- FTSE 100 down more than 3% at 7,763.65
- Defensive and utilities stocks hold steady
- Entain and Taylor Wimpey 'winners'
UK housebuilder Taylor Wimpey (TW.) and gambling firm Entain (ENT) bucked the trend by falling less than the blue-chip FTSE 100 index.
Taylor Wimpey and other housebuilders were perhaps anticipating the possibility of the Bank of England cutting interest rates this year as a consequence of economic damage caused by Trump's recent tariffs' news.
Laith Khalaf, head of investment analysis at AJ Bell said: ‘The market had been pricing in two interest rate cuts this year, but in short order that has now been ratcheted up to three, which would take the base rate to 3.75% by the end of 2025 (based on LSEG data).
‘Meanwhile the two-year swap rate fell from 4% on 1 April to 3.7% at the end of last week, according to Bank of England data. The two-year gilt yield has also fallen, from 4.2% to 3.9% since 1 April (source: LSEG).
‘We may therefore see falling interest rates feeding into mortgage pricing before too long. Likewise the cash market may see fixed rates fading to reflect the new outlook for interest rates.’
Water and waste company United Utilities (UU.), water utilities company Severn Trent (SVT) also fell less than the FTSE 100 as investors sought refuge in the utilities sector.
Engineering turnaround specialist Melrose Industries (MRO) and Scottish Mortgage Investment Trust (SMT) were two of the biggest fallers in the FTSE 100 as the global sell-off continued as Trump’s tariffs come into force.
Shares in Melrose were down over 7% and Scottish Mortgage Investment Trust fell over 7%.
There was also ‘no rest’ for energy giant BP (BP.) which fell over 4% and UK high street bank Barclays (BARC) which was down over 4%.
This was not the first time that stocks nose-dived, on 4 April China’s tit-for-tat US tariffs move sent stocks falling again.
GLOBAL MARKETS SHAKEN
Russ Mould investment director at AJ Bell said: ‘This market sell-off feels brutal because it is relentless. Often, we see one or two bad days then a rebound. We’re now on day three and the sell-off is intensifying, not dying down.
‘Fundamentally, investors are worried about a big hit to corporate earnings and a massive slowdown in economic growth. The potential end to globalisation throws up more questions than answers and that uncertainty is causing havoc on the markets.
‘The FTSE 100 didn’t have a single stock in positive territory, which illustrates the severity of the situation. Big names that have been winning trades such as defence groups Rolls-Royce (RR.) and Babcock (BAB) were on their knees.
‘British Airways owner International Consolidated Airlines dived on the prospect of weaker demand for its transatlantic flights. Tech-related names dropped hard as investor risk appetite vanished into thin air, with Polar Capital Technology Trust (POLR) and Scottish Mortgage among the biggest fallers on the UK stock market.
‘Futures prices imply that Wall Street will continue the doom and gloom when its markets open later on.
‘Negotiations may not produce rapid results so there could be prolonged uncertainty and that spells heightened market volatility. Trump will drive a hard bargain and won’t back down or soften the blow unless the US gets something big in return.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
