London’s FTSE 100 stock index has tumbled a further 2.9 per cent on Wednesday, as the European Union and China both struck back at Donald Trump’s tariffs.
The European Commission voted in favour of imposing tariffs on some US imported goods from 15 April, until Washington agrees to a deal. China will also impose 84 per cent tariffs on US goods from Thursday.
Warning that the situation has “dangerously escalated”, Beijing expressed “grave concern and firm opposition to this reckless move” by the US – after Mr Trump slapped tariffs of 104 per cent on nearly all Chinese imports on Wednesday.
The escalating trade war between the world’s two largest economies has shaken global markets, prompting a widespread sell-off and rattling investor confidence.
In a further blow, analysts warned that the US Federal Reserve could be forced to intervene to stabilise the bond market after a sharp rise in US Treasury yields overnight, signalling that US assets were temporarily losing their safe-haven status.
The cost of long-term borrowing also rose for the UK government, as British 30-year gilt yields surged to their highest point since 1998 on Wednesday, surpassing a previous 27-year high set in January.
Watch: JPMorgan chief says he expects a recession after Trump tariffs
Posting on Truth Social shortly after the interview, Mr Trump wrote: “‘Fixing Trade and Tariffs is a good thing!’ Jamie Dimon, JPMorgan Chase, Chairman & CEO, on Maria B Show!”
In reality, however, Dimon warned that a recession was a “likely outcome” due to Trump’s sweeping tariffs and that he expected loan defaults to rise amid an economic slowdown.
Watch a clip from the interview below:
UK 30-year gilt yields close at 5.6% after hitting highest point since 1998
The cost of long-term borrowing has risen for the UK government after British 30-year gilt yields surged to their highest point since 1998 on Wednesday to hit 5.61 per cent, surpassing a previous 27-year high set in January.
The yield was at 5.6 per cent when London’s financial markets closed for the day, in moves that followed a sharp rise in 30-year US Treasury yields overnight – signalling that US assets were temporarily losing their safe-haven status, analysts said, as Donald Trump’s tariffs continue to wreak havoc on global markets.
George Saravelos, global head of foreign exchange research at Deutsche Bank, said that if the turbulence continues, “we see no other option for the Fed but to step in with emergency purchases of US Treasuries to stabilise the bond market”, in a similar intervention to that by the Bank of England following Liz Truss’s disastrous 2022 mini-Budget.
Mr Saravelos added: “While we suspect the Fed could be successful in stabilising the market in the short-term, we would argue there is only one thing that can stabilise some of the more medium-term financial market shifts that have been unleashed: a reversal in the policies of the Trump administration itself.”
The sell-off in UK gilts, meanwhile, came amid rising bets from investors that the Bank of England will need to cut rates faster than previously expected this year.
Most traders now expect a rate cut of at least a quarter point at the Bank’s next meeting in May, while some were even pricing in a half-point drop.
FTSE 100 down 2.9 per cent as trading closes
London’s FTSE 100 share index closed at a fresh 13-month low on Wednesday after European markets dropped further following the launch of President Donald Trump’s tariff regime.
The index of top UK stocks finished down 2.92 per cent, or 231.05 points at 7,679.48 for the day.
The mid-cap FTSE 250 index also closed 2.5 per cent lower on Wednesday.
Trump ‘got it very wrong’ over tariffs, says economist used by US president
University of Chicago Economics Professor Brett Neiman, who was also a Biden administration Treasury official, said the Trump administration wildly overcalculated tariff rates placed on nearly all countries that export to the U.S.
The U.S. Trade Representative released its workings and cited a paper produced by four economists, including Prof Neiman, supposedly supporting its approach.
Read the full article here:
Spain defends closer trade ties with China after US warns against ‘cutting own throat’
Spain will pursue closer trade ties with China in the interests of its citizens and of the EU, its agriculture minister Luis Planas said on Wednesday, rejecting a U.S. warning that moving closer to the Asian country would be “cutting your own throat”.
“We have excellent trade relations with China which we intend to not only continue having, but expanding,” Planas told reporters from Ho Chi Minh City, where he was accompanying Spanish prime minister Pedro Sanchez on a trip to Vietnam and, on Friday, China.
Planas had been asked about earlier comments by U.S. treasury secretary Scott Bessent, who criticised Spanish economy minister Carlos Cuerpo’s suggestion that Europe should more closely align with China.
“That would be cutting your own throat,” Bessent told a banking event in Washington, adding that China would continue to produce too many goods and dump them on markets elsewhere.
Sanchez and Planas are heading to Beijing later this week to forge closer economic ties amid the global fallout of U.S. President Donald Trump’s tariff policy, seeking to position Spain as an interlocutor between China and the EU and attract Chinese investment.
Trump not trying to reinvigorate US-Russia trade by sparing Moscow tariffs
U.S. Trade Representative Jamieson Greer told lawmakers on Wednesday that President Donald Trump was not trying to re-invigorate trade with Russia by sparing Russian goods from reciprocal or baseline tariffs, but it was up to Trump whether to impose any future duties.
Greer told the U.S. House Ways and Means Committee that Russia was excluded from the tariffs because it already was facing heavy U.S. sanctions and sectoral trade embargoes, as were Belarus, Cuba and North Korea.
Republicans in US Congress express concern over impact to pensioners
Republicans in Congress are worried that the market rout sparked by U.S. President Donald Trump’s tariffs is taking a heavy toll on retirees and people approaching retirement age – a critical constituency for their party.
Stocks have plummeted in the week since Trump kicked off a trade war with the U.S.’ major trading partners while Treasuries have also been hit with fresh selling pressure, weighing on the private 401(k) accounts and other investments Americans rely on to fund their retirements.
Some Republican lawmakers have expressed worry this week about the hit to Americans’ investments ahead of next year’s midterm elections, when control of both chambers of Congress will be up for grabs.
“People are going to look at their 401(k) statements. They did vote for President Trump and they voted for me. … I’m just trying to figure out if they are going to feel good about this,” said Thom Tillis of North Carolina, one of seven Senate Republicans who have signed on to a bipartisan bill that would give Congress the authority to review and override new tariffs.
Republican Senator John Kennedy of Louisiana expressed similar concern.
“It’s not fun. I don’t like it. I like it when the market goes up,” Kennedy told reporters. He said he wants to give Trump’s gambit a chance, but that the president ought to do a better job of informing the public about his short-term goals.
“We don’t know how long it’ll take (to see positive results), we don’t know what the short-term consequences will be,” Kennedy said. “We don’t know if the medicine will be worse than the disease.”
Rachel Reeves agrees £128m export and investment deal with India
The Chancellor has agreed £128 million worth of new export deals and investments with India.
Rachel Reeves and her Indian counterpart Nirmala Sitharaman signed a joint statement for a package that includes the new deals as well as recent ones worth £271 million after meeting in London.
These include plans for Paytm, India’s largest digital payment app, to invest in the UK and for HSBC Bank to expand its presence to 34 cities in India from 14 currently.
The Chancellor said: “In a changing world, it is imperative we go further and faster to kickstart economic growth.
“We have listened to British businesses, which is why we’re negotiating trade deals with countries across the world, including India, so we can support them and put more money in people’s pockets as part of our Plan for Change.
“Our relationship with India is longstanding and broad and I am delighted with the progress made throughout this dialogue to develop it further.”
US markets hold steady as global markets thrown into turmoil
While most of the rest of the global markets spent today in the red, the US is in the green in early trading – the S&P 500 is 0.5 per cent up, the Dow 0.1 per cent up and the Nasdaq 1.3 per cent up.
The president himself, meanwhile, has taken to social media to suggest “this is a great time to buy” – presumably he’s referencing stocks, rather than products from China – but billionaire investor Bill Ackman isn’t in agreement.
“If the president doesn’t pause the effect of the tariffs soon, many small businesses will go bankrupt. Medium-sized businesses will be next,” he wrote on X.
The Pershing Square Capital CEO added: “Our stock market is down. Bond yields are up and the dollar is declining. These are not the markers of successful policy.”
Tech shares lift Wall Street amid escalating U.S.-China tariff war
Wall Street’s main indexes inched higher on Wednesday as investors lapped up cheaper technology stocks in a choppy session that remained centered on tariff moves as China retaliated with more levies on U.S. goods.
Most megacap and growth stocks rose, with Apple and Nvidia adding nearly 2.5 per cent each and Microsoft up 1.2 per cent. The tech sector was up 1.5 per cent.
“The reflex to buy the dip is very strong and certainly the wipeout you’ve seen in tech stocks makes them cheap relative to where they were,” said Chris Beauchamp, chief strategist at IG.
Despite the early gains, all three benchmarks were down more than 10 per cent from the levels seen before the reciprocal U.S. tariff were announced last week.