This afternoon the FTSE 100 has slumped even further after China has announced fresh 84% retaliatory tariffs on the US.
The blue-chip index fell 3.6%, 289 points to 7621, the French Cac 40 is down 3.6% and Germany’s Dax dropped 3.5% on Wednesday afternoon.
AJ Bell investment director Russ Mould said, “Yesterday’s fragile recovery in stocks has been shattered by renewed selling as reciprocal tariffs on what the Trump administration regards as the ‘worst offenders’ comes into effect.
“Investors had initially taken some positives from a willingness in the White House to negotiate with Japan and Israel, but an escalation with China triggered another sell-off on financial markets. US consumers buy a lot of goods from China, so the 104% tariff could stoke inflation big time.
“Investors are looking for any indication that the US government might blink in the face of the turmoil. For now, there are no signs of a willingness to back down or hit pause on tariffs. The longer the situation persists, the harder and more complex it will be to unpick.
“A trend which will be watched closely is an apparent loss, whether temporary or otherwise, of US assets’ safe-haven status. Treasuries sold off heavily amid some speculation China and other parties are dumping their holdings as a retaliatory tool. The dollar also remains under the cosh.”
He added, “Government bonds in the UK and across Europe were under pressure, too, and market weakness was apparent among names that had been spared the worst of the selling thus far, with the pharmaceutical sector taking its medicine.
“Gold prices were back on the march after losing some of their shine in the initial stages of this sell-off, and this helped give precious metal miners a lift.
“Shares in over-50s lifestyle group Saga were flat in a rising market as underlying profit grew more than expected in the year to the end of January, buoyed by its travel business.
“The company is still in the process of reshaping its operations following the sale of its insurance underwriting arm. It will hope the recent turbulence in the global economy doesn’t knock it off course.”
