Global Stock Markets Decline Amid Trade War Fears and Weakening Dollar
Financial indices react negatively to new tariffs announced by the US government, with significant impacts on markets across the globe.
Stock markets experienced notable declines as investors reacted to the recent tariffs announced by US President Donald Trump during a White House address.
The FTSE 100 index fell by 1.2%, or 99.60 points, to close at 8508.88, marking its lowest level in two months.
The FTSE 250 index saw a decrease of 1.3%, or 252.57 points, to settle at 19,397.06. Companies with substantial exposure to the US market were particularly affected, with Watches of Switzerland shares dropping by 7% and Dr Martens declining by 3%.
The tariffs included a significant 46% levy on goods imported from Vietnam, impacting FTSE 250-listed Vietnam Enterprise Investments, which fell by 7%.
Similarly, the corporate merchandise business 4imprint saw a 5% decline in its share price.
Commodity stocks were also major losers as oil and key metal prices fell due to concerns that a global trade war could dampen demand.
BP shares fell by 3% to 420.85p, while Shell and Anglo American dropped by 2% and 4%, respectively.
Barclays' shares decreased by 4%, reflecting the broader market downturn.
In Europe, both the Cac40 and Dax indices opened more than 2% lower following the announcement of 20% tariffs on European Union imports.
Asian markets mirrored this trend, with Japan's Nikkei 225 index declining by 2.8% and Hong Kong's Hang Seng index down by 1.6%.
The US dollar weakened amidst revised growth forecasts for the US economy.
Economists at Deutsche Bank projected that the new tariffs could reduce US GDP growth by approximately 1-1.5% this year.
The average tariff rate on US imports is expected to rise to between 25% and 30%, in line with worst-case scenarios.
The dollar index fell to its lowest level in six months, while the pound rose by 0.8% to $1.31.
Business groups in the UK expressed concerns over the potential impact of the tariffs, especially on small to medium-sized enterprises (SMEs), which rely heavily on exports to the US. The Federation of Small Businesses cautioned that the tariffs could severely affect 59% of small UK exporters currently active in the US market.
US stock indices also faced predicted declines, with S&P 500 index futures indicating a drop of over 3%, reflecting fears of a market correction after a significant rise earlier in the year.
Analysts expect that retaliation measures from affected nations could intensify market volatility.
In a contrasting scenario, Currys announced an upgrade to its profit guidance, citing continued growth in like-for-like sales across its UK and Ireland divisions and Nordics.
The electricals retailer's adjusted profit estimates now stand at £160 million, surpassing previous expectations.
As economic tensions persist, global markets remain on high alert regarding the ramifications of the newly imposed tariffs and the potential for further trade retaliations.
The FTSE 100 index fell by 1.2%, or 99.60 points, to close at 8508.88, marking its lowest level in two months.
The FTSE 250 index saw a decrease of 1.3%, or 252.57 points, to settle at 19,397.06. Companies with substantial exposure to the US market were particularly affected, with Watches of Switzerland shares dropping by 7% and Dr Martens declining by 3%.
The tariffs included a significant 46% levy on goods imported from Vietnam, impacting FTSE 250-listed Vietnam Enterprise Investments, which fell by 7%.
Similarly, the corporate merchandise business 4imprint saw a 5% decline in its share price.
Commodity stocks were also major losers as oil and key metal prices fell due to concerns that a global trade war could dampen demand.
BP shares fell by 3% to 420.85p, while Shell and Anglo American dropped by 2% and 4%, respectively.
Barclays' shares decreased by 4%, reflecting the broader market downturn.
In Europe, both the Cac40 and Dax indices opened more than 2% lower following the announcement of 20% tariffs on European Union imports.
Asian markets mirrored this trend, with Japan's Nikkei 225 index declining by 2.8% and Hong Kong's Hang Seng index down by 1.6%.
The US dollar weakened amidst revised growth forecasts for the US economy.
Economists at Deutsche Bank projected that the new tariffs could reduce US GDP growth by approximately 1-1.5% this year.
The average tariff rate on US imports is expected to rise to between 25% and 30%, in line with worst-case scenarios.
The dollar index fell to its lowest level in six months, while the pound rose by 0.8% to $1.31.
Business groups in the UK expressed concerns over the potential impact of the tariffs, especially on small to medium-sized enterprises (SMEs), which rely heavily on exports to the US. The Federation of Small Businesses cautioned that the tariffs could severely affect 59% of small UK exporters currently active in the US market.
US stock indices also faced predicted declines, with S&P 500 index futures indicating a drop of over 3%, reflecting fears of a market correction after a significant rise earlier in the year.
Analysts expect that retaliation measures from affected nations could intensify market volatility.
In a contrasting scenario, Currys announced an upgrade to its profit guidance, citing continued growth in like-for-like sales across its UK and Ireland divisions and Nordics.
The electricals retailer's adjusted profit estimates now stand at £160 million, surpassing previous expectations.
As economic tensions persist, global markets remain on high alert regarding the ramifications of the newly imposed tariffs and the potential for further trade retaliations.
