.
While Sir Keir will reinstate the 2030 ban on the sale of new petrol and diesel cars, luxury carmakers like Aston Martin and McLaren will still be allowed to keep producing petrol cars beyond that deadline.
Since Mr Trump announced his financial plans on Wednesday, a 25 per cent tariff is now applied to foreign cars imported into the US, while other products face a 10 per cent levy.
Vauxhall’s parent company, Stellantis, welcomed the government’s electric cars announcement but called for further measures to stimulate demand for electric vehicles.
Eurig Druce, UK group managing director for Stellantis UK, said: “With the challenging geopolitical operating environment and increased intense pressure on the automotive industry, extending the current flexibilities and the introduction of new ones helps Stellantis in continuing to be compliant.”
But “whilst more people are moving to electric, it’s not yet at the pace of the Zev (zero-emission vehicles) mandate”.
“We welcome the flexibilities to allow our customers more freedom of choice. However, there is still a need to address market demand and introduce measures to stimulate it. We will continue to work closely with Government on this.”
UK transport secretary refuses to be drawn on questions over Trump state visit
The UK transport secretary did not say whether it is time to rescind the offer of a state visit to Donald Trump and said Sir Keir Starmer will be “honest” in conversations with allies about the “knock-on impact” of tariffs.
Asked whether the government should tell the US president to forget the visit, Heidi Alexander told BBC Radio 4’s Today programme: “So, standing up for British industry is about finding solutions, and, as I have said, a constantly escalating trade war is in nobody’s best interest, and I know that the Prime Minister has been speaking to (Premier) Mark Carney in Canada, President (Emmanuel) Macron from France, over the last couple of days to ensure that we have those conversations with our international partners to make sure that we navigate this situation as well as we can.
“And it’s part of the reason why today I am announcing those changes to the zero-emission vehicles mandate, which provides certainty to the car industry, British manufacturers.”
Asked whether Sir Keir will urge Mr Trump to change course, Ms Alexander said the prime minister “has discussions internationally with allies, (and) he will be honest about what is both in the best interests of the British people, and actually the sort of global impacts of the global tariffs will have a knock-on impact upon our economy”.
Starmer has ‘relationship’ with Trump and will be ‘honest’ about tariffs impact, says transport secretary
Sir Keir Starmer has “built a relationship” with Donald Trump and will be “honest” with the UK’s allies about the impacts of tariffs on the national and global economy, the transport secretary has said.
Speaking on BBC Radio 4’s Today programme, Heidi Alexander said: “So you’re right to say that the prime minister has built a relationship with President Trump.
“I think that has been obvious over the last couple of months.
“We’re clear that, actually, a constantly escalating trade war where tariffs are ratcheted up is bad for global demand.
“It’s bad for prices, which means it’s bad for British consumers and so, obviously, when the prime minister has discussions internationally with allies, he will be honest about both what is in the best interests of the British people, and actually the sort of global impacts of the global tariffs will have a knock-on impact upon our economy.”
Sir Keir has been speaking with Canadian Prime Minister Mark Carney and French President Emmanuel Macron over the last few days regarding how best to “navigate” the current economic climate, she added.